Alexander MacDonald

A year or so ago, everybody was debating hard vs. soft landing. As we moved through last year, the Fed really couldn't have asked for much more, keeping rates up and having inflation slowly come down. US unemployment is still incredibly low by historical standards.

Now, employment is still strong, and inflation is still stubbornly hanging in up there. Calls are for fewer than 2 rate cuts through 2024. Whereas in 2023, expectations were for 4 or more cuts.

Interest rates are like a tide that pulls equity valuations down. Fewer rate cuts will impact equity valuations going forward. Some concern in early April, when market valuations pulled back, as the market anticipated fewer rate cuts for this year. Luckily, earnings season is now 80% done in the US. Earnings growth is very strong, hasn't been this good in about 2 years. YOY earnings growth up about 5%, revenue growth up 4%. Investors are starting to look more to the fundamentals, the underlying growth of companies. Economic growth is still hanging in pretty well.

Next week on May 15, US numbers come out for CPI. That's going to be a big indication of whether those 2 rate cuts that are priced in will happen by year's end or not, and that will impact equity valuations.

Companies with floating rate debt are hurt when rates stay elevated, paying a lot more in interest expenses. Also affects their valuations, as equity investors will penalize struggles with debt. Higher interest rates really affect some of those highly levered companies.

Medicare side really squeezed on costs, government prices can't keep pace. PBMs are always a target in US. Always looks cheap, single-digit PE for a long time. Not interested.

More and more, content is being created for streaming platforms. The "theatrical windows" it used to be able to benefit from are getting shorter and starting to disappear. Struggling on growth. Elevated debt.

Has done very well. Benefited more than others from capital markets business, as opposed to traditional lending/deposit business. Capital markets results can be lumpy and tough to forecast. Hard to argue with its growth. International exposure in Cambodia, mostly in Quebec. He prefers a more national footprint.

As for a stock split, not something he focuses on. Whether your pizza is cut into 4 pieces or 8, it's still the same amount of pizza.

Traditionally, its fortunes are tied to drilling activity and oil prices, though it has diversified. Can be volatile.

Last quarterly report was underwhelming. Regulatory fines and lawyers fees. Stuck between different rocks and hard places that have strong negotiating power. Great service. Long-term profitability is the question. Generous valuation.

EV industry has slowed after tons of hype in 2023. Shift to EVs is measured in decades, not in years. See his Top Picks.

Always looks expensive. Phenomenal job of underlying business. Very well run. Wishes he had a time machine to go back and buy it cheaper.

Invested premiums is what's made them money. Now a conglomerate. Very good allocator of capital, good acquisition decisions. Succession is one of the big questions, but seems solid. Very strong company.

Exposed to rising interest rate payments on debt used to buy properties. Good yield is in competition with no-risk bonds. In the space he owns CAR.UN instead, which is multi-family housing.

Exposed to rising interest rate payments on debt used to buy properties. Good yield is in competition with no-risk bonds. Multi-family housing. Tailwinds from immigration and housing shortage.

Rails in NA are an oligopoly. CP acquisition of Kansas City Southern is probably the last one we'll see in NA. Can't really go wrong with either. CNR valuation is more appealing. Industry has lots of tailwinds. 

Rails in NA are an oligopoly. CP acquisition of Kansas City Southern is probably the last one we'll see in NA. Can't really go wrong with either. CNR valuation is more appealing. Industry has lots of tailwinds. 

Note that this timeframe is short, since last October. His usual holding period is for at least 3-5 years. It was his Top Pick because it ran into some problems, stock sold off, giving him a bigger margin of safety. Stock's bounced back, happy to hold.