Latest Expert Opinions

Signal
Opinion
Expert
COMMENT
COMMENT
December 29, 2016

Has always been leery about the airline sector. It has been a graveyard for investors over the last 100 years. Because he runs Long and Short strategies, he has had a couple of compelling ideas on the Short side, namely Westjet (WJA-T) and Transat (TRZ-T). Because of that, he has taken a Long position in Air Canada. This is because he wants to take out industry specific risks. If jet fuel prices go up, it affects Westjet and Air Canada. One of the benefits of Air Canada is that there is going to be a new ultra low cost airline come into Canada, which will disproportionately impact Westjet and probably Transat as well. Doesn’t feel Air Canada is a good long term holding, especially if oil prices start rising. This would be a trade at best.

Air Canada (AC-T)
December 29, 2016

Has always been leery about the airline sector. It has been a graveyard for investors over the last 100 years. Because he runs Long and Short strategies, he has had a couple of compelling ideas on the Short side, namely Westjet (WJA-T) and Transat (TRZ-T). Because of that, he has taken a Long position in Air Canada. This is because he wants to take out industry specific risks. If jet fuel prices go up, it affects Westjet and Air Canada. One of the benefits of Air Canada is that there is going to be a new ultra low cost airline come into Canada, which will disproportionately impact Westjet and probably Transat as well. Doesn’t feel Air Canada is a good long term holding, especially if oil prices start rising. This would be a trade at best.

Jerome Hass
Portfolio Manager, Lightwater Partners
Price
$13.740
Owned
Yes
HOLD
HOLD
December 29, 2016

(Preferred Series B.) This was his Top Pick in October as there was a catalyst in November, where any one of the 3 parties that owned the wealth management arm of GMP could put their stake up for sale without the approval of the others. The main bidder had been Toronto Dominion (TD-T), and he felt a lot of the IAs, which had veto power, had expressed their unhappiness. Still thinks this is on the table, but thinks management will want to get a few more good quarters under their belt. Still an interesting play.

(Preferred Series B.) This was his Top Pick in October as there was a catalyst in November, where any one of the 3 parties that owned the wealth management arm of GMP could put their stake up for sale without the approval of the others. The main bidder had been Toronto Dominion (TD-T), and he felt a lot of the IAs, which had veto power, had expressed their unhappiness. Still thinks this is on the table, but thinks management will want to get a few more good quarters under their belt. Still an interesting play.

Jerome Hass
Portfolio Manager, Lightwater Partners
Price
$4.410
Owned
Yes
BUY
BUY
December 29, 2016

One of their problems was that the Hatchamils weren’t hatching, and also some of them had a pottee mouth. This is a very slow news time of the year, so a story like this got a lot of press. This was trading down about 13% as a result of the story. In the long run, it is probably a benefit to the company, because a lot of people who didn’t know these were produced by this company, now know that it is a Canadian company. Thinks there was an overreaction by consumers and the market. He was Buying shares today. Expects that one day this will get taken out, but in the meantime, there are a couple of good years ahead of you.

Spin Master Corp (TOY-T)
December 29, 2016

One of their problems was that the Hatchamils weren’t hatching, and also some of them had a pottee mouth. This is a very slow news time of the year, so a story like this got a lot of press. This was trading down about 13% as a result of the story. In the long run, it is probably a benefit to the company, because a lot of people who didn’t know these were produced by this company, now know that it is a Canadian company. Thinks there was an overreaction by consumers and the market. He was Buying shares today. Expects that one day this will get taken out, but in the meantime, there are a couple of good years ahead of you.

Jerome Hass
Portfolio Manager, Lightwater Partners
Price
$32.570
Owned
Yes
COMMENT
COMMENT
December 29, 2016

A good company with about a 5% yield. Their policy is to try and grow the dividend at about 10% a year. Have been able to grow their FFO by about 11%+. Their payout ratio has been falling, which is good. The only caveat is that if interest rates are going to be rising, you have to be careful about stocks like this. They deal with a lot of debt, so their debt costs are going to be rising. Has been a high dividend payer. As interest rates rise, that tends to be discounted by investors. If he were dealing with this, he would hedge it out by being Long this and Shorting another utility against it.

