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Sold his holdings at around $160 in October. The story hasn’t changed, he still likes it, and is looking for an entry point. Any time you see a stock appreciate 50% in a year, it is ripe for some sort of correction and pull back. This is a name that is going to do very well in a portfolio in the long-term. If you are a “buy and hold”, you could buy it and hold for the long-term, but if you are a little more tactical, buying it on a dip is a better way to make money.
Announced some problems with mortgages resulting in a knee-jerk selloff. This bank is similar to Canadian Western Bank (CWB-T). They are not large compared to the big Canadian banks, so they are not as diverse and don’t have as many revenue lines. They generally have more volatility. The valuation is not that much different from some of the bigger banks, so unless it was sufficiently cheaper, it would not be his first pick.
The world’s largest video game retailer. They’ve done a lot of things well. To combat online gaming, they have a great trade program. If someone is tired of a game, they can take the video to this company, and get credit for the new hot game they want, and that ability is not available online. The challenge is that they are going through a transition of being known as a video game retailer to being a sort of entertainment media outlet, and are doing that in a variety of ways, including getting into selling mobile phones. Expects this will trade at a discount because the market is worried about what it will look like 5 years from now. The balance sheet looks pretty good and pays a juicy dividend of 8%.
There is a lot of pressure on carbonated beverages. It’s shrinking year-over-year. This has transitioned away better than Coca-Cola (KO-N) has. More than 50% of revenues comes from non-carbonated beverages. They have over 20 brands that generate over $1 billion a year. He would consider this if it were cheaper. Trading at over 20X Price to Earnings.
(A Top Pick July 18/16. Up 31%.) Historically they’ve been very active in doing acquisitions, and have been buying up all sorts of different businesses. After seeing a meaningful double-digit return and at how many acquisitions they have done and their need to digest them, he wasn’t sure what direction they were heading in, so he locked in his profit. Still likes the name, but is out of it.
After its 1st leg of recovery, as the stock started to go sideways, he sold his holdings. He has a tough time seeing a business pay a 10% yield when they have the challenges this company has. Dividend yield of 9.78% which he doesn’t think is safe, as they should cut it to do better allocation of capital.
You need to own this. He doesn’t own it because his company’s mandate has a requirement that a business pays a dividend of at least 1%. It’s a name which is never going to feel good to own, because when it goes up you make great money, but end up with the million-dollar question of is it going higher or do you cash out.
Sell this and buy Shaw Communications (SJR.B-T) or BCE (BCE-T)? He likes all 3. It really comes down to your portfolio and what else you own. These are 3 very different businesses. BCE is the most boring name and is the “Steady Eddie”. You’re getting a dividend of about 4.7%, and the stock is up about 6% this year giving you a 10% return. He would steer you more towards BCE.
Regional planes and aftermarket parts distribution. He likes the business. It’s been under pressure from a Short seller making comments about using debt to pay the dividend. He is not convinced. They’ve been fairly active doing acquisitions, and he looks at the debt as being for acquisitions. Trading at a reasonable valuation at about 16X, and pays a great dividend of almost 6%. He is buying for new clients.
Cash, Power Financial (PWF-T) or Power Corp. (POW-T)? These are very different propositions. It depends on what else you own in your portfolio. Power would not be his pick of where to go in the financial space. Having cash at this point makes sense. Given how much markets have run up, you have to have a mechanism of being able to play some defence, so Cash would be his first pick at of these choices.
Cash, Power Financial (PWF-T) or Power Corp. (POW-T)? These are very different propositions. It depends on what else you own in your portfolio. Power would not be his pick of where to go in the financial space. Having cash at this point makes sense. Given how much markets have run up, you have to have a mechanism of being able to play some defence, so Cash would be his first pick at of these choices.
Market. One side looks pretty good. Confidence is high and there is earnings growth. US tax reform and Wall Street Reform are positive which helps earnings. The other side can’t be ignored if you are managing money. It’s how investors’ psychology plays into all this. After years of positive markets, with relatively low volatility, he expects that over the next 12-18 months, it will look uglier than it really is because, as we start to get volatility and a pullback, it will be further compounded by it being the first time it’s happened in a while. Once that happens, combined with the fact that there is a lot of bond money in equities, when we start to see some corrections, the volatility and the depth of how much markets go down, will be compounded by investors moving more capital out, taking a pause to digest the fact that every $1 million is now worth something like $900,000, etc. He feels pretty good about the earnings trajectory and what is going on from a global economic perspective. We will be going through a period that is relatively choppy.