Opinions by Michael Sprung | StockChase
3290
Michael Sprung

President

ON STOCKCHASE SINCE Oct 2000

Sprung Investment Management
25 Adelaide Street East, Suite 500Toronto, ONM5C 3A1
T: 416-934-7160 msprung@sprunginvestment.com
http://www.sprunginvestment.com/

3290
Michael Sprung

President

ON STOCKCHASE SINCE Oct 2000

Sprung Investment Management
25 Adelaide Street East, Suite 500Toronto, ONM5C 3A1
T: 416-934-7160 msprung@sprunginvestment.com
http://www.sprunginvestment.com/


Opinions by Michael Sprung


Signal Opinion Expert Chart
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General Market Comment 

December 13, 2017

Market. We are into tax loss selling which will put pressure on the upside going forward. People are becoming very wary of valuation levels. Since 2008, we haven't had any really significant setback in the markets. The underlying geopolitical factors are still at work. There are tensions in Europe but have been most predominant since 2008 with the debts of Italy, Portugal, Spain, etc. That ultimately led to the BREXIT vote. There are also tensions in Asia. The US itself is a big unknown right now because of NAFTA, which has been of particular concern in Canada. Despite that, the market has continued pushing ahead. He is in higher levels of cash than he was a year ago. That's about the only thing a prudent investor can do at this time.

Market. We are into tax loss selling which will put pressure on the upside going forward. People are becoming very wary of valuation levels. Since 2008, we haven't had any really significant setback in the markets. The underlying geopolitical factors are still at work. There are tensions in Europe but have been most predominant since 2008 with the debts of Italy, Portugal, Spain, etc. That ultimately led to the BREXIT vote. There are also tensions in Asia. The US itself is a big unknown right now because of NAFTA, which has been of particular concern in Canada. Despite that, the market has continued pushing ahead. He is in higher levels of cash than he was a year ago. That's about the only thing a prudent investor can do at this time.

Unknown
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$0.020
Owned Owned
_N/A

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TOP PICK
Alaris Royalty(AD-T) 

December 13, 2017

Invests in a diversified range of private companies in North America. A number of their investee companies ran into problems, and at the same time, they got into a dispute with the CRA. It's been a long work-out with a number of these companies, and a few are still outstanding, but most things are beginning to settle and stabilize. Some of the investments have been renegotiated and are beginning to contribute to cash flow again. The main point is that they are beginning to deploy capital again in a very significant way. This has limited downside, but great potential upside. Dividend yield of 8.6%. (Analysts' price target is $23.)

Financial Services

Invests in a diversified range of private companies in North America. A number of their investee companies ran into problems, and at the same time, they got into a dispute with the CRA. It's been a long work-out with a number of these companies, and a few are still outstanding, but most things are beginning to settle and stabilize. Some of the investments have been renegotiated and are beginning to contribute to cash flow again. The main point is that they are beginning to deploy capital again in a very significant way. This has limited downside, but great potential upside. Dividend yield of 8.6%. (Analysts' price target is $23.)

Financial Services
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$18.990
Owned Owned
Yes

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PAST TOP PICK
AGT Food & Ingredients(AGT-T) 

December 13, 2017

(A Top Pick Feb 1/17. Down 42%.) It was as though the perfect storm had hit. Because they don't treat their pulses a certain way, they had some problems importing to India until they received the exemption. The company has diversified into the food and ingredients area more. Parts of the business are doing very well. He perceives this as more of a cyclical problem. They have an oversupply in a number of areas that have to work its way through the system, which could happen within the next 6 months to a year. At these prices, this stock could be fairly attractive, although it is a bit higher risk/reward.

agriculture

(A Top Pick Feb 1/17. Down 42%.) It was as though the perfect storm had hit. Because they don't treat their pulses a certain way, they had some problems importing to India until they received the exemption. The company has diversified into the food and ingredients area more. Parts of the business are doing very well. He perceives this as more of a cyclical problem. They have an oversupply in a number of areas that have to work its way through the system, which could happen within the next 6 months to a year. At these prices, this stock could be fairly attractive, although it is a bit higher risk/reward.

agriculture
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$20.440
Owned Owned
Yes

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DON'T BUY
Agrium(AGU-T) 

December 13, 2017

Doesn't think you should get into this right now. He did own it, but when they announced that they were going to integrate with Potash (POT-T), that changed the complexion of the company quite a bit. Doesn't think there will be much in the way of a stock price change until it has been time-tested for a while.

