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Sold his holdings, but still likes it and is hoping to get back in. The company needed to reinvent itself, and did that by providing a 24-hour a day McDonald’s. The new CEO has done some great things by refranchising stores with a focus on technology. Trading at around 23X PE, which is not expensive given the good things that are going on. A low beta stock, and you need some of those in a portfolio. In a bad market, these are the names that hold up. Dividend yield of 2.6%.
Breakdown of a portfolio in terms of Canada, USA, Europe, Asia and emerging markets? He is 2/3 US and 1/3 Canada since January 2012. Doesn’t like to invest outside of developed markets. Although there is lots of opportunity he feels they lack regulation, and also many of them use different accounting standards making it difficult to analyse financial statements. Prefers to capture the upside in international markets through multinationals that trade in the US.
A great business. The chart shows it has had a steep rise, but more recently it has been flat. Feels the market is trying to figure out which direction the business is going, and the next chapter of growth. At 20X PE along with an acquisition to digest, you are better off missing the 1st few innings, and coming in once that acquisition has started to digest. Historically acquisitions don’t go very well, especially at the beginning.
This gives a comfort and sense of security, and is a service we all use, especially in the US. They are large and pay a big dividend. However, the stock chart shows it hasn’t done much for a while. It has really gone sideways for several years at around $50. Other than the dividend, there hasn’t been any real capital appreciation. They are going through a transition. They were a telephone company initially, then a mobile cell phone company, and now getting heavily into media and transitioning once again. With their acquisitions, there is risk. If you own, he would suggest switching to Canadian telcos instead because of the dividend tax credit.
Had owned this at the time the stock price was going down. When it got back to previous levels, he sold his holdings. Over the last 12-18 months, they’ve gone through a transition of being more focused on what they want the business to look like going forward. Today, they are in 2 parts, children and women and family. He likes that move, but there are still lots of question marks on what the industry will look like. Still a lot of work to be done. Dividend yield of 8.6% which he thinks is safe.
(A Top Pick Feb 11/16. Up 24%. Up 24%.) Sleep apnea is such an unaware market. 26% of the population have it, and the penetration is less than 15%. Last year, there was a lot of built-up demand for the masks that they create, because the new line was being rolled out. They’ve rolled out the new masks, and there has been more demand than had been expected. The dividend is just under 2%. He is continuing to buy this.
Stock split? The reality is that a stock split is going to have very little impact to your long-term success in owning the shares. Also, it will make no difference to your performance. This and the National Bank (NA-T) are the cheapest on a valuation basis, and as a result they also pay the best dividends.
Move into banks instead? He likes the banks more. This company’s story on paper is pretty good. They’ve gone from being insurance centric to wealth management, which has that reoccurring fees. They’ve done a lot of things well. Interest rates are eventually going to go up, and this company is going to benefit. However, if you are not making money for your shareholders, it is a waste of time. He would make that move.
Relative to what they’ve been through, this has really done well. 75% of revenues are global and they are in over 180 countries. Have had a few very tough years from an environment perspective, and have held up very well. Although things are turning around, he would not be a buyer. A lot of their business is in emerging market countries where brand isn’t as important as price, and their main competitor is much cheaper. The stock is way too expensive at around 30X PE.
Market. He is invested and has 5% cash and 5% gold, so about 10% of his portfolio is hedged, or could go into equities if there was a sharp pullback. If there was a real meaningful pullback, he would underweight his bond allocation by around 10%, and go into equities for the short term.