Paul Gardner, CFATimbercreek FinancialTF.TOPAST TOP PICKFeb 17, 2016

In Canada, banking really dominates. There are some opportunities, and he does own some non-bank financials (like SII and MFC). This one has gone down for 5 years. At some point, will have a turnaround -- probably. Unless you know this company really well, consider buying into the financial services company that you do deal with.

Dividends of 5-6% are great, probably. Dividends of 9-10% -- market's telling you the dividend is likely to be cut. Think of BCE.

Pool of money trading on the stock exchange, which they invest in short-term first and second mortgages. Can't specify a rate of return, but you get 100% of the income on those mortgages. The income you get is based on the interest rate.

The dip earlier this year on the chart was because of sentiment, as it's involved in the commercial and residential real estate market. So it traded at a big discount to NAV. Still underpriced for where it should be long term, capital gain if you're patient.

Last year was hard on this company with interest rates having moved way up so quickly. It is in the short term mortgage market business. Property prices are coming down. It still pays a 9% dividend and is trading at a 10% discount to its hard cash value. It is in their income portfolio.

Unique business plan.
Pool of money that collects dependable income.
Worst case - can collect underlying real estate. 
High yield being paid on shares.

Pool of money that trades on the TSX and is lent out short-term to the real estate industry. They charge a premium on that. Like owning just the mortgage department of a bank. Payout of over 8% is fully taxable income, not a dividend. Avoid the tax by putting it in your RRSP. Risk/reward is good. One loan didn't go well, with the result that the company is left with a building to sell. Because of this, combined with market nerves about small things, trades at a discount to NAV of $8.40. He'll trade around the NAV. Stock doesn't grow, it just distributes income. 

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. A decent company and the stock price is decently cheap. The dividend has not been changed since being lowered in 2016. Shares have not passed 2011 levels. An income investment. Unlock Premium - Try 5i Free

He's very negative about the housing sector. He's short TMC. Credit spreads are rising and the credit markets are turning over. Canadian real estate is vulnerable.

There was a real disconnect between two entities within the company they decided to merge and that allowed them to trade closer to NAV. They increased their distribution recently. He still likes it.

$300 million market cap. A very stable mezzanine financed building. They lend money for short-term real estate loans and are tight lending the money. If there is no loan to be done, there is no yield. If they do a loan, they just flow the income back to you. A very consistent business. Putting this into a TFS account is a wonderful vehicle. Yield of about 9%.

(Top Pick July 8/14, Up 0.44%) There is an anomaly because this senior mortgage is trading below timber creek. This is a temporary thing and it should trade up.

(A Top Pick May 5/14. Down 3.53%.) The trouble was repayment issues last year. They lend short-term to developers. They are underinvested, which hurts their bottom line. They have kind of solved that problem and it is cheap, trading at a 10% discount to its NAV. The mortgage market is still earning a very good rate of return on a risk adjusted basis. He thinks this does recover and does well over the next year.