Alaris Royalty

AD-T

AD just did some big equity investments and AD pays a big dividend. He used to own and recommend this. Smart and lean management. They suffered some problem investments. They've cleaned them up and he hopes they learned their lesson. You're in good hands. He doesn't know about their recent deployments.

It's like a holding company that makes investments in a number of companies. Over the year they have improved somewhat the disclosure on some of their holdings. 15 to 17 different investments in a wide range of companies. He does not know how it will do in the future. He is not keen on the name right now because he is not keen on conglomerates. (Analysts’ price target is $21.00)

(A Top Pick Jul 27/18, Up 16%) Good dividend. Moved his exit point up to $18. Still likes it. Yield is 8.8%.

They are investing in Alpine Credit, who are doing well and who they are getting involved in for their own succession planning purposes. He would not consider AD-T low risk or defensive. They are medium to higher risk. Their valuation is not very related to where interest rates go.

He would be a buyer at this time. They just recently shored up their capital. The dividend is safe for the time-being. They can make some significant investments over the next while. Under $20 it is a good buy.

He has a small short position on this one. It is expensive and the management compensation plan is too generous. With such low interest rates, why would anyone need to borrow from them?

For RRSP? A few years ago, these royalty stream companies were popular, but haven't done much lately. They've fixed several fixes and are back to square one. He's never loved these kinds of companies. There are better income stocks out there.

He has been a fan for some time -- during ups and downs. It was recently penalized when an analyst spoke of some issues. He thought it was overdone and will be remedied soon. . They have over 15-20 investee companies, providing great diversification. The biggest problem is they are growing so large, it takes bigger projects to move the needle. It has a compelling value at this level.

Not the type of company he would own--the management fee straucture is aggressive and they have some Alberta exposure. He doesn't have much of an opinion on this. He has shorted this in the past. He'd stay away from it, but he'd need to do more research on their holdings. Providence Distribution has been giving them trouble, but accounts for only 5% of Alaris' overall revenues.

He likes this name. They have done a good job of right sizing the ship. Their current portfolios of companies has improved. Things are moving in the right direction. May take a few quarters to make sure they are on track. They have about a 90% payout ratio. He thinks between yield and current pricing, investors will be rewarded, but is higher risk.

He likes it and has recommended it before. They've stumbled the last few years with investments that stopped paying distributions, but they've worked out five of them recently. AD is back onto a trend. Can they continued to deploy capital at 13-15% rate of return and expand dividends? Yes, he believe they can do both cases, and do it well. He expects this to trade at higher stock prices in years to come. A well-run company. The CRA issue, he thinks, will work out in their favour. They need to find bigger companies to invest in, and those choices may be fewer. Meanwhile, they've increased their pipeline in people who sources prospective deals for them. (They are well-connected in the accounting community.)

It's held in here, but a dividend this high likely get reduced. Over time, this has acted poorly. Heavy volume at $20.

Their payout ratio is 65%, which he thinks is sustainable. Sales were down 3% and forward earnings are expected up 4% in 2019. They are producing free cash flow. Yield 8.63% (Analysts’ price target is $21.07)

It had been expanding its portfolio, but then it had some problems with some of their partner companies. They struggled to get out of those assets and the stock price suffered. Management has done a decent job and is now switching back to deploy capital. He has just recently added it back. The dividend is safer today. (Analysts’ price target is $21.00)

DIV-T vs AD-T He owns Diversified. He likes their management team and it pays a good dividend. He waits to hear how management will deploy their capital going forward, but likes how management has been prudent with it. The yield is enticing. Alaris has stumbled as of late. He prefers DIV-T.