N/A

Market. There is an issue in that Donald Trump has promised a lot of things, but can he execute them within the 1st 90-100 days. How will the people he selected work with Congress to get things done? There are a lot of expectations based on that, and the stock market has run up on what they feel is a much more business friendly environment happening. Also, what happens to interest rates and the US$ with that. There is the question of how Trump deals with the rest of the world. There are also a lot of changes coming in Europe, potentially on the political side. 2 major countries in Europe, that kind of forged the EU, may have changes, or certainly have less power than they did before. Also, are we in a much more inflationary environment going down the road in a year or so?

BUY

Primarily a generic company, but a much more diversified generic company. They have things in respiratory, oncology, women’s health, etc. The stock has fallen off and is trading at about 6X earnings with a free cash flow yield of about 13%. A great dividend yield of almost 4%. This is a strong franchise in generics, and nobody can compete with them. They have some things in the pipeline that are very good, which will come to fruition and help them. Healthcare is the only sector that has underperformed this year because people are worried about overpricing. With their acquisition, there is also a change in management, so there is a little uncertainty. You should do very well with this over the next several years.

BUY

Primarily a retail and commercial bank in the UK. The banking industry is changing quite dramatically, but this one has really made an effort to change the way they are thought about. This fell quite dramatically in 2008, and new management came in. A great franchise and thinks it was ahead of itself. You can buy it here and do well over the next little while.

COMMENT

He owns Brookfield Asset Management (BAM.A-T). There are good opportunities in infrastructure plays in the next little while. There is more and more talk about how the private sector has to work with the public sector. This company is very good at what they do. There are a lot of people involved in infrastructure these days, so you have to be cautious about what they pay to get something.

COMMENT

The dividend yield is good. All these Brookfield companies have the ability to get involved in certain types of projects and are very good at it. When they get involved in projects, you have to look at what they are paying for them and what the return expectations are. Feels these infrastructure plays are going to do well over the next little while, and these types of companies have the ability to get involved and generate some great returns. He prefers Brookfield asset management (BAM.A-T).

BUY ON WEAKNESS

Bank of America (BAC-N) or Citigroup (C-N)? He prefers this, because they have done a very good job of exiting low margin businesses. Also, they have a very strong retail franchise in the US. They can’t make any more acquisitions, but they can grow organically. The yield curve probably steepens by about 100 basis points. For every hundred basis points steepening in the yield curve, this bank makes $5.3 billion of more revenue. Has a great franchise name in investment banking, a great retail franchise, great commercial and wholesale franchise, and a good wealth management franchise.

COMMENT

Bank of America (BAC-N) or Citigroup (C-N)? He prefers Bank of America because they have done a very good job of exiting low margin businesses. Also, they have a very strong retail franchise in the US.

PAST TOP PICK

(A Top Pick Dec 31/15. Down 5.49%.) Sold his holdings well before the split happened. Felt management was not executing as well as they had promised.

PAST TOP PICK

(A Top Pick Dec 31/15. Up 15.82%.) Sold his holdings as he felt it had run up a lot, and he had found other opportunities. You can’t go wrong owning this, but he just wanted to put money someplace else.

PAST TOP PICK

(A Top Pick Dec 31/15. Up 23.69%.) He really likes this company. They have cut costs a lot. Heinz had this great global distribution franchise and Kraft didn’t, so he is looking for them to move a lot of the Kraft products through that. Also, Kraft had some terrible Return on Capital products, so bringing down the number of products is going to help. Also feels they will make a bigger acquisition, possibly a year from now.

BUY ON WEAKNESS

Doesn’t own any of the insurance companies. They’ve done well in the last little while because of what has happened with interest rates. If we continue to see this kind of interest rate environment, they will continue to do well. You probably want to wait for a pullback before buying.

DON'T BUY

Doesn’t really like these kinds of stocks. Retail is very tough. They’ve done a great job with their stores. Amazon (AMZ-Q) is doing a great job of taking away their business. Thinks people own this for the real estate.

BUY

A very interesting Danish company. They have about 50% of the volume market share in insulin. The diabetes market is about $45 billion, and they basically have 28% market share. On top of that, they have done a very good job of making it easier to use their products. Trading at 16X earnings, and used to trade at 30X. The stock has fallen a lot, and diabetes is a growing problem, particularly in North America. Dividend yield of about 2.5%.

COMMENT

The operational part of the business has really moved to the US, as the company wanted to get more US contracts to be part of the US aerospace/defence, but you needed to actually be a registered company there, so they split the company. When they need to raise capital, they will do it in Canada. Part of the problem is, everybody is under security to not talk, so you don’t know what is going on. Also, the satellite business is very tough, because there are too many satellites being put up.

COMMENT

Marijuana stocks? The problem is that there are such high expectations. One has a $1 billion market cap, but only $1 million in revenue. That makes no sense in any kind of dynamic. Like many of these things, he expects it will blow up. If you are involved and have made some money, you should take some off the table.