High Liner Foods (HLF.TO)

The 3-year chart shows an area of congestion in 2011-2012, followed by an advance, followed by another congestion in 2013, with another advance. Currently it is now in an area of congestion. He calls this “Bullish Congestion”. He would say it probably works higher. Likes the patterns where they advance and then have a period of congestion. A very Bullish pattern.

Clearwater or High Liner (HLF-T)? Prefers this one because the returns to the common shareholder are better. Also, there is a lot of M&A happening, and this one is probably a more likely candidate. Both of them are Buys.

Great company. Likes the food business. The value is in the distribution network. As it continues to expand the distribution network inside Canada and the US, it continues to compound and grow. Generating a lot of free cash flow. The problem is that casual, quick service restaurants are not growing at massive paces so there is not a lot of fast growth for this company. They are using a smart model that is generating free cash, making acquisitions and rolling on. He sees expansion into Latin America as well. This is the cheapest of all food distribution companies.

They are on a roll. They seem to have broken out into a good acquisition phase. Stay with it.

Canadian fish processing company. An attractive company. Has seen management buy-in on shares. Fairly good business model. He is looking for companies that are going to be strong in a weak Cdn$ environment. A lot of this company’s sales are targeted to the US and a lot of their costs are in Canada. You should see margin expansion.

(Top Pick Jan 8/13, Up 39.20%) Was buying recently. Owns both this and Clearwater, which is unusual for him. Great brands.

Not just a fish stick company anymore. 70% of their business is to the US, with a lot of restaurant and hotel food distribution. Generating a lot of free cash and making smart acquisitions with it. Has increased its dividend every year for the past 5 years and has had two dividend increases a year for the past 3 or 4 years. There are growth opportunities outside of North America. Doing a good job.

His second-biggest holding. Still cheap. One of the cheapest food supplying companies in North America. You can’t find any others that are trading at 13X earnings. Made some wickedly, wickedly smart acquisitions. With a cash flow that continues to grow, there are more opportunities. 1.7% dividend.

Been a great performer. He has looked at it. Today it is not a cheap stock. It has grown through acquisition. His biggest concern is the expansion of their business in the US and to US restaurants, which are under pressure. The question is if they can pass through cost increases to restaurants. He would take profits.

A real Canadian success story. A couple of years ago it was a quiet little company in Atlantic Canada that had bad liquidity on the stock market. Started making some tremendously accretive acquisitions and the stock took off like a rocket. They keep making acquisitions and keep adding to earnings so he is buying. Not expensive and only a few competitors.

Most recent quarter was good, rumours of take-out. One of the great consumer products companies, well managed and in a great sector.

(Top Pick Sep 14/12, Up 90.45%) Did a great job of following the playbook of Saputo Cheese. He is not selling but might trim as it gets too big in his portfolio. Sees more dividend increases and a reasonable valuation. Biggest frozen seafood supplier in the US is their target.

Made a wonderful acquisition of Icelandic Foods, which boosted their exposure to the US and their earnings. He was very surprised at how fast they were able to pay back their debt on the deal and increasing dividends. Can’t understand the cheap valuation. Trading at only 11X earnings and should be trading at 13 or 15 times.

Tripled in a very short period of time. It has been treading water now. Low $30s is a good buying level. Well managed and leaders in their field. Thinks they will make a few more tuck-in acquisitions. They are adding value. The stock is not that expensive and they are paying down debt quickly. They will increase the dividend in the future.

They are very focused on value added. They won't be buying a company that actually goes out and catches the fish. He would be buying on the pull back. They will likely increase their dividend once a year every year.