Gordon Reid, president and CEO of Goodreid Investment Counsel
Focus: U.S. equities
The core question for market participants: why is the market near all-time highs in the face of an earnings recession, a tepid economy and a myriad of negative macro issues? The answer is a Federal Reserve that the market believes has its back and a complete lack of viable options to invest in. Goodreid’s reaction is to stress quality, pay attention to valuations and be responsive to asset mix targets.
CATALYSTS TO WATCH
- Who holds Congress in the upcoming U.S. elections?
- Does the Fed raise rates a number of times in 2017?
- Can corporate earnings reinvigorate in 2017?
- What can we expect of emerging markets in the next decade?
- Passive vs active investing — let’s ask the right questions.
CITIGROUP (C.N) – latest purchase Sept. 2016 at $47
Citigroup’s stock price is hostage to the Fed’s action on interest rates. Downside protection is firm as this stock trades at very compelling valuation levels. The upside is contingent on a steeping of the yield curve which will add meaningfully to the bank’s profits. In the current environment, owning the financials is likely a winning strategy.
TRI POINTE GROUP (TPH.N) – latest purchase Sept. 2016 at $12
While the entire home-building sector has significant appeal from a growth and valuation standpoint, lumpy results are giving the market pause. That said, the longer-term trend is strong, and this builder of single-family homes should gain traction in the coming quarters. Revenues, earnings and free cash generation are accelerating.
OWENS-ILLINOIS (OI.N) – latest purchase Sept. 2016 at $17
Owens-Illinois is the largest producer of glass containers in much of the world. A newly-minted turnaround plan is yielding results, and at barely eight times earnings this issue has strong prospects even with modest success. Substantial free cash flow will enable the company to pay down a burdensome debt level.
PAST PICKS: NOVEMBER 4, 2015
- Then: $135.34
- Now: $122.05
- Return: -9.82%
- TR: -8.04%
TIME WARNER INC (TWX.N)
- Then: $72.20
- Now: $79.26
- Return: +9.78%
- TR: +12.16%
CINEMARK HOLDINGS (CNK.N)
- Then: $35.56
- Now: $39.95
- Return: +12.35%
- TR: +15.80%
TOTAL RETURN AVERAGE: +6.64%
FUND PROFILE: GOODREID’S NORTH AMERICAN BALANCED
PERFORMANCE AS OF SEPTEMBER 30, 2016:
- 1 year: Fund 7.2%, Index* 9.1%
- 3 year: Fund 9.1%, Index* 6.7%
- 5 year: Fund 10.2%, Index* 7.3%
* Index: Globe Canadian Equity Balanced Peer Index Average
TOP HOLDINGS AND WEIGHTINGS
- Candian equities: 34%
- U.S. equities: 37%
- Canadian fixed income: 24%
- Cash: 5%