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Markets. Canadian market has been lagging, mainly because of our resource exposure as opposed to the emphasis in the US on non-resource names. He has been taking some risks off since the middle of March, partly on the “Sell in May and Go Away”, which now seems to have stretched to April.

Just came out with its results and were largely in line with what the market was looking for. Had been pretty well signalled that they had a difficult winter this year as well as a mild winter in 2012. As well, had a native Indian protest in Q1 which disrupted their line. He has a pair trade on with this on one side and shorting Canadian Pacific (CP-T) on the other. He is more negative on CP. Both of them are actually expensive. This rail is a good proxy for the Canadian economy and a good long-term holding. If looking for an entry point, he would hold off. You might be better looking at some of the US rails such as Kansas City Southern (KSU-N).

A nice play on the US-Mexican growth. They have a line that goes directly into Mexico and there is a new port there that is catering to the Mexican auto sector.

Shaw family put their stake up for sale in Dec/12 and the share price took off. There wasn’t a bidder with an attractive price so the company decided to buy the shares at a premium. This didn’t go over well with some institutional investors. Dual Class share structure is now eliminated, which he likes. Largest pipe coating manufacturer globally. A lot of pipelines are 50-60 years old so this is a great structural play. Just bought the number 2 competitor in the offshore space so expects margins to increase dramatically. Feels it could breach $50 in 12 months.

Down 40% in the last 12 months. Expects management overpromised regarding their new Salts Flats acquisition in Texas. There were some operational issues and they replaced the chief operating officer and he hopes there is a turnaround there. Also, there was a debate on the decline rates on their Texas fields and some of them will decline 62% in the 1^st year. He thinks the market has overestimated the decline rates and thinks it will drop below 20% in 2014. 15.4% yield, which he doesn’t think will get cut. Have a good line of credit.

Over 100 years supply of potash so this is a very good long-term holding. Doesn’t see a lot of either positive or negative catalysts. Short this stock because he is a lot more positive on one of its rivals, Mosaic (MOS-N), which has a very similar structure in terms of its potash and phosphate exposure. 62% of Mosaic is owned by Cargill and 30% of this company is owned by the Cargill family and about 10% of this will be available on the market in May. He thinks the company will buy back those shares.

Long and Short strategies. Use technicals, fundamentals or a combination of the 2? As a fundamental investor, he doesn’t use any technical analysis. When he is positive on one company, he looks for an opposite side to pair it with. He generally uses pairs but not always. Sometimes he’ll have a lot of conviction on the situation where it requires a Short.

Doesn’t know a lot about this, but is very impressed that it has a 8.7% yield and is trading at 3.5X trailing earnings. This, combined with the fact that it is in the auto parts sector, which he is generally positive on, makes it interesting

Long Mega Blocks Warrants (MB.WT-T) and Short Mega Blocks (MB-T). A pairs trade. Warrants are composed of 2 parts 1) time value and 2) the intrinsic value (“in the money” value). 2 years ago it was 100% time value because the share price was worth a lot less. Now in the money, the strike price is close to $10 and is currently trading at about $4.75. The warrant is trading at about $0.24.5. You are essentially getting the optionality of the warrants for free.

Long Mega Blocks Warrants (MB.WT-T) and Short Mega Blocks (MB-T). A pairs trade.

A very stable business. Holds a variety of properties that are very light industrial or warehouses. Has very long-term leases with the average being 9 years. There tends to be a lot of single tenant occupancies. Yield of 6.16%.

Long Tag Oil (TAO-T) and Short Imperial Oil (IMO-T). A Pairs trade. Very positive on this name which is 100% exposed to New Zealand which has a very favourable royalty regime and very favourable pricing. Last quarter they earned $109 per barrel versus Western Canada where they will be lucky to get $65. Also, earns high premiums for natural gas. Ended the fiscal year with 1500 barrels but they had a lot “behind the barrel”. With their high paraffin content in their oil, they have to treat it and process it before they can send it onto the market. Very cheap at less than 3X price to cash flow.

Long Tag Oil (TAO-T) and Short Imperial Oil (IMO-T). A Pairs trade. Put this against the Short to offset any fluctuations in crude oil prices. Also, he is not too optimistic about Western Canada, Kearl and the Syncrude projects.

Market. Feels this bull market is in the later innings, 8^th to 9^th. We have to be increasingly cautious as we move through the summer and into the fall. Bull markets tend to peak over an extended period of time. One indicator he watches is the advance/decline line on the New York Stock Exchange. This often indicates deterioration in breadth i.e. fewer and fewer stocks are leading the market higher. Expect there are a few more quarters to run.

Probably a long-term Buy but you can afford to be patient. Silver price is down to about $23. This is one of the ones in the precious metals area that he likes from the longer-term point of view because it has very good volume growth. Margins a very wide and they have low overhead. If he was a trader, he could consider buying this for a flip.