Market. He came into the year with a conservative frame of mind and more cash than usual. Valuations were too high at the start of the year but there have been good opportunities as volatility has gone up. In terms of FAANG stocks, he thinks they are hitting a wall in terms of what regulators will ignore. There is downside risk as new regulations are created, but he cannot yet tell how much. When asked which sectors he prefers, he said that his process is bottom-up, focused on individual stocks rather than sectors. However, the opportunities that have been most attractive this year have mainly been utilities and other stocks that people often think of as boring.

He prefers companies like Keyera to companies like Enbridge. KEY has reasonable level of debt, great cash flow visibility and a growing cash flow stream over time. He also thinks the management team is aligned with shareholders.

Canadian Banks. He doesn’t own any of the Canadian banks. He sees risk because of the level of consumer and mortgage debt. He doesn’t see attractive rates of return in the near future but if investors must hold Canadian banks, he would recommend a higher-quality bank such as the Royal or TD.

He prefers this to Manulife. They have been a consistent operator over time. They have gone through some softness in their quarters, especially in their auto division, but he expects them to raise rates soon to address this.

He finds decent value in the utility space now. This is a stable business. Rising rates can continue to weigh on this stock, but much of that has already been priced in. This is a high-quality business that will continue to grind out cash. It has growth opportunities in Florida and elsewhere.

He doesn’t own this. Airlines are very cyclical and are traditionally poor capital allocators. WestJet has been better with capital, but there are concerns after the pushing out of their CEO. The underlying issue might have been labor relations and perhaps the new CEO can manage this better. However, airlines are getting late in their cycle, so the sector has a lot of risk. WestJet is trying to grow internationally, which is inconsistent with their original focus on the local market using one type of plane.

This trades at a premium (compared to Manulife) now, and historically. The gap has widened recently. They have more fee-based revenues in their business, which is preferable. He generally prefers Intact Financial for insurance investments.

(A Top Pick December 27, 2017. Down 4.49%). This is a player in restaurant equipment. They have done a great job deploying capital into complementary kitchen equipment businesses. They do a great sales job, explaining the value of new equipment for water savings, energy savings, etc. Their margins have been under pressure but he believes this will improve over the year.