Opinions by Paul Gardner, CFA | StockChase
1275
Paul Gardner, CFA

Partner and Portfolio Manager

ON STOCKCHASE SINCE Dec 2004

Avenue Investment Management
47 Colborne StreetSuite 300Toronto, ONM5E 1P8
T: 416.482.2004 F: 416.482.0007 pgardner@avenueinvestment.com
http://www.avenueinvestment.com/


Opinions by Paul Gardner, CFA


Signal Opinion Expert Chart

2017-09-13

N/A
A Comment -- General Comments From an Expert 

Market. The Canadian economy roared ahead of 4.5% growth in the 2nd quarter, the TSX is not participating in the global rally. By the end of the year, Canada should probably flip, and outperform a little against the US and its global peers. Global demand has reached an all-time high for energy demand for oil. We are getting close to 100 million barrels a day which is somewhat positive. The numbers for most banks were stellar despite the low interest rate environment. There is a big sale going on in the utility spaces and energy-like yield spaces, and that has to be revalued. A lot of those types of businesses, which are actually incredibly stable, are sitting at 6%-7% yields, but you have 10-year bond yields at 2%. All boats will probably lift as long as we have synchronization of global growth.

Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $0.020
Owned: _N/A

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2017-09-13

COMMENT
A Comment -- General Comments From an Expert 

Split $300,000 into 3 diversified dividend holdings with at least 4%+? Utilities are on sale, so you would have to take one third and buy a utility or an energy name such as Inter-pipeline (IPL-T) which gives you a 6%-7% yield. If you literally gave no valuation to the natural gas and liquids business, the payout is very conservative and you get 6%-7% guaranteed. His 2nd choice would be banks which is giving you a 4% yield. There is a case to be made on REITs because of the ultimate yields, but you are probably not going to get any more capital gains out of it.

Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $0.020
Owned: Unknown

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2017-09-13

COMMENT
Pure Industrial Real Estatetrust Trust (AAR.UN-T)

He likes this company. Real estate has headwinds, but this company has a tailwind because it is industrial. Also, they are buying assets in the US which has extensive corridors with a population base where there would be some desired locations to own in the Midwest and in secondary cities. Yield is around 5%. They are pretty good at what they do. He would like to own this, but at the right price.

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $6.480
Owned: No

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2017-09-13

TOP PICK
Altagas Ltd (ALA-T)

Incredibly cheap, and mispriced. The market doesn’t like that they made a transformational acquisition of WGL, the US utility. It is going to have to go through a year’s worth of regulatory reviews, but it will double their earnings, and effectively their yields and dividends will increase in about a year’s time. They beat numbers last quarter. Dividend yield of 7.6%. (Analysts’ price target is $33.)

oil/gas
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $27.590
Owned: Yes

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2017-09-13

PAST TOP PICK
Aecon Group Inc (ARE-T)

(A Top Pick Feb 17/16. Total return 7%.) Convertible 5.5% bond due Dec 1/18.

contractors
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $17.780
Owned: No

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2017-09-13

COMMENT
Artis Real Estate Investment Trust (AX.UN-T)

Was expensive at 13-14 times to AFFO, and traded at a premium to its BV. Got hit with Calgary and over exposure to Alberta. They are reducing their Alberta office space. Industrial and retail seem to be doing all right. They are trying to grow their US asset base, and have new properties in Houston and Phoenix. About 40% of their assets are now in the US. However, in the last 3 months, the US$ has gone down. They are trying to reinvigorate their company, because they got caught.

