Alaris Royalty Corp (AD.TO)

(A Top Pick May 8/14. Up 29.94%.) Not adding at the current price, but if it was to pull back 10%-15% he would be looking at adding. Good management. A unique company in the way that it is structured. As they grow, they are seeing more and more opportunities opening up to them, particularly in the US. Expecting there will be rising dividends as the years go on.

(A Top Pick March 24/14. Up 17.58%.) If he did not own this, he would be buying it today. A great free cash flow story that has executed consistently. Great management. A billion-dollar company with a growing stream of dividends passed on to unit holders. Almost a 5% dividend.

Has a small Short position in this, more because it shows up on a quant screen as being a short as momentum of forward estimates has been declining because of their exposure to energy services. The other issue he has with companies like this is that if someone is going to hire him to manage their mining and to pick good companies to buy and sell, which this company does, it is just another level of fees for investors, and this is hard for him to justify in his fund.

(A Top Pick Dec 6/13. Up 2.73%.) This has gone through a bit of a ride. Had a big downturn in the 1^st quarter. Had invested in Sears Holding, which Sears kind of abandoned. This was the first bad investment they had made. Had a bit of a selloff and then a bunch of Shorts jumped on. It drove the stock down from a $35 range down to $24 in the 1^st quarter. Since then it has been recovering. Every quarter they just continued doing what they had been doing for the last 6-7 years since becoming public. There was another dividend increase this year and there will probably be another next year. A great stock.

They own a number of different interests. They try to take part of the revenue or the margin base, and give back some of their capital to the owners. He has never been able to get his head around all of the different interests they have. Feels there is a bit of an arbitrage play that has played out positively for them, in that if they have an expensive currency, they can use it and trade it for more royalties. However, if their stock falls, they won’t be in a position to use their expensive currency, and no more deals will happen.

Great company, but he missed it. If you want income and you want dividend, see his Top Picks. Has had a great track record and have done a very good job of taking care of their shareholders. (See Top Picks.)

The three-year chart is showing a nice long-term upward trend. However, there is resistance at around $36. Indicators show that it is getting a little bit overbought.

Owns in his income funds. Management have done well in deploying their capital. They have a good long term track record. Good dividend growth.

(A Top Pick Dec 6/13. Down 0.67%.) Still likes the stock and really, really likes the business. A financial company that invests in Private companies by providing them with Capital to help them expand, as they are not interested in going public. Banks are generally not interested in lending to them. They get a royalty-like return for it. Have an excellent track record of investing in really good returning projects. Pays out about 80% of their cash flow to shareholders, so there is an increasing stream of dividends over time.

Thinks management is executing their formula in an extremely efficient manner. They act like a private equity firm, without really being private equity. They tend to buy into private businesses that are well run and have good long-term track records. Where management wants to keep control of their business, they will construct a preferred instrument that will return to them and participate in growth in the company, but won’t convert into real equity if things really go off the rails. Have been expanding more and more into the US. Thinks they have a great future. He wouldn’t be surprised if many people try to copy this formula. Yield of 4.5%.

This is a quasi-private equity royalty type shop where they give private companies capital, in exchange for part of the top line generally. Have a bunch of underlying companies and are looking to expand that into the US. Last year was a bit rocky when they had some problems with a couple of their underlying companies, but that has all been sorted out. Thinks this could get back to $36 or so. Feels the dividend is safe.

(A Top Pick Sept 27/13. Down 5.52%.) Made an acquisition of a company that serviced and installed Sears products, which declared difficulty shortly after. Because of that, she sold her holdings.

Chart shows a long-term upward trend line that broke down in the latter part of 2013 with a pretty sharp correction. However it consolidated early this year. Also had 2 higher lows. This looks like a turnaround.

Alaris Royalty (AD-T) or KKR (KKR-N)? Two very, very different operations. Like brokerage firms and private equity firms, most of the profits walk out the door to the general partners. Shareholders are often an afterthought. Right now, with asset prices being pushed very high, it is a real dilemma for these private equity firms, because they are paid to invest money and they get paid big, big fees and big bonuses to invest money. They can borrow money really, really cheap, but it is increasingly difficult to find things to acquire at cheap prices. They are making money right now on things that they had bought 5 years ago, when the end of the world was coming.

A Top Pick of his last month. Gives unique exposure to the private equity world with a diversified business mix. Companies they invest in have at least a 10 year history, are family owned, and are diversified. It is extremely well run and he expects dividends to go up. Anywhere under $28 is a good place to invest in it. A CRA problem is a primary driver of the recent weakness. They are gaining more and more opportunities in the US. In the next few years they will get to the point that no one investment represents more than 10%. 5.5% dividend.