Stock Opinions by Ben Cheng - Stockchase Experts
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Ben Cheng @

On Stockchase since : Aug 2001

President and Chief Investment Officer at Aston Hill Financial Ltd.

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Stock Opinions by Ben Cheng - Stockchase Experts

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General Market Comment 

July 18, 2016

Markets.  With negative rates in some countries and zero % rates in North America, 3-4% income rates are attractive.  In the developed world, there is little demographic growth.  Without immigration in North America it would be half a percent.  If the population is not growing then economic growth over the long run is impossible.  Governments are pushing money into the economy, but taxes are going up, compliance is more expensive and these things inhibit growth.  Lack of growth is why people are moving towards income.  Interest rates will be low for a very long time.  People will be looking for safe income plays for a long time.

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Markets.  With negative rates in some countries and zero % rates in North America, 3-4% income rates are attractive.  In the developed world, there is little demographic growth.  Without immigration in North America it would be half a percent.  If the population is not growing then economic growth over the long run is impossible.  Governments are pushing money into the economy, but taxes are going up, compliance is more expensive and these things inhibit growth.  Lack of growth is why people are moving towards income.  Interest rates will be low for a very long time.  People will be looking for safe income plays for a long time.

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Ben Cheng

President , Aston Hill Financial...

Price Price
$0.020
Owned Owned
_N/A

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HOLD
Suncor Energy Inc(SU-T) 

July 18, 2016

They have a massive operation that had to shut down due to wild fires.  They raised capital and paid down debt on their balance sheet.  Investors don’t understand the potential for free cash flow in the next year.  It is quite powerful.  It is a good hold here.  Management says they could run the business as low as US$30 a barrel.

integrated oils
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They have a massive operation that had to shut down due to wild fires.  They raised capital and paid down debt on their balance sheet.  Investors don’t understand the potential for free cash flow in the next year.  It is quite powerful.  It is a good hold here.  Management says they could run the business as low as US$30 a barrel.

integrated oils
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Ben Cheng

President , Aston Hill Financial...

Price Price
$36.190
Owned Owned
Unknown

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BUY

They have a very good portfolio.  They are now refocused back on Alberta.  REITs here are being supported because index players are buying the stock.  REITs are tucked within financials, but at the end of the month they will be a separate sector (GIC).

property mngmnt/investment
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They have a very good portfolio.  They are now refocused back on Alberta.  REITs here are being supported because index players are buying the stock.  REITs are tucked within financials, but at the end of the month they will be a separate sector (GIC).

property mngmnt/investment
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Ben Cheng

President , Aston Hill Financial...

Price Price
$23.290
Owned Owned
Unknown

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BUY

You need to be aware of fuel margins.  Oil costs are steady as are gasoline costs right now so they should be able to do a little bit better.  Things should be okay for them in this environment.

merchandising/lodging
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You need to be aware of fuel margins.  Oil costs are steady as are gasoline costs right now so they should be able to do a little bit better.  Things should be okay for them in this environment.

merchandising/lodging
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Ben Cheng

President , Aston Hill Financial...

Price Price
$23.090
Owned Owned
Unknown

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BUY

It has been on a tremendous run and he does not think it is going to stop.  Management is solid and the balance sheet is solid.  They are benefiting from the shift away from physical stores.

investment companies/funds
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It has been on a tremendous run and he does not think it is going to stop.  Management is solid and the balance sheet is solid.  They are benefiting from the shift away from physical stores.

investment companies/funds
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Ben Cheng

President , Aston Hill Financial...

Price Price
$23.960
Owned Owned
Yes

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COMMENT

It has come under pressure for two fronts.  Across the US there is quite a bit of new hotel product that is coming on stream over the next 12-24 months.  But they are not competing in the same tier 1 cities as the new product so should not be affected by the new volume.  Also, they have a lot of contracts with rail operators.  Volumes for rails have dropped off considerably.

investment companies/funds
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It has come under pressure for two fronts.  Across the US there is quite a bit of new hotel product that is coming on stream over the next 12-24 months.  But they are not competing in the same tier 1 cities as the new product so should not be affected by the new volume.  Also, they have a lot of contracts with rail operators.  Volumes for rails have dropped off considerably.

investment companies/funds
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Ben Cheng

President , Aston Hill Financial...

Price Price
$10.350
Owned Owned
Yes

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BUY

They signed a new long term contract with Air Canada until 2020.  There is not a lot that is going to affect their income generation.  They are shielded from fuel and labour costs.  It is very bond like for an equity.

Transportation & Environmental Services
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They signed a new long term contract with Air Canada until 2020.  There is not a lot that is going to affect their income generation.  They are shielded from fuel and labour costs.  It is very bond like for an equity.

Transportation & Environmental Services
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Ben Cheng

President , Aston Hill Financial...

Price Price
$6.330
Owned Owned
Unknown

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PAST TOP PICK

(Top Pick Dec 3/15, Up 8.12%) There was certainly some volatility.  The actual business itself will not be affected by Brexit.  They are looking at properties in Ireland now.  91% of their revenues currently come from the NHS in the UK.  He sold last week because he cannot predict the continual political changes in the UK and it was at a high.

