Jason Del Vicario

The long-term investor wants to own equities. It's well-established that equities outperform fixed income over the long term for the simple reason that equities have the unique ability to increase their earnings. Invest in equities for at least, by default, 5-10 years. The value of equities can fluctuate wildly in the short term. Have the mindset that this is a 5-10 year proposition. High-quality leaders and management of companies are not thinking next week, month, or quarter. They should be thinking 5-10 years down the road. Think as if you own the entire company, or at least a portion of it, which you do. Short-term things that are beyond your control are secondary to the operating and functioning of the business.

He groups the 29 business that he owns into a weighted grouping. Then he does a report twice a year to show the average ROC, growth in earnings, or debt/equity. It's difficult at the granular level to appreciate one business, so an aggregate assessment can help. Focus first on ROIC. Growth in earnings should be strong. You want debt/equity to be low.

Driven by acquisitions. ROIC has fallen. Better opportunities for new capital in Canadian tech such as CSU or TOI. Good, but not exceptional. If you already hold, hang on.

Tech stocks are, by definition, long-duration investments. That is, investors are looking to receive cashflows 5-10-15 years down the road. Versus, for example, resource companies where the visibility might be only 5-10 years down the road. For long-duration assets, the present value is more at the whim of interest rates. Rates are probably close to plateauing. With rapidly rising rates, tech stocks were punished by short-term thinking. Flipside has happened. Rates might start going down later this year, and this benefits companies that rely on debt to finance. These stocks probably went too far to the downside, and now the rebound is due to the perception of where rates are headed.

He has no idea whether it will outperform equities in 2023. This is too short a time horizon for him to comment. If you feel that interest rates and inflation are likely to stay low for the next 5-10-15 years, absolutely long-dated government debt will provide you with the best bang for your buck. Canadian investors benefit not only from the price going up if rates and inflation go down, but typically the USD gains against the CAD so you get a boost from the currency translation. You also get an interest payment of 3-4%. For people who don't need the money for 5 years, fixed income still plays an important role in an investment portfolio.

His #1 holding. Best creator of shareholder value on the TSX since it went public in 2006. Has done about 700 acquisitions. Exceptional capital allocation skills. Good for growth part of a portfolio. New spinoff, Lumine, is cut from the same cloth.

Listed on the Venture Exchange because when CSU spun it out, wanted to keep it off the radar and didn't want to pay high listing fees of the TSX. He hasn't examined the latest results, probably relatively good. Financials are frustrating, messy. If it can come close to replicating the success of CSU, should do well. Higher organic growth rate than CSU. Note that CSU won't announce any acquisition unless it's more than 100-150M. To find this information, you need to look at the underlying business groups. TOI has been active. This environment is more favourable to both TOI and CSU making acquisitions. Exceptional capital allocation skills. Good for growth part of a portfolio.

Doesn't own any Canadian banks. Scale advantage, favourable regulatory environment. Further competition in the space erodes their moat. If he were to own any banks, the two that stood out when he reviewed their financials 3 years ago were TD and RY.

He favours founder-run, founder-owned. Management has skin in the game. High, consistent ROIC of over 20%. Ability to reinvest cashflows and earn a high rate of return. Looks for the "hockey stick" true compounding of value. The conviction levels for stock weightings in his portfolio are 1, 3, 5, or 10%.

Doesn't own any Canadian banks. Banks and financials aren't what he wants to include in his stable. Banks don't really have a lot of opportunities for excess capital. Some have done acquisitions with varying degrees of success, but mostly just pay out a large chunk of earnings in dividends. Scale advantage, favourable regulatory environment. Further competition in the space erodes their moat. If he were to own any banks, the two that stood out when he reviewed them 3 years ago were TD and RY.

Doesn't own any Canadian banks. Scale advantage, favourable regulatory environment. Further competition in the space erodes their moat. If he were to own any banks, the two that stood out when he reviewed their financials 3 years ago were TD and RY.

Business is operating very well. Boom in profits and revenues during Covid. Now, earnings have gone back to trend, expecting to grow by 15-20% this year. However, Egyptian Pound has been decimated by 50%, and this really hurts when converted to USD. Company's been around for 40 years, not the first macro challenge. Geopolitical risk beyond his control. A 3% conviction rate for him. He's been nibbling at shares around 64 cents.

Most business is in Russia. The war in Ukraine got it delisted from NASDAQ, still trades in Russia. Still produces nice ROIC and free cashflows. Trying to find a way to deliver their dividend. Once the war ends, he hopes to get the shares back. Even so, he'd trim because of lack of founder ownership.

His top conviction weight. Exceptionally well run. Did another spinoff, and he expects the Lumine shares in his account shortly.

His #2 position right now, at an 8% weighting from a 5% conviction rate. Shares have done quite well. No direct competitor. Rabid fanbase. Deal with Amazon Prime. Long-term, bodes well. Asset light. No debt. About 100% ROIC, exceptional. Majority of earnings as dividends. Canadian investors are not subject to withholding tax on UK or HK dividends. Not founder-run, founder-owned, but he's convinced the founder ethic has endured.