chemicals

Doesn't think you should get into this right now. He did own it, but when they announced that they were going to integrate with Potash (POT-T), that changed the complexion of the company quite a bit. Doesn't think there will be much in the way of a stock price change until it has been time-tested for a while.

chemicals
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$143.550
Owned Owned
No

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COMMENT

Thinks this is going to do fairly well in 2018. Over the last number of years, it’s managed to restructure its balance sheet. At one time they paid a totally unsustainable dividend. Even in the current market, they figure they can continue to grow cash flow, even at $55 West Texas intermediate pricing. It probably has more drilling opportunities and more land in good areas, then a lot of the competition. It could be worth taking a serious look at.

oil/gas

Thinks this is going to do fairly well in 2018. Over the last number of years, it’s managed to restructure its balance sheet. At one time they paid a totally unsustainable dividend. Even in the current market, they figure they can continue to grow cash flow, even at $55 West Texas intermediate pricing. It probably has more drilling opportunities and more land in good areas, then a lot of the competition. It could be worth taking a serious look at.

oil/gas
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$8.700
Owned Owned
Unknown

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COMMENT

Doesn't own this, but does own Enbridge (ENB-T). The company was very smart reorganizing into 2 structures. Lately they’ve done a lot to shore up the capital structure of both. If buying for yield, this has a slight advantage, but Enbridge (ENB-T) has reiterated that they intend to grow their dividend by about 10% over the next few years. They keep adding assets that are adding more cash flow. All the pipeline companies look somewhat expensive, and all go through the cycle of issuing equity to invest in capital expenditures, which adds to debt. Once those report cash flows, you are into the same cycle again. Prefers Enbridge (ENB-T) and taking the slight discount, but really doesn't have a problem with this one.

oil/gas

Doesn't own this, but does own Enbridge (ENB-T). The company was very smart reorganizing into 2 structures. Lately they’ve done a lot to shore up the capital structure of both. If buying for yield, this has a slight advantage, but Enbridge (ENB-T) has reiterated that they intend to grow their dividend by about 10% over the next few years. They keep adding assets that are adding more cash flow. All the pipeline companies look somewhat expensive, and all go through the cycle of issuing equity to invest in capital expenditures, which adds to debt. Once those report cash flows, you are into the same cycle again. Prefers Enbridge (ENB-T) and taking the slight discount, but really doesn't have a problem with this one.

oil/gas
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$29.810
Owned Owned
No

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COMMENT
Fairfax Financial(FFH-T) 

December 13, 2017

Prem Watsa's investing approach is often compared to Warren Buffett's. He believes that over the long-term, the stock price is going to reflect a company's ROE relative to the Price to Book that you are paying for. If you take a very long-term view of this company, it is a fairly safe place to invest. If there was any pullback, this would be a very, very good buy.

insurance

Prem Watsa's investing approach is often compared to Warren Buffett's. He believes that over the long-term, the stock price is going to reflect a company's ROE relative to the Price to Book that you are paying for. If you take a very long-term view of this company, it is a fairly safe place to invest. If there was any pullback, this would be a very, very good buy.

insurance
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$663.730
Owned Owned
Unknown

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PAST TOP PICK
Fortis Inc.(FTS-T) 

December 13, 2017

(A Top Pick Feb 1/17. Up 18%.) He likes this, but hasn't been buying it lately. His cost basis was normally around $40. They've very successfully diversified from just being a power producer to also being a power transmission system. Over the last 10 years they've made 2 really large acquisitions very successfully. Excellent management. There are exposed to different regulatory systems, but they have enough growth in assets going forward that there will be more free cash flow and higher dividends over time.

electrical utilities

(A Top Pick Feb 1/17. Up 18%.) He likes this, but hasn't been buying it lately. His cost basis was normally around $40. They've very successfully diversified from just being a power producer to also being a power transmission system. Over the last 10 years they've made 2 really large acquisitions very successfully. Excellent management. There are exposed to different regulatory systems, but they have enough growth in assets going forward that there will be more free cash flow and higher dividends over time.

electrical utilities
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$47.240
Owned Owned
Yes

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TOP PICK
Hudbay Minerals Inc.(HBM-T) 

December 13, 2017

There’s been a number of base metal companies running a little recently, on the prospect of better copper and zinc markets coming forward, particularly with increasing production globally and demand for these metals. This is very well positioned, but not getting much credit for some of the things they have. Their flagship mine, Constancia, is performing very well. Yield of 0.2%. (Analysts' price target is $12.75.)