A good company with about a 5% yield. Their policy is to try and grow the dividend at about 10% a year. Have been able to grow their FFO by about 11%+. Their payout ratio has been falling, which is good. The only caveat is that if interest rates are going to be rising, you have to be careful about stocks like this. They deal with a lot of debt, so their debt costs are going to be rising. Has been a high dividend payer. As interest rates rise, that tends to be discounted by investors. If he were dealing with this, he would hedge it out by being Long this and Shorting another utility against it.

Jerome Hass
Portfolio Manager, Lightwater Partners
Price
$11.440
Owned
Unknown
SELL
SELL
December 29, 2016

His experience is that their Toronto stores have very few customers. They are all corporate owned stores. This was a growth story that was predicated upon being able to grow in the US, which they haven’t been able to do. The last quarter was disastrous for them. The founder resigned last summer, which is never a good sign. The CEO resigned ahead of the Q3 numbers, which was an obvious sign of terrible quarterly results. The e-business may be growing at a much faster pace than their bricks and mortars business, and they don’t separate the 2, so the one maybe masking the other.

David`s Tea Inc. (DTEA-Q)
December 29, 2016

His experience is that their Toronto stores have very few customers. They are all corporate owned stores. This was a growth story that was predicated upon being able to grow in the US, which they haven’t been able to do. The last quarter was disastrous for them. The founder resigned last summer, which is never a good sign. The CEO resigned ahead of the Q3 numbers, which was an obvious sign of terrible quarterly results. The e-business may be growing at a much faster pace than their bricks and mortars business, and they don’t separate the 2, so the one maybe masking the other.

Jerome Hass
Portfolio Manager, Lightwater Partners
Price
$6.750
Owned
No
HOLD
HOLD
December 29, 2016

He likes this. It was a spin out from Element Financial, which split into 2 companies. About 80% of the value went to Fleet and 20% to this company. Almost all the analysts were of the view that this should be priced on a Price to Book, so if you say it is worth at least BV, which is approximately $4, it should trade up. They recently sold some rail assets, which went for about 1.2X Book. With that, you could get up to about $6 for this. Also, there are a couple of catalysts coming up in January to move some of their rail assets into a third-party vehicle, which will put a revaluation on those assets.

ECN Capital (ECN-T)
December 29, 2016

He likes this. It was a spin out from Element Financial, which split into 2 companies. About 80% of the value went to Fleet and 20% to this company. Almost all the analysts were of the view that this should be priced on a Price to Book, so if you say it is worth at least BV, which is approximately $4, it should trade up. They recently sold some rail assets, which went for about 1.2X Book. With that, you could get up to about $6 for this. Also, there are a couple of catalysts coming up in January to move some of their rail assets into a third-party vehicle, which will put a revaluation on those assets.

Jerome Hass
Portfolio Manager, Lightwater Partners
Price
$3.210
Owned
Yes
PAST TOP PICK
PAST TOP PICK
December 29, 2016

(A Top Pick Feb 8/16. Up 24.94%.) Recently got their bank license after about 4 years of waiting, so they are now a Schedule 1 bank, which operates as the Exchange Bank of Canada. They are specialists in foreign exchange. The growth profile, now that they have their bank license, is going to be much, much better.

(A Top Pick Feb 8/16. Up 24.94%.) Recently got their bank license after about 4 years of waiting, so they are now a Schedule 1 bank, which operates as the Exchange Bank of Canada. They are specialists in foreign exchange. The growth profile, now that they have their bank license, is going to be much, much better.

Jerome Hass
Portfolio Manager, Lightwater Partners
Price
$27.500
Owned
Yes