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(Top Pick Dec 3/15, Up 8.12%) There was certainly some volatility.  The actual business itself will not be affected by Brexit.  They are looking at properties in Ireland now.  91% of their revenues currently come from the NHS in the UK.  He sold last week because he cannot predict the continual political changes in the UK and it was at a high.

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Ben Cheng

President , Aston Hill Financial...

Price Price
$0.000
Owned Owned
No

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PAST TOP PICK

(Top Pick Dec 3/15, Down 5.30%) He exited just below where it is now.  They are in the US and are the number 1 provider of HSAs.  They are wonderful vehicles that save for healthcare costs.  The other 75% of their business is traditional banking.  It is difficult for them to maintain margins with interest rates so low.

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(Top Pick Dec 3/15, Down 5.30%) He exited just below where it is now.  They are in the US and are the number 1 provider of HSAs.  They are wonderful vehicles that save for healthcare costs.  The other 75% of their business is traditional banking.  It is difficult for them to maintain margins with interest rates so low.

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Ben Cheng

President , Aston Hill Financial...

Price Price
$35.880
Owned Owned
No

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PAST TOP PICK
General Market Comment 

July 18, 2016

Hunt Company Bond 9.625% due March 2021.  (Top Pick Dec 3/15, Up 1.00% plus 9.625% interest) They have some exposure to Texas.  They manage assets for investors who want exposure to real estate.  This is a high yield bond, not investment grade.  The balance sheet is very manageable.  It is almost 10% yield and is up 1% on the capital.

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Hunt Company Bond 9.625% due March 2021.  (Top Pick Dec 3/15, Up 1.00% plus 9.625% interest) They have some exposure to Texas.  They manage assets for investors who want exposure to real estate.  This is a high yield bond, not investment grade.  The balance sheet is very manageable.  It is almost 10% yield and is up 1% on the capital.

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Ben Cheng

President , Aston Hill Financial...

Price Price
$0.020
Owned Owned
Yes

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HOLD

It is still trading at a discount.  There are some things weighing it down.  There are concerns in the mutual fund industry regarding fees.  You have to keep this in mind.  However, the family is very committed to this company and if anyone can figure it out, they can.  The 5% dividend is safe.  If markets continue to move higher you want to hold the investment managers.

finance/leasing
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It is still trading at a discount.  There are some things weighing it down.  There are concerns in the mutual fund industry regarding fees.  You have to keep this in mind.  However, the family is very committed to this company and if anyone can figure it out, they can.  The 5% dividend is safe.  If markets continue to move higher you want to hold the investment managers.

finance/leasing
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Ben Cheng

President , Aston Hill Financial...

Price Price
$30.340
Owned Owned
Unknown

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WATCH
Magna Int'l. (A)(MG-T) 

July 18, 2016

Brexit is going to affect growth in sales in the UK and Europe.  They have exposure to Volkswagen as well.  It is probably a decent entry point here, however.  It could be two or three years before they come out of this cycle. 

Automotive
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Brexit is going to affect growth in sales in the UK and Europe.  They have exposure to Volkswagen as well.  It is probably a decent entry point here, however.  It could be two or three years before they come out of this cycle. 

Automotive
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Ben Cheng

President , Aston Hill Financial...

Price Price
$49.330
Owned Owned
No

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BUY

Tens of thousands of employees laid off in Alberta represent a source of growth to them.  When oil and gas companies start hiring again this will be a source of business for MSI-T.

Business Services
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Tens of thousands of employees laid off in Alberta represent a source of growth to them.  When oil and gas companies start hiring again this will be a source of business for MSI-T.

Business Services
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Ben Cheng

President , Aston Hill Financial...

Price Price
$18.200
Owned Owned
Unknown

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BUY
General Market Comment 

July 18, 2016

Bank rate reset preferred share at 5.5%.  These new products are capital that the banks issue and are more easily convertible.  He owns a lot of these.  They are higher up on the balance sheet.  It will not reset into a yield substantially lower than 5%, regardless of where interest rates are.  If interest rates rise, they should continue to have almost a 5% spread over rates.

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Bank rate reset preferred share at 5.5%.  These new products are capital that the banks issue and are more easily convertible.  He owns a lot of these.  They are higher up on the balance sheet.  It will not reset into a yield substantially lower than 5%, regardless of where interest rates are.  If interest rates rise, they should continue to have almost a 5% spread over rates.

Unknown
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Ben Cheng

President , Aston Hill Financial...

Price Price
$0.020
Owned Owned
Yes

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BUY

It is a good buy at these levels.  It has a robust dividend and has lagged other bank peers.  This is because investors are waiting for management’s vision for the bank to unfold.  It has been acquisitive and will continue to do so for growth. 

banks
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It is a good buy at these levels.  It has a robust dividend and has lagged other bank peers.  This is because investors are waiting for management’s vision for the bank to unfold.  It has been acquisitive and will continue to do so for growth. 

banks
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Ben Cheng

President , Aston Hill Financial...

Price Price
$98.470
Owned Owned
Unknown

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