Jerome Hass

Marijuana. Doesn’t believe any of the current players will ever make money in the marijuana business. In Canada, we have to heat greenhouses in the winter and cool them in the summer, when compared to someone in a more temperate climate, who doesn’t have any of those costs. In Ontario, they are going to be marketed through an LCBO equivalent which is going to be a high cost structure. Doesn’t think they will be able to put the black-market out of business.

Supplies physical foreign exchange. They’ve diversified into the payments business, which has caused a few headaches for them in the last few years. It is still not in profit mode. There was a lot of excitement last Sept/16, when they got their bank license, and it was thought they would take the Canadian market by storm. The reality is that it has been a tougher slog in the Canadian market. Incumbents were a little more resilient than what had been thought. Q3 had record revenues, but expenses were a little higher than expected. Expenses continue to grow. Sold his holdings this summer, largely on valuations. It is difficult to justify the stock given its outlook for growth and profitability.

Plugged his nose and bought this a year or 2 ago, because he has Short positions in the airline sector so is using Air Canada for hedging purposes. It had a phenomenal run this year. He would be cautious about adding to it. It should trade closer to its American peers, and is trading at a discount, so he does see some upside.

Doesn’t know this company very well. They essentially supply equipment to semiconductor manufacturing companies. The risk is that there is a fair amount of cyclicality in the semiconductor industry. If you think the semiconductor industry is cyclical, then those that supply them would be even more cyclical.

A very steady business. Just built a new plant in Toronto. There is a potential for them to make an acquisition or to build a plant in Vancouver. His concern is that when they have built plants in the past, it’s taken time to fill the capacity of them. He is cautious. On top of that it has always been pricey as a stock. Hard to see where the upside is in terms of valuation. Dividend yield of 3.1%.

There has been a lot of negativity weighing on the common shares, and conversely, Canaccord (CF-T) seems to have done a lot better over the last 1.5 years, so people have often looked at the difference between the 2. Canaccord is more heavily weighted towards cannabis stocks, which have done very well. Also made an acquisition a year ago of First Energy, which hasn’t worked for them. In terms of Preferred B shares, which he owns, it gives a decent yield, and at some point, thinks GMP and its wealth management side could be a potential interest to a 3^rd party. He would rather own the Preferred B then the common shares.

He is still very confident in this. In Oct /16 they announced a privatization plan, and hired Goldman Sachs to lead the process. Had set a guidance on privatization by the end of June/17. Shortly before that, they announced privatization had been delayed, so the share price sold off. Management still expects something to occur in the fall, and still remains positive. A very good business. The underlying capacity has actually grown over the last 1-1.5 years, so when they do re-start their lending, the capacity of the company will be something that will be taken into account by potential buyers. When they announced the delay, they also announced they were exploring opportunities with private debt funds, which is something that hadn’t been taken into account. 12% dividend yield is a red flag to investors, but the leverage of the company is 25%-30%, and management feels it should be closer to 70%. They will absolutely use their balance sheet to fund the dividend, and there is no way they will cut the dividend.

(A Top Pick July/16.) *Short* Up 74.69%. A lithium ion battery company. Made an acquisition in Germany, and the head of the company had to pay $250,000 to OSC over a disclosure that the OSC felt was a bit rosy. His analysis suggests this is worth significantly less then the current share price.

(A Top Pick July/16. Up 44.92%.) Investors like this name because of its predictability. When a quarter starts, because of so much recurring revenues, they already know what 90% of revenue is going to look like. Because of this, they spend the last 90 days of the quarter trying to get the next 10% in. It is always a non-event when they come out with quarters, and portfolio managers love that, and pay up for it. A growth story and a play on global trade and on increasing returns on cross-border traffic. A very good, long term story.

(A Top Pick July/16. Up 27.57%.) He still thinks the street is not giving them enough credit for the sub-metering business. There is a fair amount of excitement about an acquisition they did in the US and Canada, called Service Experts, which is more on the service side for HVAC business.

Has a Short position. It is so widely held by Canadians, portfolio managers, and virtually every mutual fund. Has always traded in a band of $48 and $52. Their Q2 numbers were way down as a result of a very poor box office. People underestimated the cost of the launch of the new ventures, and it finally broke out of that band and gapped down to around $37. A good company, but trades at twice the valuation of its US peers.

Last time he looked, this was pretty expensively priced. Has met with management, and it is pretty impressive. The kind of a name he wished he had bought.

Has looked at this over the years, and never thought they charged enough for their product. They hold about a dozen investments and collect a royalty off of that. He would be very cautious on this. If you own, you might consider taking your money off the table.

Produces succinic acid, an intermediate product that can be used in things like plastic, artificial leather, etc. The asset is generally made in Asia and from petroleum products, but they make theirs from industrial sugars, which is generally cheaper than that made from petroleum. They just haven’t executed on anything, so it has been one of the worst investments he has had this year. He questions if they will stay in business.

Provides a very specialized ERP system that tends to be focused on warehouses. If you have a complex distribution system, this company will come in if you can’t get it to work through SAP (SAP-N) or Oracle (ORCL-N). The stock traded off in the last quarter, largely because of issues with Samsung. The street is not sure if this is a one-off with regards to Samsung, because they wouldn’t discount to the extent that Samsung wanted. It has been a very high growth story in the past, and has been trading at lofty multiples. When you hit a hiccup and you have a high multiple, you get a big correction in the share price.