AtkinsRéalis Group Inc. (ATRL.TO)

He was not worried about the scandal which was caused by employees that are gone from the company. They cleaned up the ethics of the company, lost no business and then gained more. They are monetizing non-strategic assets and are growing the company.

Company has done a good turnaround. Had some significant challenges that they got out of the way. Looks like they are selling off some of their assets, which is a good thing. They want to get back into their core business, which is good, but is a more cyclical business.

This is one of his growth stocks. Likes this under $50. Not adding to his holdings at the moment. There are some real good kickers in this. They own a chunk of the 407 and have other assets they can sell. Just sold off a chunk of their Alberta energy holdings. Thinks they are riding the wave of big, international, engineering projects, which he feels are going to go on for decades.

This is a stock that has been disliked for a long period of time. There was a reasonable Short position on it. It’s in the right space, i.e., industrial/infrastructure. It has finally broken out this year and he thinks the stock is on its way. A good place to be.

(A Top Pick Aug 6/13. Up 46.14%.) Stock had got too cheap and is now fully valued. Sold his holdings in order to Buy DIRECTV (DTV-Q).

Bought this when they got new management. New management is very big on ethical behaviour and brought in some ethics people. During that time, it didn’t lose any business because of what had happened and continued to bring in new business at a great level. In the process of selling its Alta Link in Alberta. It has highway 407 and is talking about possibly selling 20% of it. Announced a merger with an English engineering firm which the market liked very much. Still trades at a big discount to other engineering/construction companies. Thinks there is significant upside. There are still more headline risks. There is still a multimillion dollar penalty that is going to be assessed against them. It will be a big headline again, but it is old news. If it falls, that will be a buying opportunity, because it doesn’t affect the company going forward.

Has been in transition over the last couple of years. Feels all of the scandals they had, a couple of years ago are pretty much behind them. New CEO has done a very good job of weeding out that element of the company. Have been making great gains in getting contracts, particularly domestically. It is now priced at a point where it is probably close to 20X earnings and is selling at over 4X Book Value. On ROE, they are going to earn about $3 on a BV of $14, and this is a little bit rich.

Hit a rough patch awhile ago with a bribery scandal. Not a super risky company. They own a part of Highway 407, and they had really strong numbers from this. If you own, consider taking some profits.

New CEO has done a good job in cleaning house and bringing in new top level management and re-establishing trust. Management would like to re-shift the business from minority interest and infrastructure assets, to a pure E&C (energy and construction) business, and grow the oil/gas segment. If you back out the concession assets, the core E&C business trades at stub value of around 5.5X. It is going to take some time for this strategy to turn things around. He would prefer WSP Global (WSP-T) or Stantec (STN-T).

He has recommended it many times. Bought it after the corruption scandal. They brought in a new CEO who was clean and then some compliance people. They have important assets that the market is undervaluing. Likes their current acquisition. They may pay out a special dividend.

He would classify this as a Hold, but if there was a rise of 10%, he would be a Seller. They are doing relatively okay. He suspects we are not going to see the kind of margins that we have seen over the past decade. Not sure that all of the contracts that they had were completely legitimate.

(Market Call Minute.) Sold AltaLink electrical grid to Berkshire Hathaway, which is a big chunk of change for them. Have got over the bribery scandal they had. Quality company with exposure to high growth areas.

This name has been in the headlines, for all the wrong reasons, for the last couple of years. They have come a long ways to fixing this. Company has a core engineering and construction business and they also have infrastructure investments. Just sold one of them, AltaLink, to Berkshire Hathaway. Also, have a piece of Highway 407 and have a very good valuation for this, much higher than people thought. Looking at these assets, you are really not paying much for the core business. They are working through some problem contracts where they basically have zero margins and as these move through the backlog, you start to see margins expand.

Looking at the problems the company was having; every time bad news came out the stock would drop to $40 and then bounced higher. Just sold AltaLink for $3.2 billion. There are rumours the company will be taking that $3.2 billion and maybe make a return of capital to shareholders. Thinks a lot of the problems are behind them. A really good company in a really good sector.

There was a tremendous headline risk on this stock because of the scandals having to do with bribery in North Africa and there were write-offs involved with Libya. The earnings reported today had 2 interesting things. 1.) There was a loss recovery in Libya, which boosted earnings, but 2) to him the most important thing was that the engineering/construction sector actually lost money. In other words in their core competence, designing and building stuff, they are still losing money. Sold his holdings about a year ago because he saw decreasing margins in their core business. They have all this work, but he is not convinced they can make any money on it.