Opinions by Paul Gardner, CFA | StockChase
1292
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/

1292
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
PAST TOP PICK

(A Top Pick March 28/17. Up 5%.) 6.625% bonds maturing 2022. A safer way to play the recovery, because the bond was under distress, but are backed by the Eagle Ford assets in Texas, one of the best fracing natural gas plays. Last quarter they came out with really good production numbers, as well as lower costs per well.

oil/gas

(A Top Pick March 28/17. Up 5%.) 6.625% bonds maturing 2022. A safer way to play the recovery, because the bond was under distress, but are backed by the Eagle Ford assets in Texas, one of the best fracing natural gas plays. Last quarter they came out with really good production numbers, as well as lower costs per well.

oil/gas
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$3.950
Owned Owned
Yes

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TOP PICK

6.625% bonds maturing July 19, 2022. He still likes this. Their numbers came out, and they not only had lower cost wells, but their production at the Eaglesford was much better than expected. It is a possible deleveraging story, but even with their stretched balance sheet, they can handle it. He likes the company, management and the execution of what they are doing.

oil/gas

6.625% bonds maturing July 19, 2022. He still likes this. Their numbers came out, and they not only had lower cost wells, but their production at the Eaglesford was much better than expected. It is a possible deleveraging story, but even with their stretched balance sheet, they can handle it. He likes the company, management and the execution of what they are doing.

oil/gas
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$3.950
Owned Owned
Yes

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COMMENT

Owns TVs and radio stations and have to deal with the bundling and the CRTC decision of not having to take all channels. That negatively impacts them. They’ve spun in Shaw media which are good assets, but this company is still pretty expensive relative to what they earn. They are struggling with the business model that is in decay. Thinks the dividend is sustainable, but it is going to be tough over the next 2-3 years. 8.4% dividend yield.

entertainment services

Owns TVs and radio stations and have to deal with the bundling and the CRTC decision of not having to take all channels. That negatively impacts them. They’ve spun in Shaw media which are good assets, but this company is still pretty expensive relative to what they earn. They are struggling with the business model that is in decay. Thinks the dividend is sustainable, but it is going to be tough over the next 2-3 years. 8.4% dividend yield.

entertainment services
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$13.570
Owned Owned
Unknown

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DON'T BUY

There are a lot of problems with this REIT. Their numbers came out and they missed badly. They basically own real estate mostly in Québec, and some Target stores that are repositioning. Their debt profile is soft, being BBB low. There is a good chance that they get downgraded to BB high which means they have to go for secured financing. Their execution has been poor.

investment companies/funds

There are a lot of problems with this REIT. Their numbers came out and they missed badly. They basically own real estate mostly in Québec, and some Target stores that are repositioning. Their debt profile is soft, being BBB low. There is a good chance that they get downgraded to BB high which means they have to go for secured financing. Their execution has been poor.

investment companies/funds
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$13.170
Owned Owned
No

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BUY

This sector is doing incredibly well. In the REIT space, industrial properties are benefiting from the technological move, because they can demand really good sized rents if they have the proper facilities. That is growing quite well versus retail or office, which are really having problems.

REAL ESTATE

This sector is doing incredibly well. In the REIT space, industrial properties are benefiting from the technological move, because they can demand really good sized rents if they have the proper facilities. That is growing quite well versus retail or office, which are really having problems.

REAL ESTATE
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$8.700
Owned Owned
No

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BUY

He owns the bonds. They have fantastic assets, and believe in not only growing their bottom line versus acquisitions, but also in the intensification story, such as core cities like Toronto. Their risk money is re-developing projects such as Yorkville, Lawrence or Liberty Square. Believes it is trading at a 20% discount to its NAV.

property mngmnt/investment

He owns the bonds. They have fantastic assets, and believe in not only growing their bottom line versus acquisitions, but also in the intensification story, such as core cities like Toronto. Their risk money is re-developing projects such as Yorkville, Lawrence or Liberty Square. Believes it is trading at a 20% discount to its NAV.

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$20.250
Owned Owned
Yes

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BUY on WEAKNESS

Most, if not all of their assets, are in the US. They have 2 kinds of businesses. One focuses on hotels/motels for rail employees. The second is the named hotels/motels throughout the US that are mid-tier. Very good operators. They are trying to expand and increase their franchise hotels. This is in a good spot. They don’t have too much debt and are growing. Thinks they trade a little more than what the sector does, so wait for a better entry point.

investment companies/funds

Most, if not all of their assets, are in the US. They have 2 kinds of businesses. One focuses on hotels/motels for rail employees. The second is the named hotels/motels throughout the US that are mid-tier. Very good operators. They are trying to expand and increase their franchise hotels. This is in a good spot. They don’t have too much debt and are growing. Thinks they trade a little more than what the sector does, so wait for a better entry point.

investment companies/funds
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$10.240
Owned Owned
Unknown

Must be logged in to use chart
TOP PICK

Trading at a discount to its NAV. Owns low rise in Alberta, but also a 3rd of the portfolio is in Surrey BC. They have a huge balance sheet, because they do not distribute any yield. They just retain their earnings and buy properties at cheap valuations. The CEO is a good executor on his properties. They are less cyclical than the high-rises in Calgary. (Analysts’ price target is $41.00.)

property mngmnt/investment

Trading at a discount to its NAV. Owns low rise in Alberta, but also a 3rd of the portfolio is in Surrey BC. They have a huge balance sheet, because they do not distribute any yield. They just retain their earnings and buy properties at cheap valuations. The CEO is a good executor on his properties. They are less cyclical than the high-rises in Calgary. (Analysts’ price target is $41.00.)

