N/A

Market. The first half of the year was pretty soft and people were wondering if they were going to get a second-half recovery. If you add up the 4 quarters of this year, you’ll probably see about a 2% growth. Global growth has surprised him this year. The European economy has made a nice recovery and the Japanese numbers have been pretty good. In China, moderation has slowed down, even though it has all been debt financed. With the Trump thing, there is a lot of bullishness, which we have seen in the stock market. The soft economic data has been exceptionally strong, but the harder data such as retail sales, industrial production, trade data, is not nearly as supportive, so it will be interesting to see how it washes out for the balance of the year.

COMMENT

Has added to his holdings in the last couple of months. He understands how bad retail is because of Amazon competition. On the other hand, it is too hard for him to ignore what the potential valuation is on the real estate side. If there is $30 worth of real estate assets, they are going to find a way to surface it. The risk/reward is pretty good.

COMMENT

Valuation has been excessive for a while. Same-store sales growth in the last little couple of quarters has been slowing down. Their expansion has started to get a few headwinds. Did a fantastic job of reorienting their company a couple of years ago, and the stock reflected that. Not sure he would be jumping in at this time. There is too much competition in this market.

COMMENT

A well diversified REIT with good assets. His problem with REITs is that they get a valuation because of their payout, which is a little excessive, relative to the rest of the market. Trading at 12 to 15 times enterprise value to operating cash flow. There is no real organic growth in most of them. They are popular with investors because they pay out up to 90% of their Operating Cash flow as a yield.

COMMENT

He likes this and it is one of the few financials he owns. They have a better growth profile than a lot of domestic Canadian financials because of their international holdings. They’ve done a great restructuring in the past couple of years. On top of that, rising interest rates benefit the lifecos.

PAST TOP PICK

(A Top Pick Oct 12/16. Down 28.4%.) Pulled the plug on this just after they reported earnings. The positive is that they are still an asset story. When you look at the value of content out there, you could argue there is still $20 of valuation. The problem is, they levered up to make the Peanuts acquisition.

PAST TOP PICK

(A Top Pick Oct 12/16. Up 23.49%.) Still one of the great growth stories. Nobody has better data sources and the ability to get into it than this company. This is a juggernaut that is going to continue to grow good cash flow.

PAST TOP PICK

(A Top Pick Oct 12/16. Down 0.99%.) Had felt this had to be worth more to somebody such as Disney, Alphabet, Facebook, etc. Some of the players were looking at this, but ended up doing other things. User growth has stalled out a little. As an asset play it has value. It generates cash flow.

COMMENT

Doesn’t think there is any money to be made in this. There are a lot of people more bullish on the stock than he is. Their capital issues have gone aside. They have the new investors and new management. His problem is the business model. It is a funding issue. The cost of financing has gone up, and he thinks the spread is tight, so where do they make money going forward?

HOLD

This still has a good core business. The router business is changing and they still own that. The way equipment has evolved, they’ve continued to grow, but not at the same rate. Margins are strong. Dividend yield of 3.4%.

PARTIAL SELL

He is Short this, but not because of any holes in the story. It was just based on excessive valuations. Growth is still in place. In the short term, the problem is because of questions that were brought up by Citron, especially about the affiliate system, where a lot of people are setting up storefronts just to bring in others. That is not going to last. If you own, he would take a little money off the table.

COMMENT

He has a hard time making an investment for a business that doesn’t exist yet. If you are going to own anything, own the “go to” name, and Canopy is definitely the “go to” name in that sector.

COMMENT

He is warming up to agriculture a little. With the merger, this will be the “go to” name in the sector. It is a good fit. He is seeing a bit of a bottom in commodity prices. You are not going to get hurt by owning either Potash (POT-T) or Agrium (AGU-T) right now.

HOLD

At best, this is a Hold. He still doesn’t like it. A lot of these big Canadian utility pipelines have done US acquisitions, and the way the Cdn$ has moved, it has worked against them in the short term. His bigger problem is valuation. It is basically trading Debt to EBDA above 6 times. Earnings are growing, but the dividend is a 4% yield. They have something like $2.25 in estimated earnings this year, and are basically paying out 100% of earnings in the form of dividends. They also have a high debt ratio. Growth is only about 5%. Also, the PE multiple is still above 20.

TOP PICK

They’ve done a good job in the past couple of years of migrating more to the US to the Permian Basin, giving them higher productivity and higher rates. They’ve done a few acquisitions giving them a broader product and services offering. Has a joint venture with Halliburton for international rigs. The biggest reason is that drilling stocks are trading at about 30%-35% of replacement value of the assets. They’ve always been a Buy at that level and a Sell at 70%-80%. (Analysts’ price target is $2.90.)