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $13.100
Owned: Unknown

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2017-09-13

COMMENT
Bank of America (BAC-N)

Your favourite US bank? Thinks this is the most compelling story. It trades at a significant discount to all the other banks, at about 8.5X BV. Their biggest problem is that they issued a massive amount of shares in 2008-2010, so their capital ratios are completely online. On a risk adjusted basis, he thinks this one offers the greatest return over the next 12-18 months.

banks
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $24.330
Owned: Unknown

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2017-09-13

COMMENT
BCE Inc. (BCE-T)

Out of all the telcos, he likes this one. Their free cash flow yield is around 6%. Has a ton of free cash flow to either buy back or increase dividends. Fibre to the home is almost 2/3 done. The iPhone release is going to be positive for them. They have the lowest wireless attribution to their overall revenue numbers, so they have the most upside. Their biggest problem is that the wire line is decaying. Dividend yield of 4.9%.

telephone utilities
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $58.250
Owned: Yes

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2017-09-13

HOLD
Boardwalk REIT (BEI.UN-T)

Missed very big last quarter. One problem is that most assets are in Calgary, Edmonton and Saskatchewan, and the rental market there has been incredibly weak. There are signs of stabilization. The trouble is they are competing with condos, and they have large buildings. Last quarter, they came out with a significant amount of capital expenditures they have to put into their buildings. The positive is that they have a balance sheet that allows them to do CapX spending. Fantastic management and they are the biggest shareholder. Getting closer to the bottom and there is some stabilization. If you own, stick with it, but don’t buy it. Distribution yield is 5.7%, which he thinks is pretty safe.

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $39.030
Owned: No

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2017-09-13

TOP PICK
Baytex Energy Corp (BTE-T)

A 6.625% bond maturing in 2021. Made a big acquisition in the Eagle Ford of Texas. You are getting nothing for the heavy oil business in Canada. If push came to shove, as the debt holder, he will get the Eagle Ford asset if it is ever restructured.

oil/gas
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $3.340
Owned: Yes

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2017-09-13

COMMENT
Canadian Apartment Properties (CAR.UN-T)

When talking apartments, where are they located? Most of these are located in Ontario. It has done incredibly well because the Ontario economy has done well. They don’t have much exposure in Alberta, but they do have some in the Netherlands. A good company. They are not over distributing their balance sheet, so he does like this. Rent controls are back on which is not a big thing for this company, but also not a great thing. Trading at about 16X Price to AFFO, on the high side historically.

investment companies/funds
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $33.490
Owned: No

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2017-09-13

COMMENT
Cineplex Inc (CGX-T)

Something he owned, but got out too early. Management is fantastic. The last quarter, the AMC’s release in the US scared him. They came with guidance and missed their numbers. You could skew this to the box office content. The blockbusters were not in it this year. Has a feeling that the window is smaller for theatrical releases. Also, feels there is less tendency for people to go to the movies. They have some side businesses which are really good. The concession business is decent. Their new Rec Room proposition is fantastic, but that doesn’t move the needle. Thinks there are tremendous headwinds for them.

other services
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $38.440
Owned: No

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2017-09-13

PAST TOP PICK
DH Corporation (DH-T (Dead))

(A Top Pick Feb 17/16. Down 20%.) This got privatized.

other services
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $25.490
Owned: No

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2017-09-13

COMMENT
American Hotel Income Properties (HOT.UN-T)

They were always known as the railroad hotel as they had contracts with railroad providers. That is now only about 20% of the REIT. They focus on secondary markets in the US and have brands including Marriott, Hilton and Holiday Inn. They came in with numbers that were light. Margin compression was happening at the rail side of the business. There were also some timing issues with regards to a couple of the new hotels. This is a play on US GDP growth. With the US$ where it is, this is probably not a bad time to have US assets. He would like to see another quarter numbers. About 78% payout ratio which is normal. Distribution of almost 9%.

investment companies/funds
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $9.040
Owned: No

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2017-09-13

PAST TOP PICK
JP Morgan Chase & Co (JPM-N)

(A Top Pick Feb 17/16. Up 61%.) Their investment banking arm has done incredibly well. Their trading arm, even though they had soft numbers over the last year, has done well.

Financial Services
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Management

Price: $91.150
Owned: Yes

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