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COMMENT
Markets. First half of the year was choppy for both bonds and stocks, both in Canada and US. He's positioning defensively. Markets have come off their peaks, and he expects a recession to start later this year and continue into next. Taking less risk in portfolios than a year ago. Emphasizing companies with strong balance sheets, self-funding, selling products that meet consumer needs instead of wants. Going for opportunities in staples, utilities, telcos, healthcare. Leaving the more cyclical areas like financials, tech, consumer discretionary, and industrials.
COMMENT
Overweight cash and gold? Yes. Cash has fared better than bonds this year. Steep rise in interest rates is the cause of the bear market that's unfolding and hurting bonds. Cash is a reasonable place to be. Gold has been disappointing, but still thinks the trend is intact. Higher highs are still in store. Relentless buying of the USD and other traditional, risk-off, safe haven assets has put pressure on gold. Essentially, those assets are competing for capital, and the USD is winning at the moment.
SELL
On the surface, trades cheaply. Compelling dividend. Problem is sun-setting business in printing, and that cash cow is shrinking faster than growth of other divisions. Earnings peaked in 2018. Era of steady dividend grower is over. Dividend at risk if can't restore profitability. Value trap. Better places to invest.
publishing
printing
BUY
Great grower and compounder. Behind 7-Eleven, second-largest convenience store owner in the world. Great operators and acquirers in a fragmented industry. Juicy margins on store items. Scale lets them sell fuel for less. Under-leveraged. Grows organically and inorganically. Petro-Can purchase would be great. He's buying.
food stores
BUY
Defensive, low beta. Sustainable, competitive advantage. Market share in Canadian P&C. Specialty line in the US that's growing. Big acquisition in UK and Ireland. Great risk takers. Have the float to invest during rising rates. Plenty of room to grow. Grows dividend each and every year. Strong balance sheet, undemanding valuation. Buy and hold for the long haul.
insurance
PAST TOP PICK
(A Top Pick Jul 07/21, Down 1%) Banks are a cornerstone of portfolios. Cater to needs, not wants. Canadian banks are dominant oligopolies. Could be vulnerable to profit losses this year. Net interest margins are compressing. Dividends are safe, likely to grow. Well capitalized. Usually market outperformers.
banks
COMMENT
Canadian banks. A cornerstone of portfolios. Cater to needs, not wants. Indispensable to the economy and a leveraged play on its growth. Dominant oligopolies. Could be vulnerable to profit losses this year. Net interest margins are compressing. Dividends are safe, likely to grow. Well capitalized. Usually market outperformers.
SELL ON STRENGTH
Perennially inexpensive, grows fairly consistently, but no one cares. There's always something shinier. Better opportunities in Canadian banks, alternate asset managers, and P&C insurers. A safe hold through a difficult environment. Dividend unambiguously safe, may even grow. Take profits when it gets close to a 3 handle.
insurance
DON'T BUY
CWB vs. NA Between these and the Big 5, he'd prefer one of the 5. Between this and NA, he'd prefer NA. NA is better diversified in lines of business and geographically. NA has better scale advantage, management, and capitalization. High single-digit dividend increases from NA are pretty reliable, though its dividend increases may pause if credit losses get too high.
banks
WEAK BUY
NA vs. CWB Between these and the Big 5, he'd prefer one of the 5. Between CWB and this, he'd prefer NA. Better diversified in lines of business and geographically. Better scale advantage, management, and capitalized. Its dividend increases may pause if credit losses get too high. Otherwise, high single-digit dividend increases are pretty reliable.
banks
