Onex Corp (ONEX.TO)

(A Top Pick Dec 8/14. Up 27 point to 3%.) They report their NAV in US dollars, so the currency plays a big part. Still have about 35% of their balance sheet in cash.

It is at EBV +5, so expensive. Their earnings are lumpy so he thinks the model price is not relevant. If it broke below $78 he would be quite defensive with it.

Got rid of his holdings, probably too early. A great compounder of capital, and one that he always has on the on-deck list. Feels it is now trading at around its breakup parts. This is probably the time when this company thrives when the market gets dislocated and they can put their private capital to use to make smart acquisitions. If you see a meaningful pullback, he would be a buyer.

This company doesn’t tend to have a very wide following which this has been one of its advantages. They have made good money in a number of the businesses that they have operated. Basically you are buying into ownership of a private equity kind of business. Multiples are a little bit high when compared with some of their competitors.

(A Top Pick Aug 29/14. Up 18.3%.) Part of the growth is that a lot of their assets are not in Canada. The people making the decisions have quite a bit of their own money tied up. There has been a knock on the stock because they have cash and have a 15% return every year, so it is hard to do that when at one point half their balance sheet was in cash. Have announced a number of acquisitions, even over the last quarter, that she thinks will help. Very focused on the kind of acquisitions they make. A lot of it is top down.

This has generally been a good buyer of businesses which they run for a while. What he has noticed over the last couple of years is that the discount to the net asset value has really narrowed. They used to trade at about 50% of their NAV, and as they have continued to do accretive deals that has narrowed somewhat. He doesn’t find it that attractive on a valuation basis.

(A Top Pick May 14/14. Up 9.34%.) They continue to do very well and it has been a good ride. They tend to buy businesses, fix them and then sell them.

One of the companies she is enthusiastic about. A lot of their assets are in US$. They have strong alignment with shareholders. It is a core holding and a great opportunity.

Has a lot of funds under management for others where they get a management fee and a share of the profits. The biggest difference between this company and Brookfield Asset Management (BAM.A-T) is that this one pays a very small dividend, and doesn’t seem interested in raising that dividend. Dividend yield of only 0.28%.

Moderately disposed towards this company. A really, well-run firm. Great insider ownership. Have done a phenomenal job on the deals that they have invested in over the last 5-10 years. Likes what they are doing. His only caution is that they are going to run into problems at some point with some deals, and when that happens you are going to see a pullback.

Although a Canadian company, they have most of their investments outside of Canada. Have done so well that they’ve sold a lot of investments and now have a lot of cash on their balance sheet. Just announced an acquisition and she thinks there are more to come. Yield of 0.31%.

Thinks the way to play this over the cycle is to try and anticipate when a lot of its private equity investments are going to crystallize. That is what generates the profitability and the asset value of the company. If you have a sense of when there is a big IPO cycle, then away you go. His sense is that cycle did probably peak 3-4 months ago, so if you own you probably have had your short-term little pop. Longer-term, this is evolving into a broad based company where they are always launching new funds. This is one that you just salt away and just let it go.

Have done a lot of work in the last couple of years to focus investors on the fact that they actually manage money and have done a good job of it. They now have about 50% of their value in cash. Have the ability to reach their growth target of 15% annually. A decent entry point of 10% premium to their NAV now. Yield of 0.31%.

The one thing this company doesn’t do that some of the US competitors do is the dividend. The free money is off the table with a lot of these quasi private equity guys.

Just raised $5.215 billion in their new fund. Shareholders share with the management team in the revenues from new funds, so this additional money is good news. He bought this because we are in a market period where we are going to see a lot more IPOs. A lot of the companies that are in the Onex stable, which are often carried at cost, when they go public or get sold there is a big bump when people see that they are going to start moving this company up. Has a lot more room to grow. Dividend yield of 0.24%.