N/A

Market. The ground has shifted since Donald Trump’s election. He has come in with a view of lower taxes, “Making America Great Again” and interest rates have gone up 75 basis points in the last 3 weeks. Thinks we are in a decisive turn on bond yields. It is possibly the thirty-year turn. Yields have got ridiculously low. Commodities now have bids that we have been waiting decades to see.

COMMENT

Preferreds. The settlement of the energy issue last week has been very favourable. This company is in good shape, because a lot of their existing coal capacity can also convert into natural gas, so as they meet the capacity markets in Alberta that have been created, that is a plus for them. As to preferreds, people own them for 1) income and 2) for the higher position on the balance sheet. It has a 7% yield, but in 2017, that will reset to 3.1% above whatever the 5-year yield is at the time. The rate-reset game that has been going on in the Canadian preferred market since 2008, has been very painful.

COMMENT

Bank of America (BAC-N) or Wells Fargo (WFC-N)? US banks have gone on a tear because there is a belief that net interest margins are going to go up. Bank of America is a little steadier while Wells Fargo is more of a higher risk/high reward. (See Top Picks.)

COMMENT

This is an infrastructure play, and the Trudeau government has made it very plain that he is going to use fiscal policy to spend on infrastructure to keep the Canadian economy growing. This company participates in the pipelines. All of this is positive.

COMMENT

He is finding his clients have a real need for income, and you can’t get that in the bond market. The only way you could is to buy Long Bonds. However, these behave inversely to interest rates, and the 70-basis point rise in US interest rates has really hurt the Long Bond market. Yet it hasn’t impacted the preferred share market. This is a great source of income for yield oriented investors.

COMMENT

This has had a rally in the last few weeks, and like all commodity stocks it participated in the post Trump euphoria. The price of uranium has been a significant disappointment. We really haven’t seen a cleaning out of excess supply. He would like to see significant announcements with respect to sustaining the life of these nuclear reactors in the US, and a reaffirment of the Japanese strategy to restart reactors.

COMMENT

This has a nice dividend yield, and they have the ability to raise that. He likes it because they haven’t gone out and made huge bets in Latin America, US markets, etc. They have a very good discipline of returning capital.

N/A

Convert Cdn$ to US$ or buy Cdn stocks that have a lot of US exposure? He buys US stocks for areas in the marketplace that we don’t have in Canada. In the next 12 months, he believes the US will outperform Canada by quite a bit. More importantly, US interest rates are prone to rise faster. Owning Canadian companies with US operations gives you a secondary effect.

PAST TOP PICK

(A Top Pick Nov 4/15. Up 37.62%.) When the stock was hitting $3, he felt it was a good play. You want to buy mining stocks when nobody wants them. If you get it right, the returns are spectacular.

PAST TOP PICK

(A Top Pick Nov 4/15. Down 15.38%.) They had a spill in Saskatchewan, and even worse there was a row with a Chinese company. He sold his holdings.

PAST TOP PICK

(A Top Pick Nov 4/15. Up 21.92%.) Had expected that there would be a recovery, and when you can get a 5% dividend, he felt it was a good one to own. 4.4% dividend yield is better than the average Canadian bank.

HOLD

Dividend play? This is one of those great companies, and the question is, is it in as good an industry as it has been historically. They’ve had a wonderful track record of paying dividends. Made significant acquisitions in the US, which he likes. He is not adding to his holdings as he thinks he can do better elsewhere when looking for yield.

COMMENT

Not a company that is investable at the current price. They have a massive debt load. The UK is changing the rules with respect to generic drugs. They’ve had management changes. Incredibly speculative.

COMMENT

Its assets are wonderful old buildings all across Canada. A very unique asset class. These are hot and where you want to be if you are a hip kind of company. It has been really well run with a strong kind of discipline. It can be volatile, and most recently because of interest rate increases and the decline in REITs in general. This is one of the favourite REITs, and has suffered alongside most REITs. Dividend yield of 4.5%.

COMMENT

Base metals, primarily in countries that he wouldn’t necessarily take vacations in. Higher risk environments, but from that you get higher returns. He prefers more stable jurisdictions. The company has decent assets that are generating cash flow. Also, they got $1 billion in cash on a recent deal which gives them some flexibility.