COMMENT

Sold his holdings as soon as he saw the 5% vacancy rate occurring in Calgary. These are great managers. They own 30% of the float, so if you want to be aligned with the owners, this is the REIT to own. If you don’t have exposure to Alberta, this would be a great company to own.

TOP PICK

Essentially a back office for financial institutions. Recently made acquisitions in the US that gives them growth. About 3 months ago a Short seller advised that they were playing fast and loose with revenue recognition and not making any money in the US. The stock dropped very quickly. The only way to disprove the Short Seller’s report is to show the numbers over the next 2-3 quarters. 5% organic growth and a lot of cross-selling opportunities. Incredibly cheap at 14X earnings. Dividend yield of 4.07%.

TOP PICK

US banking has fallen by 30% this year, and he thinks that is inappropriate. Trading at 1X BV. Historically this is incredibly cheap. Dividend yield of 3%.

TOP PICK

Convertible 5.5% bond due Dec 1/18. This can be swapped for stock at $19. The company’s balance sheet is very conservative, so he knows he is going to get paid back at the end of the day. This is also a play on the provincial and federal infrastructure plays. One 3rd to half of revenues comes from public ventures such as subways, etc.

N/A

Markets. Historically about every 2 years, we get about a 10% or greater correction. The job of the market is to shake the tree of the unsure investor. This time around, it is doing a pretty good job. The market has been quite volatile and it is probably not over. Thinks this is a classic relief rally within a cyclical bear market, that is in a bull market. Cyclical bears tend to be very volatile, scary, like a roller coaster ride. Secular bears are often related to economic malaise and put you to sleep. In secular bear markets, good investors survive.

COMMENT

Has been painted with a brush of being a hardware company that might disappear because some kid in a garage might come up with something better. This is basically why hardware companies tend to be assigned lower valuations. They are working hard towards building a services business with recurring revenue where there is more certainty. About 10% of their business now is Apple Music, Apple pay, etc. and these are applications that he thinks will have more traction in the future. The one thing that has hurt is the success of the iPhone. About a 3rd of their total market capitalization is in cash.

WAIT

Rails are an interesting view into the economy. The only thing showing any kind of strength for the rails is the auto area. That indicates the economy is a slow growth economy and that industrial America is one of the weakest parts. The consumer is probably where the strength lies in the economy. This is trading where it should be in the 11 to 12 times earnings area. There isn’t any hurry to get into this.

BUY

This has had fits and starts, and over time it has done well. This is a great space in the healthcare area. With the demographic changes and the affordable care act, there is a lot of wind at your back. A great growing business and not terribly expensive, trading at 19-20 times earnings, and is growing fairly well.

BUY

One of the largest originators of mortgages. Very stable loan book, and growing loans reasonably well. He has been looking for a steeper yield curve. We don’t have this because people are not very confident about the economic outlook or that the federal reserve is actually going to raise rates. If you take a position, over time you are going to see an ability for them to utilize their balance sheet, and it will be very, very profitable.

TOP PICK

(A Top Pick Feb 25/15. Down 23.33%.) A great opportunity. Trading at 60% of tangible book value, which is something he has not seen in his career, and at about 7X earnings. With any increase in rates, they are going to put a lot of earnings on the P&L. Dividend yield of 0.50%.

PAST TOP PICK

(A Top Pick Feb 25/15. Up 32.3%.) The monthly average users is now 1.59 billion, and their daily users are over 1 billion, so the opportunity for reach is spectacular. This is a company that really can’t be analysed on traditional metrics. Hugely expensive and it has to grow into its earnings.

PAST TOP PICK

(A Top Pick Feb 25/15. Down 30.66%.) This is basically just a valuation reset. They continue to do reasonably well in terms of earnings growth, but the market now has it trading at 10X earnings where it had been trading at 15X. This is still a Buy.

DON'T BUY

Merging with Pfizer (PFE-N), a tax inversion play where Pfizer wants to get offshore to avoid higher US taxes. They are not in the good books of the US legislators, which is a risk. Because of this, he would probably stay clear.

COMMENT

Thinks Visa Europe will give this company a really good opportunity. The credit card business in Europe is less mature than in North America. The average European spends $0.37 of his dollar in cash, and the average North American is about $0.25. Debit is also a big part of Visa’s business, about 60%, and profitable.

BUY

Tends to be volatile, but over time has done quite well. The 2nd largest roofer in the US. There is new construction in the US, which has been somewhat sluggish, but there is also the replacement market. 60% of homes in the US were built before 1980, so they all need new roofs. This is a high beta stock. Still likes the company and the story.