A rare commodity in Canada: it's a large food producer. It's cyclical. Inflation of commodities may be good for them because they can pass on price increases to consumers. Not enough yield to make him feel safe. If you own it, hold it, but he's not buying it.

There is some short term resistance.  There is nothing wrong technically.  He would be concerned if we took out the lows from the last couple of months.  The long term trend line looks good.  He is not concerned right now.

A large meat processor. This has been evolving since about 2011. An activist investor got involved, and agitated for major changes, which they undertook. Went through a very aggressive 5-year build where they modernized their whole plant network. The modern equipment and machinery has lowered operating costs. Also, they’ve renovated their product architectures. Instead of just being a bulk processor, they’ve moved into some upmarket and higher margin segments.

Money is flowing out of consumer related areas, and into the more cyclical areas of the market. Their earnings came out and they were quite good. They are building a large cash position and buying back stock, so are doing all the right things.

He still likes this. Everything is going well for them. Margins are improving, the balance sheet is pristine, they have a lot of extra cash, and have been looking at acquisitions. The recent dip and underperformance in the share price is entirely related to this sector rotation, where people don’t want to be in safe food stocks, but want to get into cyclicals. A weaker Cdn$ will benefit them and a stronger US economy will benefit them. There could even be a possibility of them being acquired by a US company.

They’ve done an incredible job of transforming their business from 25-26 plants across Canada down to 5-6 and have become much more efficient. Margins have gone up, and at the same time, a few years ago they sold their big position in Canada Bread to a Mexican company and got a lot of cash, so their balance sheet is a fortress. Have no debt and has $300 million cash, so are in a good position to either make an acquisition, increase the dividend, buy back shares, etc. Still trades at a discount to some of its US peers. Feels that ultimately a big US company will make a bid for them. Dividend yield of 1.19%.

A nice steady company for what could be a rocky market environment. The dominant company in Canada for branded protein products, pork, bacon, etc. Has gone through a massive transformation over the last 5-6 years. They’ve gone from 20 some odd manufacturing facilities, down to 6, which has helped margins increase substantially. In an enviable position with a very strong balance sheet. Sold their stake in Canada Bread a few years ago, and as a result have $300 million in cash on their balance sheet, and no debt. This gives them the ability to probably deploy $800-$900 million of capital through acquisitions, share purchases and dividend increases. If they do that, the valuation discount, versus some of its US peers, will close. This is a business that is going to continue to see margin expansion. Dividend yield of 1.6%.