Bill Ackman owns a 6.7% stake in the company, worth about $1.9 billion Canadian, and is selling his shares. No one should react to something like this. If you are in the stock because he is, then it is time to get out. Commodity volumes in Canada are not great. This is a decent company and he would not Sell because one guy is in it. You are going to have to wait for the Canadian economy to fully recover to make any money. But it is a very well-run company.

He covers this in his model portfolios, and really, really likes the company. They have great software for many different clients. Good management. Pays a good dividend which has had a very, very good growth rate. Revenues are starting to increase. They are buying back stock. Yet no one really cares, which is quite surprising. Business is starting to pick up. They signed a deal with Microsoft (MSFT-Q), which creates long-term opportunities. He wouldn’t get over excited about it this quarter, but it is a good deal to have for small Canadian company.

He likes this. You need to have a 10-year timeframe on this. Management has done it all before with their prior companies that they sold. Have signed very good deals and have signed licensing partnerships, and have worldwide media partners. Their library is starting to increase in value. But it is a quiet company, and is not that sexy. They produce children’s shows. Has a tiny dividend which they can probably increase a little more. If you own it for 4-5 years, you might get a little bit frustrated.

He dropped coverage on this company, because of the mass of inconsistencies they had in terms of their earnings report. They would come out with a quarter and spend $10 million on litigation fees, and their revenues would drop and earnings would not be what he expected. It went on a big run, until they missed their quarter very, very badly. He would rather have a company that is not inconsistent.

This invests in private royalties for other companies and has a nice portfolio of about 20 companies. 5 of them are accruing and some are not doing that well. The key thing investors are forgetting is that their larger companies are doing very well, so if you are going to have a problem, you want it to be your smallest investments. They missed on earnings and the stock took a hit, and they decided to not take a payable on one of their investments, and just wrote it off. They earn 15%-16% royalties on some of their investments. You do not get that type of return without taking a few hits on the way. Doesn’t think this is as bad as the stock price indicates. Thinks their payout ratio is at about 80%, so he is not really too concerned about the dividend sustainability.

If you want to own the sector, you might as well go for safety and security of the largest company. This is a sector he doesn’t pay a whole lot of attention to right now. You might have to wait 5 years for the cycle to turn.

(Market Call Minute.) The sector is not going to roll over, but Magna (MG-T) is a better company. (See Top Picks.)