Chris Blumas

In the investment markets, there's never a shortage of uncertainty. But a lot of it's coming to a tipping point right now, prefaced by where we are on the valuation side. Not to say that things couldn't keep going, but it's more of an orange flag to be a bit more cautious.

Yes, and that reflects the interest-rate sensitive nature of the economy in NA. As central banks increased interest rates to cool things off, there's a lag as to when all that has an impact. All that filtering through is what we're seeing now. That's why the cuts have been so aggressive.

The view now is that it's going to be sharper and shallower, but we'll hear a bit more later this afternoon with the Fed.

Yes. A continuation of the theme for quite a while, as growth has been bid up and has become expensive. In a market like today, companies that don't grow as quickly but pay a really good dividend tend to be more defensive. There's still some good value there.

When he looks across his coverage universe, a high percentage of names in the income bucket are buys for him compared to names in the growth bucket.

Tough time for BCE, just look at the chart. Spooked the market with expansion plans that people weren't anticipating. People own it for the dividend, lately that's been in question, could be cut down the road. Trading ~11x earnings, yield over 10%. 

Hard to sell when you're down this much, so hold and wait for a turnaround. You're giving up too much value to just say I'm down, and I don't want to see it anymore. Hopefully, there's some rebound down the road. The things you could transition into would likely have less value.

Not an unreasonable time to sell, given the economic sensitivity of the name. Stock's come up a bit recently. Consider something like TD rather than BNS.

Lowest multiple of the peer group. Lots of negative sentiment has put it under pressure, which might give a bit more upside over the longer term, while still providing you with income.

Lots of people were unhappy with the latest equity financing. Typical for income-focused securities. REITs and royalty companies tend to pay out most cashflows to shareholders; so when they want to do something, they need to raise equity. Makes it unable to deploy a counter-cyclical playbook the way a CNQ can. And in a cyclical industry, that's what creates the most value.

Became really focused on fundamentals. As a cashflow investor, that's what you like to see. Cashflows and margins have been improving. Valuation is the sticking point. Well run, but too rich for cashflows it's generating. He watches it and its free cashflow yield.

For growth stocks like SHOP, he looks at free cashflow yield instead of PE. You get to that point where you're burning so much cash, even though earnings look good. In lots of tech, the multiples will always look high. But if you look at price relative to cashflow from operations, or price to free cashflow, you get a better sense of how they're doing.

Biggest thing right now is the tariffs. Canada exports about 4M barrels a day to the US. The decoupling from the price of oil has to do with the risk of tariffs, not tax-loss selling, as that will affect the demand for Canadian crude oil. Another overhang is ESG; some people don't want any part of energy. Oil price has been weak recently.

Doesn't own, but watches quite closely. First-class operator. A good buy when oil pulls back. Very difficult in this space to be counter-cyclical, and this one does it well. Economic payoff profile for oil sands is very attractive -- big capex up front, but cashflow for a very long time.

A US name to look at if you don't want to deal with the geopolitical or the heavy-oil takeaway capacity. Those constraints wouldn't affect this non-Canadian name. Probably the lowest-cost operator in the US, and one of the lowest globally. Does well operating in the counter-cyclical model.

Sharp selloff along with the price of oil, and it's just to do with the economic sensitivity of the commodity. Yield is 3.2%.

A lot of people have to use them as they build up their savings, but he's not a big user of ETFs. They do have a massive advantage, and have attracted massive fund flows, when you compare their value proposition versus a mutual fund. Mutual funds charge significantly more as a management fee than an ETF.

With an ETF, you get a whole lot of everything. Some very expensive, some very cheap; some with good balance sheets, some with bad. His preference has always been to use ETFs, or the market in general, to frame your opportunity set. Then you narrow down the opportunities from 500 to the 10-20 you want on your dream team.

You want great business economics, good balance sheets, strong free cashflow. Those are the companies that can control their own destiny. When you buy individual stocks, you're a lot more conscious of what you're buying at what price and what return you're expecting. As you build up your savings, you may want to transition from ETFs to individual stocks that meet your risk parameters.

It's not only about individual stock-picking as a way to outperform the index. For clients who are retired, let's say, the goal may not be outperformance of the market. It's more risk management and certainty of cashflow.

Absolutely loves. Checks all the boxes on business economics, balance sheet, management team, and growth. The only miss is the rich valuation at 20x FFO. First-class compounder. Wait for a pullback to ~18-18.5x FFO.

Corporate budgets under pressure has dampened spending. Backlog has remained very strong. Hasn't grown as strongly as some peers. Sitting just above his buy price at north of 20x; for new $$, wait for a better valuation.