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COMMENT
Market - Still have a broad based rally with broad participation. There is reallocation from fixed income into equities that really only began in earnest from December. This could go on for some time. Many missed a lot of this rally and private investors are now engaging. Over the last 50 years we got to the low point in equity allocation in pension funds about 10 months ago. Averaging about 45% allocation to equities, versus 30% about a year ago.
BUY
Energy and energy equipment/service companies have had a very good move. There is a shift underway in how energy companies are going out to find and develop oil reserves and this company falls right in the middle of it. Stock is consolidating. This is an area you want to focus on.
oil
gas field services
DON'T BUY
This is a great bull market in networking stocks and this company is not participating. Built their business when they had tremendous pricing power because of their dominance. Since then there have been a lot of companies that have come up with very competent products and willing to sell them at much lower margins. Also their government contracts are being squeezed.
electrical
electronic
COMMENT
Have always felt that in golds, the shares should be leading the metal. In the last few weeks, while gold price is strong, equity prices have not been participating in general to the same extent. This is a mid-cap which is the right neighbourhood to be in. Coming into production, which is important. Stock is kind of consolidating. Generally gold shares have been sloppy and he feels there are better places to be.
metal mines
TOP PICK
Energy is about a 40% weight in his portfolios, specifically mid-caps with growth, production and reserves and focused on oil or liquid rich gas. This one has grown production to about 15,000 barrels a day and will probably grow to 22,000-23,000 this year. Doing development and exploratory drilling in Colombia, Argentina, Brazil and Peru. Have multiple catalysts coming over the next few months. About $300 million in cash.
oil
gas
TOP PICK
Focused in 3 areas. 1) Optical networking, 2) pipelines for gas infrastructure and 3) electrical grid. Recently broke out above multi-year highs. Business should grow about 15% this year but there are a lot of opportunities coming as there is about $200 billion to be spent on natural gas infrastructure. In wireless 70% of the back haul connections from towers in N.A. is copper and they are challenged from a bandwidth standpoint. This company digs the trenches and lay the fibre.
REAL ESTATE
TOP PICK
Have 15% of the Iron Ore Co of Canada. They get a royalty on the production. Very strong demand globally for iron ore. Production is likely to go from 18 million tons to 26 million tons over the next couple of years. Can grow production to 50 million tons with the right investment with their partners. 100 years of reserve life. Good yield.
Financial Services
