Alaris Royalty Corp (AD.TO)

Has been recommending this since June, but it has not as yet worked out as he had hoped. In their latest quarter there were a number of problems and issues in 3 or 4 of their investee companies. One was more of a major problem, which he feels will be divested or reworked entirely. The others were more operational issues, and things have now been put in place to carry them forward. There is also an outstanding issue with Revenue Canada, which he is fairly confident that they are going to beat. Over the last number of years, it is becoming more and more of a diversified play. They go to private companies that have 10 years or more of track records of solid management with growth potential. They put in preferred shares that can participate in the growth. Should a company run into trouble or do things that are not allowed, then the preferred turns into equity. Dividend yield of 7.18%.

It invests in companies where they get a royalty for the revenues. One of their companies has run into difficulties and this has pushed their stock down. He thinks it is a buying opportunity.

He likes management and their business model. They go into private businesses that need capital, and instead of them having to raise equity, they take a royalty off the top line. They’ve had a couple of problems with companies they invested in, but haven’t really lost a lot of money. Also, they invest in smaller companies, so as people get concerned about economic growth and the prospects of these investee companies, it puts a little pressure on them. It is cheap and over time it will grow. In an improving environment, this is a good company.

Today was a great opportunity to buy it. It is a really well run alternative finance company. They are not in resources. The recent downturn was from a hiccup and tax loss selling. It is a 7% yield now.

Great company. Selling at less than 13X on a earnings basis and the debt is very, very low. Also, pays a decent dividend. Earnings have been a little disappointing, but think that is a short term blip. Have a very well thought out strategy for delivering earnings to the companies. A great entry point.

Great management team. They have made a lot of great investments. There is concern over a couple of investments recently. Sentiment is the main factor hurting them right now. He is concerned about a 100% payout when the dividend is so low.

A very interesting business model. Have invested in a number of different companies giving a lot of the founders an exit strategy. Have done fairly well looking out over the longer-term, but in the shorter term people have been really focused on a couple of their investments. One of them has gone sideways. From what he understands, they are going to get back a lot more money than what they put into it. It sounds like their pipeline is as full as it has ever been. Yield of 5.9%.

It was a Top Pick a couple of months back. At current prices it is certainly off from its highs. They keep on getting better. Over time they have diversified the number of business they are invested in, and more and better deal flow keeps coming their way. He looks for future dividend increases and continued growth.

It is a great business. He was in it and then sold early. This is a very good, lean management team. As long as there are no fundamental problems, this is a good stock to own.

Very interesting business model. They are investing, usually with preferred equity, into companies, and are getting access to bigger and bigger companies. Dividend payout is fairly high compared to some of the other royalty companies. The business is built around generating cash flow out to their unit holders. Any time they make a new acquisition, they tend to raise more equity. You can time your spots for taking new positions in it, but if you just want a nice dividend that is going to grow over time, you could certainly hold it here.

Alternative financier to private companies. They get a preferred stream of dividends when they put money into a company. Their clients are generally excellent companies, but don’t want to give up any ownership. They had 10 dividend increases over the last 5-6 years. Solid management and balance sheet.

6% yield. A royalty company run by a CEO who is a CFA. The fluctuations in revenue don’t fall outside of their boundaries. They increased their dividend over the last two years, monthly. It looks attractive here.

This has a bunch of different businesses such as End of the Roll carpets, Planet Fitness, a Texas construction company. It is a great value proposition to the owners of these companies. Instead of going through a regular private equity type shop, who wants to take a big piece of the equity and try to get control, they invest through a preferred share type of arrangement where it is tied to the top line with built-in collars to grow that over time. Dividend yield of 5.24% and he expects to see continued dividend growth.

It is a conglomerate. It has a portfolio of investments. When you have this type of company, you have to have extreme confidence in management. He can’t look at the balance sheets of all their investments so he won’t invest in them.

Extremely well-managed and a kind of unique company, in that they invest in a diversified range of primarily private companies that have solid long-term management track records and good records of profitability. Basically invest in companies in such a manner that allows the principles to retain control of the company, provided they meet certain objectives. In the meantime this company participates in the growth of those companies over time. Have been one of the consistent dividend increasers over the years. Just made one of their biggest investments in a construction company in Texas, $70 million of which $40 million is permanent and $30 million to help the transaction go through. Dividend yield of 5.05%.