Chief Inv Strategist & Sr. Portfolio Manager at Sentry Investments
Member since: Aug '13 · 69 Opinions
Preferred shares can be floating (cash flows are tied to rate), rate resets (every 5 years they re-issue with new rate) and straight perpetual (can be called any time). In this environment it is tricky. Markets were hit hard especially in the last few weeks and the rate resets were hit the hardest. It’s all in the hands of the issuer, so he has little exposure to preferreds.
Prefers an actively managed pool of corporate credits. You can’t get enough diversification in corporate bonds. If you want to move some of your corporate bonds into stocks, how do you trim your holdings – a bit of each? An actively managed corporate bond fund is more appropriate. 85% of his are in high yield corporate bonds.
Rising rates in the utility sector. There is a higher degree of certainty of the cash flows in the future so there is a lower discount needed to be applied when comparing to government bonds. Higher quality cash flows like these get hit harder when government rates go up. You are only positively affected when rates go down.
Cinemark USA Inc. 4.875%, June 1st, 2023 Bond. Second largest globally, third largest in the US in its space. There is expansion into Latin America. A block buster slate of movies in 2015/16 and they have confectionaries. They obviously only go into countries when they can be the 2nd or 3rd biggest.
Sinclair Broadcast (Television) Group Inc (SBGI.O) Bond, 5.625%, August 1, 2024 A local broadcaster in the US. They reach 38% of the population. They are almost like a toll road for the national broadcasters instead of relying on local advertisers. [They charge the national broadcasters instead of local advertisers]
Markets. Thinks we get a rate hike in June. The Fed minutes are overanalyzed. It doesn’t matter what everyone in the Fed thinks, it is a matter of when rates need to go up. Lots of professionals in the business have never seen the Fed raise rates (9 years ago last) and may overreact. He thinks the economic impact of a rate rise won’t be felt for 2 years. The odds are that Canada will lower rates. Thinks Canadian rates go up mid -2016 again.