GMP Capital Trust Inc (GMP.TO)

It's a Toronto-based broker. It was very energy-oriented. This is one of the go-to guys for cannabis issues which has helped them (so have blockchain issues). But energy has had a very negative impact on them. GMP's outlook and growth are too uncertain to him. If there's a correction, this will get pulled down.

(A Top Pick Aug. 14/17, Up 37%) He bought it because they were in commodities, not Marijuana and crypto, but it has helped the bottom line. He is aware of increasing M&A activity in the wealth management space. This is the largest independent money manager in Canada.

Preferred B: A good way to a get tax-efficiant yield. Hold it, collect your yield, and over time see capital appreication. There are few prefs left with captial appreciation as well as yield. This is one of the not well-priced in the market now, so you can benefit later.

This is one of his holdings. Much of its competition has fallen by the wayside. This is one of the largest wealth management companies in Canada. Its two big recent plays are cannabis and crypto-currency. They aren’t do very well on the numbers but they did well enough to pay a special dividend. Going forward, he thinks they have a lot of potential. He can see this going up to double digits.

They have been involved in several cannabis ventures and into cyber-currencies adding to their traditional business areas. He thinks revenues could go up quite a bit. Revenues went down last quarter and they paid a surprise dividend – so he thinks this bodes well going forward. Yield 0%.

This is one of his favorite stocks. They reported earnings last week. Revenues were down 10% year over year but profit doubled. They decided to give a one-time dividend of 10 cents per share, which suggests that they think they are in very good shape. This is company raises money for those companies, mining and oil and gas, also into marijuana and cryptocurrencies.

This company is well run and they look for where the puck is going to go – doing that with marijuana, capital markets and now blockchain. This company is well ahead of the banks and this latest trend.

They’ve had trouble. They are involved in two major areas: (1) raising money for companies in commodities and oil & gas, has gone poorly. Revenues have gone down. (2) Richardson Securities has gone well and the takeover by Scotia in this area has made Richardson more attractive. GMP Capital is raising funds in cannabis and cybercurrency so this is a way to play those areas that is lower risk than buying the financed companies. (Analysts’ price target was not provided on the show)

In 2 areas, wealth management via Richardson Securities and in commodities in terms of raising capital for mining organizations. A little over a year ago, they bought First Energy which got them into oil and gas, but now have also moved into cyber currencies, and into marijuana, 2 fast growing fields. Last quarter, they lost about $2.8 million, and revenues went down about 21%. Thinks this could be a very good year for them. A lot of their competition has fallen by the wayside and a lot have merged.

The chart shows this was in a downtrend from mid-2014. In late 2017, it broke out from a bit of a base, and looks very bullish from a technical perspective.

He is not looking at owning it. It is a high Beta stock and not a strong franchise. Investment banking has been weak since the resource cycle peaked several years ago. They are not likely to pay a dividend any time soon.

This is having a lot of trouble. Their space got hit, and a lot of companies have gone under. They do a lot of financing, and also have a good piece of Richardson Securities, which is doing very well in wealth management. The most recent quarterly earnings were down about 21%. They lost about $2.8 million. The commodity fields, which is their cache, has not been doing well, but has been coming back. Just did a crypto currency deal. He’d love to see them do some marijuana plays. This could move up quite a distance from where its at.

There has been a lot of negativity weighing on the common shares, and conversely, Canaccord (CF-T) seems to have done a lot better over the last 1.5 years, so people have often looked at the difference between the 2. Canaccord is more heavily weighted towards cannabis stocks, which have done very well. Also made an acquisition a year ago of First Energy, which hasn’t worked for them. In terms of Preferred B shares, which he owns, it gives a decent yield, and at some point, thinks GMP and its wealth management side could be a potential interest to a 3^rd party. He would rather own the Preferred B then the common shares.

Bought this last April at over $3, and it has come down since then. They have a few problems such as dealing with some lawsuits. One is obviously a rogue trader who was putting people into investments that were too risky for them. This is possibly going to court, and he doesn’t know how that is going to work out. GMP Capital has 2 sides. One is the energy side where they raise money for energy and mining companies, which has not been a great side. The other side is Richardson Securities, wealth management, which has been absolutely wonderful for them. Thought they would be taken over. He is quite content holding this, and can see how it can do a triple from this level. They had a lot of competition, but a lot of it has either folded or merged, so there is less competition.

This field has been decimated. They took over First Energy. The recent quarterly results look awful because they wrote off a lot after the merger, which is normal in a merger or takeover. They are dealing with a lot of law suits, however.