Craig Millar

Markets. The back drop for stocks is not that bad. We had a volatile start to the year that we had to deal with. He reminds us it was like this last year. Financials almost everywhere in the world look good and are the biggest weightings in his funds. Commodities, especially base metals will remain weak for some time. We have real GDP growth accelerating in 2016 and reasonable valuations, high single digit earnings growth across the world. The emerging markets story is not performing well right now.

He did extremely well and now has moved on. He thinks now it is an opportunity to buy again. India has a strong growing service economy. Earnings estimates are attractive.

San Francisco based with a huge exposure to silicon valley. A mid-cap bank. They have grown loans and deposits by 20% each over the last 20 years. They just closed an acquisition that is attractive. They grow two to three times as fast as the typical US bank.

Beer business. The world’s only true global brand. 2/3rds of their revenue comes from emerging markets. It had a takeover offer that they turned down, but then embarked on massive cost cutting.

A Dutch Telco. They have a wireless business in Belgium they agreed to sell. They have a stake in Telefonica Deutschland, which they have sold part of and will sell the rest. The third part remaining is the domestic Dutch business: Fixed, mobile, Internet and television. He thinks they will get taken out after the first two businesses are divested.

Star Wars has been incredible. The stock is off quite a bit from its highs. The catalysts this time last year were Star Wars, merchandising, and the new theme park in China. Now ESPN is losing subscribers quickly, down almost 7% due to cable cord cutting or dropping packages. The good news is behind them now and all that remains is the ESPN worry. He has a lack luster outlook on it right now.

He really likes the financials. This sector is his number 1 weighting in his funds. He had an analyst in a while ago who was pounding the table on this one. This is a good one to enjoy ROE improvement and rising interest rates.

Dividend near 9%. Management keeps saying they will keep the dividend even if they have to sell assets. Ultimately if they have to cut, then they have to cut. This is a key risk. They are over distributing. They are spending more than the depreciation to maintain assets. On the plus side, they made an acquisition that has a lot of synergies, being accretive in a couple of years time. If you believe oil will firm up over the next couple of years then you could do very well in this one.

US Dollar Investments. He took his currency hedges off a couple of years ago and just in December, he put them back on. He took half his US$ currency exposure of the table 3 weeks ago and will take the rest off in the next few months. The Canadian dollar is going to strength a lot.

An international drinks company. These companies are typically secular outperformers - year after year after year. This was a top pick of an analyst he saw in Europe in November. Near term risk: expensive liquor is not able to be used as bribes in China any longer.

Industrial companies in the US are struggling with the high US$. This one is selling in Euros. He is very cautious on the industrials both in the US and in Europe. It’s a good company but he is not interested in the sector.

(Top Pick Jun 25/15, Down 9.58%) It outperformed the market last year. He is not worried that they were down in the last 6 months. This is for buy and hold for a long time.

(Top Pick Jun 25/15, Down 18.16%) It was off in the last 6 months. Oil exposure hurt them because 17% of their restaurants (e.g. Chilli’s) are in Texas. They made a significant change to their loyalty program that hurt foot traffic. They are addressing it. 10% free cash flow yield, 8% share buyback and 2% dividends. He still likes it.

(Top Pick Jun 25/15, Up 32.04%) There are a billion people in the world that wear glasses and contacts but 4.3 billion actually need them. 43 countries with 5800 stores. He will own this for years. It plays into demographics. They are a low cost operator.

Refocusing from China to countries with expanding manufacturing. China is moving from a manufacturing based economy to a service based economy. The problem is that those markets are closed to retail investors.