Jeff Young

Markets. OPEC didn’t help us at all by not cutting oil prices. Also, there is tax loss selling because of weakness in the oil stocks and weakness in the cyclical stocks. US investors have concerns about Cdn Banks, especially with the loan loss provisions going up and challenges they are having with growth. You have to really pick your spots on an individual company basis. This is one of those markets where things have been working, so in Canada things that have a lot of revenue growth from outside of Canada and a lot of exposure to the US, have been working very well and consequently are quite expensive. Growth is very patchy around the world, so if you are looking for growth now, the US seems to be the place to be. He is expecting GDP and earnings growth to be positive globally next year. Doesn’t expect it to be a runaway success, but there will be spots that you can pick to do well.

A stock that did very well in the run-up of the oil sands, and it got quite expensive. It was priced to keep growing. Thinks it was 22X EBITDA, and it is now 11, so the premium has come way out of it. There is not a lot of direct commodity exposure, although they are exposed to volumes of the oil sands.

Key metrics to focus on comparing it to other railways? Network speed and operating ratios is something you look at in the rails. He sold his holdings and switched into Canadian Pacific (CP-T) where he sees more improvement in operating ratios. (See Top Picks.)

He likes the business and the management team. They took a deal to the market to get a more permanent source of capital to help fund their development business. The market appetite just wasn’t there, which may have put a bit of a damper on the stock. Thinks they’ll grow through it. Have a good asset management business and single-family rental business in the US. Over time it will be fine. They tend to be pretty shrewd operators.

This is a regulated utility and he doesn’t think there are any issues with the dividend. Doesn’t expect there is a lot of growth in the near term and there could be a bit of pressure if rates start to rise quickly or unexpectedly. The business is sound.

The company is doing the right things. Their assets are good. They are just caught in this malaise of the price of gas. The longer that goes on, the more difficult it is for them to survive. Doesn’t see any immediate threat, but is now focusing on what he considers to be safer bets.

This is a royalty company. They have been buying assets from producers who are looking to raise capital. Thinks they are now over distributing, so there is potential of a dividend cut. He didn’t buy into it because he thought the valuation multiple was too high.

Mastered Limited Partnerships were very popular for a while, but have been under a lot of pressure over the last year or 2. Feels this company has been dragged down with that. Their revenues are largely contracted so there are not real issues in the short term, but the multiples have been compressing. They have lots of growth prospects in pipelines, but people are worried that they’ll need to raise equity and the plans will get shelved which brings down the multiple. Reasonably priced, but it is going to take a change in sentiment before it turns around.

(A Top Pick Dec 8/14. Up 37.01%.) Predominantly US in their earnings and revenues. Cotton prices have cooperated. Have moved up from just being a maker of T-shirts, underwear and socks into a brand of their own. They have a near-shore operation so that they don’t do things in Asia, which he thinks is an advantage. Still likes.

(A Top Pick Dec 8/14. Up 4.96%.) Gas gathering and processing. Doesn’t have a lot of direct commodity risks, but it does have throughput risks. Its assets are in the right area, and he thinks they come out of this downturn better. Still likes it.

(A Top Pick Dec 8/14. Up 18.07%.) A REIT with their assets in the US, which is largely distribution warehouses. Good management. They have been going through a strategic review for the last 6 months, so he expects they will sell their portfolio as there is a lot of demand for their type of assets.

Recently bought this. It is cyclical, so you need to be a little careful. It has come down sufficiently so that the price warrants taking a position here.

He has a little bit and thinks it is cheap. Trading well under NAV. It gets about 40% of its Net Operating Income from the West. There is a lot of capacity coming on in the office space, both in Toronto and Calgary. They are doing the right things on leasing. This is one that he hopes will rise after the pressures of this year come off. The company has said they are not looking at the 13% dividend as it is fine and their cash flow supports it at the moment.

This is one commodity stock that he has added a little bit to. Likes their assets and the management team, and the valuation is good. Thinks the dividend is sustainable in the near term. Its safety depends on oil prices. There is no immediate pressure on it, but if oil prices stay at this level for the next 12-18 months, none of the dividends are going to be safe in any of these companies.

He likes management and their business model. They go into private businesses that need capital, and instead of them having to raise equity, they take a royalty off the top line. They’ve had a couple of problems with companies they invested in, but haven’t really lost a lot of money. Also, they invest in smaller companies, so as people get concerned about economic growth and the prospects of these investee companies, it puts a little pressure on them. It is cheap and over time it will grow. In an improving environment, this is a good company.