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Markets. Feels this is a stealth rally. There are a lot of non-believers in it. Sentiment has shifted too far negatively. People were legitimately worried that we were repeating 2008 again. We are on much better footing and the market is slowly starting to recognize that. Housing market in the US has clearly bottomed and has moved from a half 1 million annual starts to 700,000-800,000. Thinks it can move back over 1 million. Once you get the housing market going, you are creating jobs and more wealth. Auto sector is doing very well. US is sort of back in its role as the dominant player in the global scene, which makes a clear difference. There are shifts going on right now from areas like consumer stocks, which have been safe and sort of defensive. He feels more money will be shifting from defensive to cyclical economically sensitive stocks. Canada’s resource sector has been completely undervalued.

Economy. Thinks Europe is in the process of bottoming, but will take a while. China is really the wildcard but thinks it is still 7.5%-8% growth this year, and that is the low point.

Has just added more to his position. Extremely undervalued. Horizon was shut down for a while because of production problems but is now fully back on line so you have the heavy oil side looking awfully good. Good production development growth. Not as levered to natural gas as they used to be so generating great cash flow. Good story. Cheap. Wouldn’t see $40 as being overly expensive.

Natural gas. Thinks this has bottomed but he has a hard time getting bullish that it is going to get a lot higher. Shale gas is bringing an endless supply which he thinks will dampen prices for a long period of time. Thinks we saw the worse when it dipped to about $2 MCF but he doesn’t think we are racing back to any of the old highs.

He is not nearly as negative on financials as a lot of others. Cdn banks are trading at a bit of a premium compared to all the global banks and earnings growth is slowing down a little. However, dividends are safe and probably growing and earnings are growing single digit. This bank has done really well with its international diversification. Has gone more into wealth management as well. Great purchase in the low $50’s.

Financials. Feels the big upside is in the US banks especially in the ones that have really been pummelled such as Bank of America (BAC-N), CitiGroup (C-N) or J.P. Morgan (JPM-N) and feels there is a better recovery here. They are cheaper and trading at 50%-60% of BV, while Canadians are trading at 1.5%-2% times BV.

Have gone through a painful restructuring over the past couple of years and are slowly starting to emerge from it. It’s a more competitive business than it used to be. Growth is going to be more cramped because of US entries coming in. Also, input costs are going up which they are unable to pass on to the customers. Valuation is still high. The best the stock is going to do is go up at the rate of growth of earnings, which he thinks is a single digit rate.

Likes it but hasn’t been adding much to his holdings recently. Coal prices are still under a bit of pressure. Great copper exposure.

Likes this one. The financial services arm has improved. The core business of turbines, power generators is a great area to be in. Probably slowing down a little as infrastructure spending is slowing down. Fairly valued now. Single digit earnings grower so wouldn’t expect a big return off it. A safe stock. 3.25% dividend yield.

Trading at a quarter of its BV. It could be a slow turnaround for a lot of these types is stocks. They’ve had production issues as well as the fact that the price of coal has fallen pretty dramatically. With these guys, you get higher production costs, mine problems as well as lower prices and the valuations have all imploded as well. However, he has been accumulating some of these names such as Peabody (BTU-N) and Cliffs Natural (CLF-N), which makes a lot of sense. Very cheap.

Outlook in 12 months? He has added to his holdings recently. 2 things are big negatives for this company. Falling stock market and falling bond yields. Their hedging programs are protecting them much more than he used to. Operations are starting to do better. Core operating earnings are probably running around $1.20-$1.30 a share, which gives you less than a 10X multiple. Can see leverage upside from improvements in the market generally. Risk/reward is great. 4.6% dividend yield.

Low PE and bundles of cash. Has been considering this one. Their problem is that in restructuring they are not in the right place right now. Getting squeezed out on the printers and the PC and printer market in general is getting by what is going on with the Pads and Tablets. Looking at the multiple, cash generation and the core businesses, he is ready to take a swing at this at $20 or under. Very little downside. Not a growth play, it’s a value play. Bit of a dark horse now.

(A Top Pick Aug 19/11. Up 59.84%.) This company was acquired.

(A Top Pick Aug 19/11. Down 8.8%.) People are more worried about the copper market. Delivered on their production and he thinks it is still a great Outlook. African assets are fine.

(A Top Pick Aug 19/11. Down 72%.) This was clearly a bad call and it has shocked him how bad it has broken down. Something is going to happen with this company in the year, one way or another. When he adds up the patents, the cash and the value of the enterprise visit to an IBM or something like that, he can easily come up with $12-$15.