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He likes it and is looking at it right now. He likes the dividend and how it increases year after year. He likes the healthcare sector. He prefers disposable products more than pharma. It has not made anyone any money this year so it is now one to take a look at. He expects 7-9% return compounded over the next 10 years.
He regrets not owning it. They have executed very well. He always felt it was expensive and that is why he does not own it. If Canada is in a zero growth mode, he assumes people are shopping for bargains. If they were to miss earnings, you always have to look at why. It could create a better opportunity to buy in.
During ‘08/’09 it went way down below $4 because people were worried about their ability to service the debt. Coal is a bit of a disaster right now. Zinc is at a 5 year low. If they had no debt it would be a great time to buy in, but that is not the case. No one knows what is going to happen to commodity prices.
A well run company. They are a price taker, however. He needs something to change the supply/demand equation in oil. We are now going to see vastly more oil coming out of Iran. Frackers in North Dakota are continuing to produce. The middle east thought by driving down prices they would put them out of business. Both sides of the equation are pretty scary.
He has always been slightly cautious of the patent protected pharma industry. Drugs are very expensive to create, then eventually they come off patent and also there is always the risk of litigation. He prefers TEVA-N, who changed a drug to be several times ago and were able to extend their patent.
Markets. It is always a mixed blessing when you get a correction. It pains him to see all the red numbers on the screen, but there are some bargains emerging. Stocks are selling off in the absence of any hard reason, so obviously there are bargains. He saw an outflow of funds from equities. When you see this kind of volatility, buyers go on strike. This is when you should be looking the hardest. We are three weeks away from the third quarter earnings announcements and we have seen a lot of revisions downwards. He is not seeing a lot of earnings warnings. Now is when we should see them. He takes this to be a good sign. There will be pervasive weakness in energy and commodities. People are worrying about a spillover to the banks. He thinks there is nothing serious going on this quarter. He sees no sign of a recession in the US. He looks at alternatives. Long bonds return negative return after taxes, but high quality equities are paying 3-5% dividends. The dividends should be lower, meaning the stock prices should be higher.