Ben Cheng

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.

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.

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).

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.

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.

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.

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.

(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.

(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.

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.

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.

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.

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.

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.

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.