Brian Madden
Chief Investment Officer at First Avenue Investment Counsel
Member since: Aug '16 · 1806 Opinions
Rating Card
| All | 
Rating
| 
Big Win
| 
Win
| 
Neutral
| 
Loss
| 
Big Loss
|  |
|---|---|---|---|---|---|---|---|
| 4.64 | 203 21.57% | 234 24.87% | 154 16.37% | 200 21.25% | 150 15.94% | ||
| 1 Month | 4.77 | 8 3.31% | 81 33.47% | 85 35.12% | 64 26.45% | 4 1.65% | |
| 6 Months | 4.89 | 40 17.62% | 70 30.84% | 31 13.66% | 55 24.23% | 31 13.66% | |
| 12 Months | 4.88 | 57 26.89% | 47 22.17% | 21 9.91% | 33 15.57% | 54 25.47% | |
| 2 Years | 4.42 | 59 33.91% | 22 12.64% | 13 7.47% | 35 20.11% | 45 25.86% | |
| 5 Years | 4.22 | 39 45.35% | 14 16.28% | 4 4.65% | 13 15.12% | 16 18.60% |
Stock Opinions by Brian Madden
It's difficult to tune out, as it's pervasive, loud, and global. His team doesn't exactly tune it out, but they're resolute in their commitment not to trade in a knee-jerk fashion to executive orders, tweets, and threats. Time and again, we've come to learn that the playbook is to start with big/bully/bluff bets and then to walk back.
The risk as an investor to trading on a steady stream of reliably unreliable information is the risk of being whipsawed. Market action in the wake of liberation day (aka liquidation day) is a great case in point. His firm has made some fine-tuning and some tweaks within portfolios, but no radical changes.
It is probably a buy-ahead-of-tariffs situation. In fact the US had a negative print for GDP in Q1, and a lot of that was due to a massive surge in imports. The US recorded its largest trade deficit in history in the months coming into the tariffs taking effect.
Households were stocking the pantry and corporates were stocking the warehouses, getting products onshore before whatever tariffs were imposed. We're still seeing the tail end of that.
Looking pretty good, and that's the real conundrum for investors. There's the hard data (measured efficiently), such as employment, retail sales, and GDP. For the most part, the hard data is coming in just fine.
On the other hand, that's backward looking, so investors often rely on soft data from surveys of households or corporate executives. Purchasing manager indices are another good example. Those are coming in very squishy, not surprising given the noise surrounding trade, tariff, and policy confusion.
But as these relate to earnings specifically, in both Canada and the US we've seen the bulk of earnings reports come in. Just waiting for the banks, which we'll see next week. Most earnings are decent, showing growth YOY in high single digits or sometimes low double digits. So far, so good. Have to see what Q2 looks like.
Seeing analysts for both Canadian and US companies really ratcheting down growth expectations for remainder of the year. Now seeing consensus estimates of 6-7% earnings growth for the S&P 500 and the TSX, which has really come down a lot from the earlier estimates of 12-13%.
Not inclined to buy at this time. Chart shows the stock's not trading well. Covid was rocket fuel, but earnings have been flat to slightly down since then. Lots of White House noise about cutting funding for scientific research. Domiciled in US, but 50% of business is global export sales; EU escalated again today, there will be retaliatory tariffs.
Under lots of pressure. He's bought in recent weeks. Rare miss on Q1, lowered guidance. Medical loss ratios expected to be elevated for a few quarters; should recoup when premiums reprice in 2026. Recent CEO departure rattled investors further. Unconfirmed story of DOJ investigation for Medicare fraud.
Brand tarnished, but not irreparably. Not an immediate fix, but worth the wait. Long-term sustainable growth rate of 13-16%, trading at 12-13x PE. Market's overreacted, shares undervalued. Largest healthcare company in US. Healthcare sector is secularly advantaged by demographics and morbidity trends.
"Expensive" in terms of price per share is actually becoming less relevant because you can now buy fractional shares through some of the discount brokerage platforms. He doesn't own, but would be comfortable doing so. Today's as good a day as any to buy.
Good investment? Yes. Buffet is retiring and will be missed. Many people have learned a lot of valuable and timeless investing lessons from him. Berkshire has done a great job of planning succession and governance well, so the successor will have a good start. If Greg Abel has the endorsement of Buffett, that's good enough for his firm.
Portfolio of robust and resilient businesses with wide, competitive moats, and demonstrated history of generating free cashflow and paying dividends. Don't read too much into the cash hoard. It likes to be cash rich and patient, so it can write the big cheques when opportunities come along when there's blood in the streets.
Hitting record highs, and his firm thinks it's going higher. There's been an American exceptionalism trade on for more than a decade, and some of the lustre's coming off. Capital is returning to other regions of the world, including Canada.
Canada's uniquely advantaged by having one of the largest index weights in gold of any developed market in the world, and gold's been doing very well. That and a number of other factors under the hood advantage Canada, not the least of which is still a wide valuation disparity between our market and the US market.
Added to his portfolio in January. Has a long way to climb back, though not necessarily to the peaks of 2022. Prices of its component commodities are rising, amidst the backdrop of slowly improving prices for major agricultural cash crops. Margins are improving in South America.
Likes the chart, turned a corner last summer. Lots of upside. Discounted valuation. Prolifically buying back shares. Yield is ~3.7-3.8%, above its long-run average.
He continues to be bullish on gold. Still owns, but took partial profits just before it reported. Nothing against AEM, but wanted to spread the risk via another gold producer with more torque. Major thrust behind the move has been the gold price moving higher.
Sometimes ensnared in unfavourable headlines. Will probably prevail in US court cases. In his momentum mandate, continues to like and buy. Dominant player in digital advertising through Search, which makes up 70-75% of revenues. Really likes the cloud business (we may be in middle innings of cloud hosting). Lots of "other bets" that could pay off spectacularly.
Fears that ChatGPT and Perplexity could dislocate them in Search, but Gemini is being wired into the Search functionality and adding value to Search. Behaviour entrenchment in Search will be hard to dislocate. Remember that we use the word "google" as a verb now, which speaks to 25 years of habit-forming consumer behaviour. Will maintain its dominant position as long as it keeps investing in R&D and upping its game.
Won't be an immediate fix, but remember that the market is a forward-looking, discounting mechanism. Q2 earnings results were much better than expected. Biggest segment is Canadian personal and commercial banking, and that missed expectations. Sizeable outperformance in US retail, strong outperformance in wealth management, did very well in capital markets.
Most over-capitalized bank in Canada. Will be buying back a lot of stock. Working hard to remediate money-laundering deficiencies in US. All its plans should help to rebuild investor confidence and restore its premium multiple.
When making investment decisions, discard the idea of what your cost base is. It doesn't matter, it's water under the bridge. It's behaviourally and psychologically difficult to rip off the Band-Aid and admit that the initial decision was an error and to realize the loss. But remember that the loss is real already. What matters is where it's going in the future, regardless of what your cost is.
Stock sold off heavily in the last 2-3 years because it was anticipating the dividend cut, which finally came. Dividend is now sustainable. Total return expectations are likely confined to more or less what the dividend yield is. Doesn't expect shares to bounce back sharply in the short term. Look at Telus instead.
