COMMENT
Markets. Nice change to see a positive day or two, especially after last week and Monday. We're in for volatility for some time. War in Ukraine has exacerbated problems that were already becoming evident coming out of the pandemic. Real pressures on inflation, shortages in commodities whether energy or materials or agriculture. Global supply chain issues are not fixed. It really questions globalization of businesses, because it means we don't have strategic assets available when they're needed. We're in for a period of adjustment for a while. Investors are focusing on areas that are perhaps more receptive to inflation. Renewed focus on security of energy supply. All these things are good for those in the Canadian market.
COMMENT
Where to invest? He's tried to focus on the longer game. As a value investor, he buys stocks that aren't quite as exciting in growth markets, but can withstand the forces of volatility that descend. Canadian market is a good place to be looking right now, given our exposure to resources with energy and materials. Financial sector is fairly strong, so not a bad place to look. Globally, you want to find companies that can pass through inflationary trends. A lot of companies will have trouble doing that, especially as they have to restructure their business lines to access supply. We're really coming into a stock picker's market.
BUY
Interest rates going up is generally good for insurance companies. Extremely well managed. One of his favourites in the industry. He'd recommend it today. Priced at the right level now. Yield of just over 4%.
PARTIAL SELL
Hold or take profits? World is focused on food supply, and fertilizer companies have been the beneficiaries. Agriculture has further to go, but fertilizer companies look expensive. Never a bad idea to trim. More downside than upside from here.
WEAK BUY
A good, well-managed company. All the materials still have a fair amount of upside. Over 1x price to book. Not a bargain, fairly priced. You want exposure to the materials. Modest yield.
DON'T BUY
Large projects might be harder to finance with interest rates shooting up. The group's in a good position to do well over the next number of years. Has come back from its troubled days. Likes exposure to the area, but this one is more expensive than peers.
BUY
Big fan. Stronger and better as they've diversified. Inflation may cause a pullback, due to concerns about customers' ability to pay for discretionary services such as cosmetic surgery and fitness. For the long term of 3-5 years, no qualms about buying at these levels.
BUY
Exceptional company, great growth over the years, well managed and well structured. With the pullback, price today is reasonable as a long-term prospect.
COMMENT
Metrics to evaluate P&C insurance companies? Evaluate P&C companies much differently than lifecos, which have longer-term liabilities. P&Cs operate on a yearly renewable term, benefits can get repriced annually. on't get caught up in the year-to-year combined ratio. That ratio will fluctuate. Look at how good they are over time at investing the float, which is where they make their money. Look at the payment-to-claims ratio. Inexpensive premiums often mean it's hard to collect when you have a claim.
STRONG BUY
One of his favourites at the moment among Canadian banks. Price to book ratio is middle of the pack. Internationally exposed, especially South America, which is more exposed to the commodity cycle. Expects it to do well for the next number of years. Yield is amongst the highest.
PAST TOP PICK
(A Top Pick Apr 21/21, Down 1%) At close to book value, better priced today than SLF, which also has a lower yield. Large exposure to Asia's continuing Covid situation may explain lagging performance. Extremely well structured and financed. No hesitation in recommending it long term. Yield slightly over 5%.
PAST TOP PICK
(A Top Pick Apr 21/21, Up 65%) Still likes it. With CNQ, a benchmark energy stock in Canada. We're in a very good market for Canadian energy producers. Potential for greater dividends or share buybacks. Core holding. Yield is over 4%.
PAST TOP PICK
(A Top Pick Apr 21/21, Up 26%) Still likes it within the sector. Canada's predominant player, though Telus is not far off. Core holding. Doing well with fibre, among the top in Canada. Yield approaching 5%.
BUY
Still likes it. Extremely well financed, good dividend, strong balance sheet, great free cashflow. Trading at a bit of a discount to competitors. Significant build out in the coming years, which should fuel returns to shareholders. Amongst the top within the group. Solid.
BUY
At a bit of a premium, but among the best managed in the group. Fairly well priced. Very strong financials and management. Should continue dividend increases. A good one to own for the long term.