Michael Smedley, chief investment officer at Morgan Meighen & Associates

Focus: Canadian equities
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MARKET OUTLOOK
What a relief! After years of side looks, hints, posturing, toing and froing, we finally have Yellen not exactly yelling but certainly leaning in one direction, which is up.

We are lucky the Brits now have Carney, an originator of uncertainty while we have Poloz, Canada’s central bank Batman, swooping in behind the Fed, shelving for now his inflation waiting game.

As rates climb, banks will enjoy bigger spreads on lending and savers will earn a bit of money. Commodities and other hard assets might gain more value. It will be good not to go on bumbling along in guesswork about rates even if the economy is not ready for it. It has been so long since rates ascended and over 40 years since we started to crush inflation that we have forgotten how real growth coexists with inflationary forces. 

In a once unimaginable rotation, investors are even buying reset preferreds again.

TOP PICKS

Michael Smedley's Top Picks

Michael Smedley, chief investment officer at Morgan Meighen & Associates, shares his top picks: Fairfax India Holdings, CPI Card Group and Katanga Mining Limited.

FAIRFAX INDIA HOLDINGS CORP. (FIHu.TO)
Fairfax has caught on with some esteemed and powerful institutional investors, the type that follow Buffet and the Fairfax Financial Group, or Chairman Prem Watsa himself because he knows a thing or two about finding jewelry in distant and sometimes controversial places — as with distressed Greece, where I found his investment power deeply entrenched and much appreciated. The closed-end fund structure could be a good way to Bangalore as single stock entry is quite restricted for foreigners.

CPI CARD GROUP (PMTS.TO)
CPI is a leader in the plastic card business that’s fallen in the crack between a Canadian listing and a full American identity as it waits for a recovery from a quarterly earnings mismatch and for the United States, a backward country, to modernise its card systems. While waiting for the stock to recover investors should enjoy apparently safe dividends.

KATANGA MINING LIMITED (KAT.TO)
The fire and fury of the new electric battery age is going to carry this stock forward, no matter that it might take more externally generated power to charge those batteries than will be available if the most optimistic forecasts are fulfilled. There is also the matter of finding how to recycle them after they have degraded. I choose Katanga because it is the key producer of the one rare component, which is cobalt, and buyers might need to cultivate the love and friendship of Ivan Glasenberg and his major resources group under Glencore Plc to get their hands on the stuff.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
FIH N N Y
PNT N N N
KAT Y N Y


PAST PICKS: JUNE 9, 2016

Michael Smedley's Past Picks

Michael Smedley, executive vice president and chief investment officer at Morgan Meighen & Associates, reviews his past picks: NAPEC, LinkedIn (bought by Microsoft December 2016), and OTC Markets Group.

NAPEC INC. (NPC.TO)

  • Then: $1.16
  • Now: $1.24
  • Return: +6.9%
  • TR: +6.9%

LINKEDIN (LKHD.N) – BOUGHT BY MICROSOFT (MSFT.O) DECEMBER 2016

  • Then: $136.52
  • December 2016: $195.96
  • Return: +43.53%
  • TR: +43.53%

OTC MARKETS GROUP INC. (OTCM.US)

  • Then: $16.70
  • Now: $24.55
  • Return: +47.00%
  • TR: +55.98%

TOTAL RETURN AVERAGE: +35.47%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
NPC Y N Y
LKHD (TAKEN OUT) N N N
OTCM Y N Y


WEBSITE: www.mmainvestments.com