David Driscoll

We've gone from risk-on trading in 2023-2024 when the Mag 7 dominated to risk off where Europe is up and the US and AI are down. The USD is down, the Euro up by 4%. Everybody is running for covers in bonds and preferreds (yielding 5%). Diversification is paying off now. The last time the market went all in then sharply backed off en masse was 1999-2000, the internet bubble. In 2011, we saw similar volatility during the Euro debt crisis (i.e. Greece) and 2018 when Trump launched the trade war against China. Rising interest rates will hurt tech stocks and small caps and will limit the USD.

The large Spanish banks are up 40-50% this year due to more tourism spending there, plus the bank's diversification across Latin American. They may leave the UK and its high taxes and laws. But the Spanish banks are 3x riskier than European ones, because the Spanish one's non-performing assets are 3% vs. the 1% average. Take this with a grain of salt. SAN is having a great year, but is coming off previous lows.

Is -17% this year and -42% the past year. It went too far too fast. He's been buying more on the way down, because obesity won't change, so their weight-loss drug will keep selling. Tariffs: NVO has facilities in the US already. 60% of revenues are outside North America (vs. Eli Lilly's 60% within US). To extend patent protection, a pharma company just needs to change its formula every 3 years to extend the patent protection. There will be competition, but NVO has brand recognition and scale.

Free cash flow is still rising, and revenue growth remains 6-8% which allows acquisitions and in turn lifts earnings. Debt payments reduce debt, good. They grow 2-3x faster than GDP. Colostomy bags and bandages will remain in demand. Shares will rebound. He's owned this a long time and will keep buying.

Their focus is less Europe, more Asia and Middle East. To do this, they are laying off a lot of staff. Return on invested capital is only 6%, but the cost of that capital is 7%. Negative, despite a 5% dividend that won't rise.

He never owns car companies, because their capex is well beyond their free cash flow. But Ferrari is best in class, because collectors will pay serious money for their custom cars. Ferrari have pricing power, not Mercedes, BMW, etc. RACE boasts 18% dividend growth. Start with a partial buy.

Hold both LLY and NOVO? No. Choose one or the other. LLY sells more diverse drugs and more North American focused.

Is a domestic US company, so it faces no tariff risk. Is Trump cuts taxes 15%, this adds 20% to growing earnings for PAYX. Margins have been growing, and they just bought a company that will accrete to earnings (they report tomorrow). Trades at a high 28x PE, but the dividend grows 10% annually. Has owned this 30 years.

All his past picks on this date were small-caps and chosen, based on him expecting US interest rates to fall. All were turnaround plays. He used dollar-cost averaging. AFX peaked in March 2024, fell in July and since up slightly. Is turning around now. Fell because Chinese sales weakened, but that is recovering now. Is buying more.

All his past picks on this date were small-caps and chosen, based on him expecting US interest rates to fall. All were turnaround plays. He used dollar-cost averaging. Fading interest in small-caps now, but he still likes ENGH. They are a serial buyer of private companies at good prices. Margins are rising so are increasing the dividend to 4.5%. But they're not large nor liquid. Is adding at these levels.

All his past picks on this date were small-caps and chosen, based on him expecting US interest rates to fall. All were turnaround plays. He used dollar-cost averaging. SXS demand has fallen, but acquisitions are paying off. The dividend is rising, now 3.5%. Also, the UK pound is rising against the CAD. He's still buying.

Are protected from the giants (Rogers et al) because the CRTC is helping CGO get more wire lines. In the US, Cogeco is moving into streaming services, so they don't need to spend as much on capex as the giants. US operations are growing faster than here. So, their debt is lower than the giants. Is like an asset-lite telco. Can increase their dividend 10% annually, unlike Rogers. Pays a 5.5% yield. Low risk at 0.8 beta.

Their edge is their content library. Doesn't pay a dividend, so be disciplined: if you double your money, sell half. Any business news will punish shares. 

The controlling shareholder wants to sell the gas stations and keep the refineries where the margins are higher and sit on lots of real estate. He doesn't own the shares, but the bonds which pay 6% during falling interest rates. Not investment-grade bonds, so the leverage is high.

They make simulators for both commercial planes and fighter jets. That's how he's playing increased defence spending in Canada.