Martin Cobb, ASIP

He follows everything, always looking for opportunities. Now, the problem he has with resource stocks is they dig a hole in the ground, bring something to the surface years later, and then have to sell it for more than they paid. Cost-effective recovery rates are getting harder. It's a classic, cyclical, commodity-type industry; doesn't lend itself to the type of quality companies he focuses on at his firm. That being said, he likes today's capital discipline, and there are some opportunities in that sector in Canada and elsewhere.

He looks for quality companies with a long-established track record of profitability, free cashflow, and dividends. All of which tends to lend itself to larger caps, though today there are some opportunities in small- and mid-caps.

BOOK decided to be an agent only, so they take a commission on every transaction. Operating margins of 30%. Investors like the capital-light model, giving it a higher multiple between high 20s or almost 30x PE. Today though, PE in low 20s.

EXPE buys hotel rooms in bulk and then resells them; takes more risk and more capital. Operating margins of 10%. PE usually around 20x. PE today is in low teens. Though not as good a business, valuation discount is excessive. Better risk/reward.

BOOK decided to be an agent only, so they take a commission on every transaction. Operating margins of 30%. Investors like the capital-light model, giving it a higher multiple between high 20s or almost 30x PE. Today though, PE in low 20s.

EXPE buys hotel rooms in bulk and then resells them; takes more risk and more capital. Operating margins of 10%. PE usually around 20x. PE today is in low teens. Though not as good a business, valuation discount is excessive. Better risk/reward.

Great business. Recent results beat, high growth rates. Problem is how much you're paying for that. It's not that it's impossible for it to deliver the solid growth that would justify its valuation, now over 160x PE, but improbable.

Possibly the most attractive bank today. Adding recently on its valuation discount. Likes banks with a very strong Canadian position. Trades at 1.2-1.3x book.

That's a question every company should be asking. It takes a long time for technology to disrupt an industry. OTEX has to keep investing to stay relevant, and AI might be an opportunity. Not particularly high growth, but they chalk up free cashflow. Buys back 10% of shares every year.

In the short term, company operations matter. In the long term, capital allocation matters a whole lot more.

Very tough, competitive market. Chances are that over the next 1-3 years, competitive environment likely to get better. It, along with BCE and Telus, still controls 90% of mobile phone traffic; cheapest of the 3. Management issues. Likes consolidation and monetization of media assets. 

He doesn't worry too much about tariffs, given BN's geographic diversity and type of operations. Great business, well-positioned long term. Valuation discount not as appealing as in the past. Be mindful of your position size.

He had a bit of fun with ChatGPT doing a 25-year regression analysis of America's GDP growth and the S&P 500. The correlation ended up being less than 0.1, utterly meaningless. The stock market's a leading indicator and more likely to tell you what's going to happen to the economy, than the other way around.

In 2022, the fear that dominated investors' minds was that interest rates were going to stay higher for longer. Well, they have, yet markets have progressed substantially. So don't get too hung up on trying to predict the economy if you want to work out what's going to happen with the stock market.

Corporate profits are inextricably linked to nominal GDP over the long term. In 2000, we had the best US economic growth outside of the pandemic recovery, but the stock market fell 10%. In 2009, coming out of the global financial crisis, the US economy contracted by 2.5%, and the stock market was up almost by a quarter.

Buying cruise lines during any type of viral outbreak is typically a great buying opportunity. However, he bought early on in the pandemic and that was a mistake :(  Likes its wonderful assets that they can move around and pay little in taxes. New suite of ships. Aging demographics. Likes the travel theme.

Don't ever be anchored to what you paid for a stock; otherwise, it makes you behave badly. 

Dislikes it because they didn't fix their manufacturing, or outsource it, and now they're a couple of generations behind the likes of TSM. Until they change strategy they'll just keep pouring capex into manufacturing, and returns won't be good. 

The leader. He took some profits. Though there are plants in the US, it's not going to move leading-edge production offshore from Taiwan. Recommends reading Chip War by Chris Miller.

Entirely a liquids pipeline business. He likes it because there's no growth, so there's very little you can do with it. Management has nothing to spend $$ on, so it'll return cash to shareholders. Yield is 7-8%, reasonably well-covered by cashflows, should grow to some extent.

UK banking sits somewhere between the Swedish/Canadian model and the US model. Fewer players, strong and well-protected balance sheets, growing organically. It's OK, but you are exposed to the UK and its pressures on consumers, housing, and the economy. Valuation is OK. He'd prefer a Canadian pick. Yield is 2.9%.