DON'T BUY
Was considered the premier life insurance company in North America with best assets and great growth in the Far East as well as best management. Had a disproportionate amount of business in the segregated funds in Canada and on hedged variated annuities in the US. When the market fell apart, he sold his positions.
COMMENT
Being a value investor he is not likely to own this one on an ongoing basis. Great company and great product. Competition is heating up. Likes their long-term prospects but in the near term may be getting ahead of itself. Getting close to where you might want to take some profits.
DON'T BUY
You have to have the view that there will be rapid inflation. In the last year, these bonds have under performed because of deflation in the last 12 months. He is more in the deflation camp. People are talking about inflation but that is in the US. What do you do when the Cdn$ goes up 20%? That directly impacts the inflation rate in Canada.
BUY
Preferred shares. (He owns the common.) Great company and well capitalized. Diversified into power generation, asset management and real estate. Now that we are rallying, preferreds have somewhat lagged so it is not a bad time to buy these. When the economy turns around these underlying securities will do better.
COMMENT
They are builders of the Bow building in Calgary and had funding problems. They solved this but at a high cost. Encana (ECA-T) is their main tenant. There is too much space now out West. Hope that commodities stay firm and, most importantly, natural gas recovers.
BUY ON WEAKNESS
With the latest run he sold part of his holdings. Best in class company but would wait for a 10% drop.
TOP PICK
7.75% Bonds due 2015. Gives you a yield of about 10%.
COMMENT
Very low volatility. Expect you could do as well holding it in your bank account, which the government guarantees up to $100,000.
TOP PICK
Cineplex theatres. In an economy like this they are recession resistant. Box office revenues went through the roof. Cheap form of entertainment. Spending a lot of money on 3 D's and new technology. Basically own the majority of theatres in Canada. Pristine balance sheet. Payout ratio of about 60% and 8% yield should be safe. $6 million of tax losses when they have to convert to a corporation.
TOP PICK
On a net debt to EBITDA they have to push themselves to 2 to 2.5X. Got everything right. Buying back stock.