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Market. He is over-weighted away from fixed income right now as he sees a rising interest rate environment and does not see deflation anytime soon. Mortgages and principal protected notes are better alternatives for fixed income investing. He is staying away from government bonds. Even in a recession (GDP declines in two consecutive quarters), he only sees a 20% potential downturn as a black swan event. He does not see a trade war with the US as being likely.
Bitcoin Comment – He said back in December the price of bitcoin would collapse. He built a pricing model using the adoption rate, money supply, and other factors and calculated a forecasted weighted average value. Current bitcoin prices of $9000 US, he says, suggests an adoption rate of 40% for bitcoin and a 25% likelihood of it happening. He sticks by his thought that adoption will not occur near this rate, therefore, the current valuation should be around $500 US. If you are buying it, you are expecting growth in the adoption rate.
He sees this company as being in the penalty box although he sees them as the best diversified REIT in the retail shopping mall space. However, if you are scared of the market downturn, it is trading at a multiple at the top of the sector. He also has an issue with the Sears shutdowns. This will not be a double, you are only hoping to capture your 6% yield and a couple percent per year capital appreciation. He would focus on other ones.
He likes this company although it has retraced in price somewhat. If you are not worried about Quebec separating, the 9.5% yield is great. It has about 75 properties. As a more senior REIT, they are able to acquire debt at much lower rates. The dividend is not at risk. He would buy it on this dip. Yield 9.5%.
As a proud Manitoban, he likes this company. It has mostly government contracted aviation deals. It is trading at a discount to its historical multiple, but the problem is they keep spending their money. They need a couple years to consolidate capital. They could face future competition in their Northern Canadian market space. The yield is about 6%. It is not a bad buy here at the current price weakness.
Is there a chance for a stock split? He owns this and thinks the split will be coming in the next year or two. He bought it last Christmas after shopping for family on their system – purely on gut feel. They are only scratching the surface on their distribution play. This should be in your portfolio for the next 20 years. Longer term there is risk if their position becomes too dominate.
He thinks this stock is going to come back, but the market wants to see continued deposits. The issue of fraud was clearly not good, but shareholders can take comfort that this was not creating artificial revenue. There were no bad mortgages. He would buy it at this point.
He says this is a buy. He would own this for the long term. Coal is not going away according to President Trump. They will be spending $2 billion in capital plays and it trades at multiples that are discount to the peer group. An explosion, or pressure event, was rumoured to cut their coal production but not as much as the 87-89% the market expected at the specific project.
Although a boring story, he says he has been buying this for quite a while. They buy and consolidate auto body repair stores and don’t sell stock and get cheap debt – the earnings go right back into the business. They deal with insurance companies, who love this business model. He does not expect it to double in the next year, but 20% is likely. Yield 0.5%. (Analysts’ price target is $118.50 )
