I had the opportunity to spend a couple days in Toronto at our most recent conference and listened to some pretty good money managers on various topics.

 

Thought I would paraphrase some of what I heard and share it with everyone. In no Particular order:

Noah Blackstein - Dynamic

• Celebrated 20^th anniversary in July 2018
• “normalization” still occurring – it’s a process
• QE over last few years suppressed volatility – it’s gone and volatility is back
• The single biggest cost in investing is not fees… it’s mistakes
• He believes in only two asset classes – growth stocks and cash
• In New York City now, 30-40% of restaurant business is now take out
• 2018 was a tough year. Many blame Trump, but he believes it’s China – Since Xi became chairman for life, he unleashed a huge wave of regulations and its hurt the Chinese economy
• In Europe, hard to find names to buy – they need US style tax reform and more pro-growth policies
• Fed probably done, but “normalization” may mean more months like December
• Likes Square, PayPal, Chinese names (Weibo, BABA)

Mark Schmehl - Fidelity

• Looks for high valuation/high expectation or low valuation/low expectation names
• Down 30% since October 1^st
• Money is made when one knows where to go when the market stops going down
• One year ago, he held 80% in “magazine cover” stocks, now 80% in bad news stories
• December market action priced in a recession, which he doesn’t agree
• We are late cycle, low growth – need “squishy” market bad news
• 2019 most likely will be a trading channel year
• Blockchain is where the internet was in 1994, but no clean way to play it
• Like US Homebuilders, Microsoft, Square, Adobe, Biotech, ROKU

David Taylor - IA Clarington

• If market dropped 20% in the past and no recession occurred, one should be all in – he believes no recession
• Q4 was an anomaly, he’s fully invested
• Don’t give up on Canada just yet
• Risks – effects of tariffs a global trade:
  • Populism vs. Globalization
  • US deficit
  • US vs. China
  • Canadian consumer debt, high taxes, regulations
• Worst December since 1929 – 11^th worst month in 100 years
• 93% of all asset classes down in 2018
• Of the markets that have had 20% corrections, 55% of the time have been a recession, 45% not
• Gold massively under owned – used to be 12-14% of TSX, now 4%
• Like Whirlpool, Canadian gas names

Dave Picton - Picton Mahoney

• We are late cycle – need to watch what company management do with capital
• Q4 was systematic de-risking
• US rates are up from zero to 2.50%, at same time QE taking $50 Billion our per month – it’s double whammy as if rates >5%
• High US dollar has made global impact worse especially Emerging Markets
• What’s happening in USA since Trump election is hard to quantify – ANIMAL INSTINCTS back after being in fetal position for 8 years – regulatory burden has been cut 50% - sentiment totally reversed
• China will stimulate their economy
• Believes high chance of a policy error by the Fed
• Buying rapid disruptors (Match.com), energy (CNQ/CVE), cyclicals Champion Iron (CIA), commodities (Cameco – CCO)

Anthony Scillipoti - Veritas Research

• Last year his theme was “Don’t Worry, Be Happy” which is what all the forecasts said, he disagreed and was right
• Was a year of Bitcoin, and pot stocks (which last year were 57% of ALL trading on the TSX)
• For 2019, his theme is “NOMO MOMO” – i.e. it’s back to the basics because momentum names are done (i.e. FANG)
• Interest rates increases have changed the game (but are we done going up!)
• Passive money (ETF’s) playing havoc with trading
• Household debt to GDP:
  • In 2007 – USA 100%, Canada 85%
  • In 2018 – USA 80%, Canada 100%
• Doesn’t like the Canadian banks, loves Enbridge (ENB), Cogeco (mentioned it before the recent big pop up), Sell Canadian Tire

Rob Sluymer - Fundstrat Research

• We are in a secular bull market that thinks could go to 2033-34 (no that’s not a typo)
• No urgency to buy Canada
• Emerging Markets are a buy
• Interest rates are going to be range bound
• US dollar is peaking
• Oil has big resistance @$65/ gold $1,300 to $1,375
• Like Applied Materials (AMAT), Honeywell (HON), Deere (DE), PayPal (PYPL)
• In Canada – CGI Group, Enbridge, Teck, Methanex

Saw a whole bunch of industry analysts as well, here are their favourites:
 

Sector	Names
Pipelines	Enbridge/Pembina/Inter Pipeline
Canadian Financials	Manulife>Banks
US Financials	Bank America/PNC Bank/Key Corp
Transports	CP/Air Canada/Cargojet
US Industrials	Roper/Xylan/Honeywell/GE (aggressive)
US Consumer Staples	Altria/Colgate/Coke
US Healthcare	United Healthcare/Cigna
US Internet	In order, FB/Google/Priceline/NFLX, small caps – ETSY/ROKU
Canadian Oil and Gas	CNQ/SU – if oil spikes BTE/Kelt
Canadian REITs	BPY.UN/SRU.UN/Granite (GRT)
Canadian Retail	Loblaws/Alimentation (ATD)

 

Lots to digest!

Stay tuned,

Vito Finucci, B.COMM, CIM, FCSI

Vice President and Director, Portfolio Manager
 

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