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$36.500
Owned Owned
Yes

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COMMENT
Transalta Corp(TA-T) 

June 1, 2017

This has struggled over the last couple of years as it got hurt by the environmental movement and the NDP government in Alberta wanting to shut down all coal producing energy assets. They are migrating from coal to natural gas and have 2 plants, Sundance 1 and Sundance 2 that are coal fired, which are going to close by the end of this year. That hurts their bottom line. Also, for the last number of years, they have been over levered. Their bond rating has always hovered below investment grade or just barely above it. Thinks it will be in the penalty box for another 6 months to 1 year because they don’t have the greatest of assets.

electrical/electronic

This has struggled over the last couple of years as it got hurt by the environmental movement and the NDP government in Alberta wanting to shut down all coal producing energy assets. They are migrating from coal to natural gas and have 2 plants, Sundance 1 and Sundance 2 that are coal fired, which are going to close by the end of this year. That hurts their bottom line. Also, for the last number of years, they have been over levered. Their bond rating has always hovered below investment grade or just barely above it. Thinks it will be in the penalty box for another 6 months to 1 year because they don’t have the greatest of assets.

electrical/electronic
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$7.660
Owned Owned
Unknown

Must be logged in to use chart
COMMENT
Toronto Dominion(TD-T) 

June 1, 2017

When the bad sales practices came out, they hit the banks. This bank admitted on their last quarter that they had no systematic issue. He would use that as an opportunity to buy. This bank had impressive numbers in their last quarter. Still trading at 11X earnings, and would be surprised if we didn’t see it doubling 10 years from now.

banks

When the bad sales practices came out, they hit the banks. This bank admitted on their last quarter that they had no systematic issue. He would use that as an opportunity to buy. This bank had impressive numbers in their last quarter. Still trading at 11X earnings, and would be surprised if we didn’t see it doubling 10 years from now.

banks
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$64.700
Owned Owned
Yes

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HOLD
Wells Fargo(WFC-N) 

June 1, 2017

This got hurt by its predatory sales practices. They are in the penalty box. The whole sector has been hit because interest rates have kind of retraced. Thinks the US banking sector is cheap. This one is generally the best of the whole asset class. It is only trading at 1.3X BV and 11X earnings. Its ROI is probably around 13%. A premier bank with great assets.

investment companies/funds

This got hurt by its predatory sales practices. They are in the penalty box. The whole sector has been hit because interest rates have kind of retraced. Thinks the US banking sector is cheap. This one is generally the best of the whole asset class. It is only trading at 1.3X BV and 11X earnings. Its ROI is probably around 13%. A premier bank with great assets.

investment companies/funds
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$52.080
Owned Owned
No

Must be logged in to use chart
N/A
General Market Comment 

March 28, 2017

Markets.  Everyone was euphoric when Trump got a majority republican congress.  The market has now spent 24 hours worrying about healthcare.  There would probably be a good mandate to see lower corporate tax rates.  Now he can allow companies to grow more without needless US regulation.  Earnings are string to bubble upward.  The market is not that expensive.  We need to see lower tax rates and deregulation, but we are now a lot less confident in a clear agenda.  World economics are strong enough now to drive stock prices upward.  Unemployment is dropping.  The Fed is raising rates.  We are seeing growth spurts from Japan and growth numbers in Europe.  Greece seems not to be an issue.  Canada is a proxy for global growth.

Markets.  Everyone was euphoric when Trump got a majority republican congress.  The market has now spent 24 hours worrying about healthcare.  There would probably be a good mandate to see lower corporate tax rates.  Now he can allow companies to grow more without needless US regulation.  Earnings are string to bubble upward.  The market is not that expensive.  We need to see lower tax rates and deregulation, but we are now a lot less confident in a clear agenda.  World economics are strong enough now to drive stock prices upward.  Unemployment is dropping.  The Fed is raising rates.  We are seeing growth spurts from Japan and growth numbers in Europe.  Greece seems not to be an issue.  Canada is a proxy for global growth.

Unknown
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$0.020
Owned Owned
_N/A

Must be logged in to use chart
BUY
General Market Comment 

March 28, 2017

Canadian banks.  They are expensive based on book value.  10 years from now, they will probably double.  Europe has some incredibly cheap banks so it would be a good idea to move some money from Canadian banks to Europe for diversification purposes. 

Canadian banks.  They are expensive based on book value.  10 years from now, they will probably double.  Europe has some incredibly cheap banks so it would be a good idea to move some money from Canadian banks to Europe for diversification purposes. 

Unknown
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$0.020
Owned Owned
Yes

Must be logged in to use chart
DON'T BUY

They have had the ability to grow and this is why they issued units.  Industrial space is the hot commodity right now.  17 times price to AFFO so it is on the higher side. 

property mngmnt/investment

They have had the ability to grow and this is why they issued units.  Industrial space is the hot commodity right now.  17 times price to AFFO so it is on the higher side. 

property mngmnt/investment
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$6.040
Owned Owned
Unknown

Must be logged in to use chart
TOP PICK
AutoCanada Inc.(ACQ-T) 

March 28, 2017

He just started buying this.  It was washed out because of Alberta exposure.  2/3rds of the dealers are privately owned and looking to transition out.  They should do well, even though nothing should happen for the next 6 to 9 months.  (Analysts’ target:  $26.50).

specialty stores

He just started buying this.  It was washed out because of Alberta exposure.  2/3rds of the dealers are privately owned and looking to transition out.  They should do well, even though nothing should happen for the next 6 to 9 months.  (Analysts’ target:  $26.50).

specialty stores
Paul Gardner, CFA

Partner and Portfolio Manager, Avenue Investment Ma...

PricePrice
$21.440
Owned Owned
Yes

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