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(A Top Pick Feb 10/15. Down 40.22%.) This was a long position and had hedged this out against Amaya (AYA-T) which sold off pretty hard.

He likes the industrial space within the REITs and the fact that this company was buying individual buildings 1, 2 or 3 at a time, largely from private investors. They were getting 18%-18.5% cap rates, which is very attractive. Got a new CEO who changed the style of the company of what they were buying, so he exited his position.

Has been cautious about all of the banks as a group. If you are investing personally, everybody should own 3 banks, and one of them should be the one that you bank with. In the Canadian financial sector, he prefers the non-banks to the banks.

An asset based lender within Canada, and the only one in Canada which does asset based lending. This is a golden age for them because as the banks tend to tighten up their capital, the marginal borrower who would have got a loan from the ban, has now gone to this one. The quality of their loan book actually improves in circumstances like this.

Pretty impressed with their business. Have never invested in it, but has been watching it pretty closely. Thinks the stock has fallen back because of a rumour that they are looking to sell their Canadian business. Secondly, they might be willing to double down and purchase a rival’s business in that segment. Because of this, the market is not clear whether they are a seller or a buyer and the risk of having an equity issue. Getting to be a more reasonable valuation now.

This bank had a great run over the previous 10 years, but has gone through a rough patch recently. He is Short this, largely because of its exposure to Western Canada. Thinks there is a rough patch coming. If you look at how they performed in 2008-2009, a lot of the provisions really didn’t come in until late 2009, and carried on until 2011. Feels the market is not anticipating some of the issues they are going to have. Also, in the last conference call, they have a very substantial “preferred share book” which has been very hard hit. They did not take a write down to that portfolio, but it they wrote it down to its current market value, it would essentially wipe out at least the last quarter if not more in terms of earnings. He can still see a 10%-20% downside.

Not a big fan of this, largely because he is not very comfortable with the management team.

Is it possible to Pair Trade Magna (MG-T) and Linamar (LNR-T), and how would you do it? Yes, you could absolutely do it. You have the market risk, industry specific risk and finally the company specific risk. You are certainly going to take out most of the market risk, and the industry specific risk is close enough, and then you are left with one or the other of the companies. It really comes down to understanding the difference between the company specific factors.

Is it possible to Pair Trade Magna (MG-T) and Linamar (LNR-T), and how would you do it? Yes, you could absolutely do it. You have the market risk, industry specific risk and finally the company specific risk. You are certainly going to take out most of the market risk, and the industry specific risk is close enough, and then you are left with one or the other of the companies. It really comes down to understanding the difference between the company specific factors.

Bitcoins? He is very cynical about the bitcoin space, and thinks it is very ripe for Short opportunities. Some of the names out there are not big enough to Short. If you are thinking about going Long, there are a lot better places to put your money.

This is a niche business in the non-banks sector. The stock has fallen back partly because the market has been waiting 2 years for them to get their Schedule 1 bank license. When they do get it, it opens up a lot more doors in terms of marketing. (A lot of banks will deal only bank to bank in terms of a foreign exchange vendor.) Also, it would give them direct access to Central Banks, so they don’t have to pay a middleman in order to get access to foreign exchange. Thinks they are on the cusp of getting that bank license. Unfortunately, the summer election and the change in government have delayed that.

*Short*. A pipe coating company. Has had it as a Top Pick twice in the past, but on the Long side. About a year ago he decided that there were so many headwinds the company was fighting in the sector, that he exited his Long positions. They are going to have a very tough 12-18 months ahead. When the oil/gas sector does roll over, they’ll be one of the last to respond to it, so there’ll be plenty of time to cover a Short if there is a rally in the market. A great company and he’ll be coming back to it in the future as a Long position.

Long. (A Pairs trade with a Short on Valeant Pharma (VRX-T). In a Pair trade you really have conviction on both sides. In this instance, while he likes Mylan as a Long hedge position, the conviction actually lies with Valeant as a Short, which still has a lot of fundamental problems ahead of them.

Short. (A Pairs trade with a Long on Mylan (MYL-Q). In a Pair trade you really have conviction on both sides. While he likes Mylan as a Long position, his conviction actually lies with this company as a Short. They still have a lot of fundamental problems ahead of them.