COMMENT

The 10-year U.S. bond yield breaking 3% today is not a massive risk to the market. It's about the velocity of that move, which was gradual--the market can digest this. The data out of the U.S. hasn't been as bad as Europe. So, he's not panicking and selling. To date, over 110 U.S. companies have reported and overall they are coming in ahead of expectations. Will we get 20% EPS this year? Likely not, but maybe 10%. Is this peak earnings now or part of a longer cycle? There are currently opprortunities in Canada and America to pick up industrial tech companies that he thinks have pretty good tailwinds.

BUY

It's been a wild ride. He's follows it closely. It's a well-run consolidator. They had a horrible rare last quarter, missing on fuel margins, but he expects a better quarter. It's a high-quality stock. E-vehicles are another fear, but he thinks those are years away. He expects a rebound in ATB and sees this is an opprtunity.

DON'T BUY

He follows this closely. It started to break down a while back. The energy market has hit a pipeline roadblock. ENB is overleveraged: $65 billion of debt is overweighing their market cap. He's waiting until they clean up their balance sheet. It's now trading at 52-week lows. Maybe hold this, but honestly he would have sold it by now.

DON'T BUY

They've executed well. Has a reasonably valuation. Maybe after some quarters he may look into it, but he's not 100% sold on the demand for their currency services.

BUY

He's owned this for a long, long time and it's one of his biggest holdings. Their after-parts business struggled last year, but they are making up for that now with that business growing again. They enjoy a record backlog now. Lots of cash. They think a few steps ahead and can expand into other areas of buses. Multiple is only 16x forward earnings. He'd even buy it here. This will be a $60 stock.

DON'T BUY

A bad acquisition two years ago hit them badly after that new company suffered a negative drug trial. Then, the stock dropped and he sold. There's probably still value in this stock, but he'd rather buy something else.

BUY

Likes this a lot. It's a royalty company in fast food, but the minimum wage increase hurt them. He's added to his position and plans to hold it for a long time. They had a dip last year, but has enjoyed strong quarters since. Great franchise, good yield around 5%.

COMMENT

Market. Commenting on a 1.55% selloff in the Dow, he said that one of the factors is the rise of the yield of 10-year Treasuries to 3%. Another factor is sell-on-the-news as investors see results. The profits have jumped significantly, but the rise last year were predicated on the expectations of a very high earnings increase this year. Good news is already priced into the stocks. He doesn’t expect much valuation expansion at the present multiples. He has been increasing his proportion of cash in the funds that he is allowed to do so in. He is hedging, shorting stocks, and imposing a higher burden on new investments. Investors need to be more defensive, to respond to higher volatility. He is looking for companies that have a dividend, solid cash flow, and other factors that make them resilient in the face of volatility.

BUY

He owns this in a few of his funds and really likes the company. (1) They are one of the largest alternative asset managers in the world. (2) They are a Canadian success story with a global impact. (3) They participate in asset classes that are characterized by a predictable cash flow, such as real estate, infrastructure, power, and recently business services. (4) They have diversified into casinos and a wide range of other businesses. (5) They earn a variety of types of fees. The stock has sold off about 10% in 2018, largely because of the rising interest rate environment. People are worried that rising rates might be a headwind, for example for their real estate business. He thinks this creates a good opportunity to pick the shares up for less. This is good for a buy and hold for 5 to 10 years.

COMMENT

In response to a question about the impact of the Minnesota judge’s recommendation today of a route for its pipeline that Enbridge likes less: He doesn’t own Enbridge but he saw the news. He sees this as a temporary setback, doesn’t think this will have a material longer term effect on the price or the dividend. However, this might temporarily affect Canadian oil flows south.

DON'T BUY

He has owned this before. The stock has been very tough recently. The business used to have monopoly positions with licenses that protected their investment. Recently, licenses have been awarded to other companies and this puts into question their monopoly position. This had read to a revaluation of the company. The company also has a fair bit of leverage on its balance sheets, and with recent stock performance, it is not in a position to raise capital.

BUY

He stills owns it in his funds, likes the company. Met with the CEO and thinks they are doing all the right things. He thinks that small-cap Canadian stocks are generally out of favor and this stock is suffering from that broader problem. The stock is not widely followed. They are also being penalized for lower EBITDA margins than expected. Positives: the company is aggressively investing in its brands and growing rapidly. They are in the right spaces--as organic foods. A comparable company in the US would trade at 3 to 5x revenue and Greenspace is trading at just over 1x. He thinks this is very cheap. If it can’t grow into its own multiple, he thinks it might be taken over. (Analysts’ price target is 2.37$)

BUY

He thinks this is a successful investment, run by one of the most successful American investors of our time. However, there is headline risk in the company when the management of the company passes from Warren Buffett.

BUY ON WEAKNESS

He likes this company very much and has owned it in the past. This is the only public company in Canada in the self-storage space, so it offers a scarcity value. It is a consolidator of storage companies. The trends are all going the right way for this type of business over the next 20 years--people are living in smaller spaces and need storage. His only concern is that the stock is a little expensive now. He sold it at a profit and is waiting for it to come back down before buying again.

HOLD

He just picked this up for one of his funds. When banks sell off more than 10%, as the Candian ones have over the past year, he pays attention. There's been talk of a housing slowdown, which of course effects banks, since credit could slow down. He likes RY among the Canadian banks, because RY has U.S. exposure, and is doing a lot in technology. Safe to hold.