Mike Archibald

Market. It has been a frustrating year for Canadian small caps this year. Canada Goose and Shopify has helped to create some new interest. Cannabis stocks are something they have invested in, but they see the valuations as stretched. TRST-T is their largest holding in the space. The Saudi issues with Canada are not expected to be that big of a concern. The market was weak on Tuesday and he thinks that was selling by the Saudi’s before the announcement went public. The success of the US market indices has emboldened President Trump to continue to press his international trade and tariff policy.

Energy Sector. They are slightly overweight into energy, holding 25% of their portfolio in that space – particularly into E&P and service companies although the pipeline companies are attracting their attention now. Canadian energy has been undervalued by the market. He thinks the recent drop in WTI prices has tested the market, but the Canadian market has held its value reasonably well. The supply/demand balance looks favorable as Iranian volumes may soon decline. He thinks $65-$80 for WTI is likely going forward and this is favorable to Canadian holdings.

Dollarama vs Canadian Tire. He used to own Dollarama (DOL-T) and believes the growth will flatten out. He owns Canadian Tire (CTC.A-T) and the recent earnings surprise is not too worrisome to him. He thinks the CTC.A-T model to roll out directly to in-home sales will take time and does not believe the stock will go down much lower from here. Overall, he thinks it is a better valuation than DOL-T.

Dollarama vs Canadian Tire. He used to own Dollarama (DOL-T) and believes the growth will flatten out. He owns Canadian Tire (CTC.A-T) and the recent earnings surprise is not too worrisome to him. He thinks the CTC.A-T model to roll out directly to in-home sales will take time and does not believe the stock will go down much lower from here. Overall, he thinks it is a better valuation than DOL-T.

He has been following this one closely since the IPO at $6. They have evolved the company into a landed home building community, building master community centres, particularly in the sunbelt of the US. They are operating about 17,000 family homes. Recent earnings were positive. The market has not yet really appreciated the true value of this stock and it trades at a 15% discount to its NAV. It has struggled getting through $12, so will be watching to see if it can get to $14 soon.

They have owned this for some time. It has holdings in Mr. Lube, Sutton Group and Airmiles. They hold a lot of cash and have a dividend over 6%. He would continue to hold this. Yield 6%.

They exited their position when they announced an acquisition in the US a couple of months ago – and they were relieved they did so. The company reported management changes last night and took a write down on the Chicago dealership asset of $45 million – a third of the asset value. Same store sales were down again. It is a good business, but the value is not worth investing in at this point. He thinks the earnings per share will continue to decline.

It has been a large position in their portfolio. A great management team that has grown the volume from under 10,000 boed to 45,000 boed. They have decided to look for a strategic exit of the Colombia assets and this may have spooked investors. He does not expect management to do anything crazy. He continues to recommend holding it, expecting it to sustain $18.

This has been a bit of a disappointment for them as it has taken longer than expected to ramp up the activity in the US. He would continue to hold it. This will trade on contract announcements and they recently announced a winner in Georgia.

It trades slightly over book value and is cheap. There have been several write downs in the long term care assets they hold in the US. They will continue to hold it. As this a very liquid stock there may be some short-sellers. He continues to like the fundamentals going forward.

It has done very well, going into the consumer lending space. They put up another good quarter of earnings and margins continue to grow. This stock could continue towards $60 this year.

He has been underweight gold for some time as gold prices hang out near $1200 per ounce. You can probably find better investments elsewhere.

He owns TD-T instead as it has lots of US exposure. He prefers the liquidity and exposure into alternative markets of the major banks.

Unfortunately this company is too small to provide the liquidity they look for. The management is top-notch. Almost all their revenue comes out of Colorado and they are trying to grow into Texas. They may be at an inflection point and would continue to hold. This company should make a lot of money in the future as the incineration business to reduce flaring emissions for the oil and gas sector becomes more important.

He likes this stock as it runs specialty hedge funds and pays special dividends. The stock trades relatively cheaply. He expects to see continued consolidation in the sector and believes this may become a target in the future. (Analysts’ price target is $18.68)