James Telfser

Effect of higher rates on corporate profits. Tricky environment. We've seen massive tightening very, very rapidly, which is going to impact the economy, and we haven't fully seen those effects yet. Lots of data is being thrown at us. The yield curve is very steeply inverted. Signals are suggesting that the economy 3-6 months out isn't as bright as some hope it will be. He's being cautious as the data trickles in to see what effects it has. So far, it hasn't had a massive impact. Lots of job openings, employment still very strong, consumer is in OK shape. It's taking a while for tightening to show up in the data.

Inverted yield curve. Short term rates are high relative to long rates. But it's inverted even short term vs. short term, so 12 months vs. 3 months. Lots of the yield curve indicators are inverted or close to it, which is usually a precursor to a recession of some kind. Bond market is screaming that we've tightened enough. He wants to see how that translates into the economy, earnings, and profit margins going forward.

Gold. Starting to pick away at some of the names in the gold space. In this environment the USD has been very strong, but it's backed off a bit and that's been positive for gold. As real yields start to come down, gold is looking attractive.

Fixed income. The fixed income market looks quite attractive now. A slowing economy is going to be a tailwind for bond prices as yields come lower on the middle side of the curve, maybe 5-10 year government bonds, which are looking very attractive.

Communications provider for work. Growth by acquisition, one blunder 2 years ago now that multiples have compressed. 75% of its revenues now come from SaaS. Profitable, 17-20% margins. Generates 15-20% of its market cap in free cashflow each year. Will take a while to bounce back, no one cares about small cap tech right now.

Impressive dividends and buybacks from the sector this year, likely to continue. Supply/demand dynamic still very tight, should be positive for free cashflow. Dividend is more than safe, should grow. Good to own for the next 12 months.

Struggling. Lower occupancy rates, labour costs are a headwind. Selling assets to drive free cashflow. Payout ratio north of 100%. Some risk to this name. Replacement cost of assets has gone up. Potential acquisition target. Undervalued for good reason. Yield is over 7%, probably not at risk.

Cheap. He owns auto parts companies in Canada. Volkswagen is a much better opportunity for a value investor. VOW is growing rapidly in EV space, one of the global leaders, owns parts of luxury brands.

Volkswagen is a really good opportunity for a value investor. Growing rapidly in EV space, one of the global leaders, owns luxury brands. Will take patience for clouds to dissipate around higher costs of production in Germany.

Earnings season next week. Chronic underperformer last 5 years. Leadership transition. He'd prefer RY or BMO. If you believe in a turnaround, could be a value play for a patient investor, but not without uncertainty.

Big mortgage loan book in Canada. Question marks around how Canadians are going to be able to handle higher interest rates. Domestic focus could keep a lid on multiple expansion.

Consistent performance, US exposure, fewer leadership risks. He'd choose this over BNS or CM.

Stable P&C business growing nicely in Canada. Cashflow from that is funding a US surety and specialty insurance business, which is wildly profitable and growing fast. Smart CEO. Good growth, high ROE, lots of optionality.

Doing all the right things, and then got hit last quarter. Ups and downs of the renewable space, higher costs to produce, and higher borrowing costs. Can't say dividend is 100% safe. High risk name now. Depends on your time horizon, will take time to bounce back. Insiders are buying shares.

Seemingly a great business, but look at how good it is at reinvesting into the business over the long term. Unable to show they can deliver sustainable higher ROE. Nice dividend, safe. He prefers more growth, such as TSU or IFC.