precious metals

There’s been a number of base metal companies running a little recently, on the prospect of better copper and zinc markets coming forward, particularly with increasing production globally and demand for these metals. This is very well positioned, but not getting much credit for some of the things they have. Their flagship mine, Constancia, is performing very well. Yield of 0.2%. (Analysts' price target is $12.75.)

precious metals
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$9.700
Owned Owned
Yes

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COMMENT
K-Bro Linen Inc(KBL-T) 

December 13, 2017

This has been moving up significantly. Doesn't know if they have new contracts, but over the last few years, they’ve gained a lot of market share in the markets they are in. A smaller company, but extremely well-managed.

other services

This has been moving up significantly. Doesn't know if they have new contracts, but over the last few years, they’ve gained a lot of market share in the markets they are in. A smaller company, but extremely well-managed.

other services
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$42.500
Owned Owned
No

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COMMENT
Laurentian Bank(LB-T) 

December 13, 2017

Within the banking group, this has always been in the higher risk/reward, more regional, more restrained area. You are always more exposed to the Canadian consumer and Canadian commercial elements. It’s always been reasonably well managed. Their dividend is extremely well covered. If buying for yield and willing to be patient, this could turn out to be a good investment at these levels.

banks

Within the banking group, this has always been in the higher risk/reward, more regional, more restrained area. You are always more exposed to the Canadian consumer and Canadian commercial elements. It’s always been reasonably well managed. Their dividend is extremely well covered. If buying for yield and willing to be patient, this could turn out to be a good investment at these levels.

banks
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$56.730
Owned Owned
No

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PAST TOP PICK
Manulife Financial(MFC-T) 

December 13, 2017

(A Top Pick Feb 1/17. Up 11%.) The life insurance industry is very well positioned to take advantage if we have rising rates going forward. This company has always been particularly adept at placing itself in Asia where there is a tremendous amount of growth. Well diversified. With the new CFO, he thinks they are going to pay attention to some of the legacy problems they've had in the US. Overall, he expects profitability and margins will have a very good chance of increasing fairly significantly over the next while. This is still a Buy.

insurance

(A Top Pick Feb 1/17. Up 11%.) The life insurance industry is very well positioned to take advantage if we have rising rates going forward. This company has always been particularly adept at placing itself in Asia where there is a tremendous amount of growth. Well diversified. With the new CFO, he thinks they are going to pay attention to some of the legacy problems they've had in the US. Overall, he expects profitability and margins will have a very good chance of increasing fairly significantly over the next while. This is still a Buy.

insurance
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$26.720
Owned Owned
Yes

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COMMENT

Wonders at how much more good news there can be in this. They’ve benefited a lot from attrition in the industry. Also, have diversified more into service and parts, which has been very good for them. At current multiples, it is trading at close to 5X BV and 20X Forecast Earnings with a yield of 2.4%. Feels the weight has shifted more to the downside than to the upside.

income trust

Wonders at how much more good news there can be in this. They’ve benefited a lot from attrition in the industry. Also, have diversified more into service and parts, which has been very good for them. At current multiples, it is trading at close to 5X BV and 20X Forecast Earnings with a yield of 2.4%. Feels the weight has shifted more to the downside than to the upside.

income trust
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$54.450
Owned Owned
Yes

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COMMENT

Although the price has dropped considerably, the risk is still very high. The company has gone a long way to improve its balance sheet, and has excellent properties. However, it is still very, very sensitive to the commodity price, which is where the main part of the risk comes in. The potential upside is many multiples to what he thinks the downside is.

oil/gas

Although the price has dropped considerably, the risk is still very high. The company has gone a long way to improve its balance sheet, and has excellent properties. However, it is still very, very sensitive to the commodity price, which is where the main part of the risk comes in. The potential upside is many multiples to what he thinks the downside is.

oil/gas
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$14.400
Owned Owned
Unknown

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BUY on WEAKNESS
Parkland Fuel Corp(PKI-T) 

December 13, 2017

He likes this, but was in at much lower levels. They recently made 2 fairly large acquisitions. They've been very smart acquirers over the years, and have really added to their base of earnings. Well positioned in their markets. Prefers buying at $25 or under. The yield is over 4%.

merchandising/lodging

He likes this, but was in at much lower levels. They recently made 2 fairly large acquisitions. They've been very smart acquirers over the years, and have really added to their base of earnings. Well positioned in their markets. Prefers buying at $25 or under. The yield is over 4%.

merchandising/lodging
Michael Sprung

President, Sprung Investment Ma...

PricePrice
$26.450
Owned Owned
Yes

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