Rob Lauzon, deputy chief investment officer at Middlefield Capital Corporation 
Focus: North American Equities
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MARKET OUTLOOK

Second-quarter earnings season has come in ahead of expectations on both revenue and margins. In addition, positive earnings guidance in combination with the weaker U.S. dollar supports current stock market valuations as we forecast into 2018. The market is due for a pause and potentially a fall correction – however, we would be buyers of the dip and forecast higher equities into next year. Bear markets are historically caused by a recession which we are not predicting near-term. Tax reform and repatriation of cash are two catalysts that could take the market higher over the next 12 months.


TOP PICKS

CARDINAL ENERGY (CJ.TO) 
Shares of Cardinal have been under pressure since announcing a $300 million acquisition of low decline oil properties from Apache Canada, representing tremendous value for new investors. After speaking to management, the dividend is sustainable in the current oil price environment, providing a high level of current income along with capital appreciation potential over the next 12 months as the firm de-lever’s the balance sheet and reduces costs. Oil over US$50 for an extended period would be a major catalyst for the stock. Last purchased on August 9th at $3.90.

BRISTOL-MEYERS SQUIBB (BMY.N) 
Pharma companies that have a robust innovative drug pipeline will have pricing power and should outperform over the long run. Bristol has these attributes and we believe their pipeline is undervalued. It is the leader in Immuno-Oncology, providing the firm with above average earnings growth versus its peers. Last purchased in July at US$55.50.

BLACKSTONE GROUP (BX.N) 
Blackstone is an innovative alternative asset manager experiencing strong asset inflows as they develop new products/solutions and expand their footprint. In addition, the Limited Partnership distributes high levels of earnings to unitholders. Tax reform could be a catalyst for the shares in the event they convert to a corporate structure. Last purchased in July at US$34.00.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
 CJ N N Y
BMY Y N Y
BX N N Y


PAST PICKS:  NOVEMBER 1, 2016

BRISTOL-MEYERS SQUIBB (BMY.N) 

  • Then: $50.80
  • Now: $57.07
  • Return: 12.34%
  • Total return: 14.70%

RIOCAN REIT (REI_u.TO) – we have trimmed the position, around $24.50 in June, because of retail REIT headwinds, didn’t get included in TSX60 rebalance in Q2

  • Then: $25.87
  • Now: $23.81
  • Return: -7.96%
  • Total return: -4.09%

BANK OF AMERICA (BAC.N)

  • Then: $16.61
  • Now: $24.37
  • Return: 46.71%
  • Total return: 48.16%

TOTAL RETURN AVERAGE: 19.59%

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
BMY  Y N Y
REU_u N N Y
BAC N N Y

 

FUND PROFILE: GLOBAL DIVIDEND GROWERS INCOME FUND** (GDG_u.TO)

Performance as of: June 30, 2017

1 month: Fund -4.2%, Index* 0.02%
1 year: Fund 13.3%, Index* 18.8%
3 year: Fund 9.4%, Index* 7.8%  
*Index:  MSCI World Total Return Index
**Reinvested Dividends

TOP HOLDINGS

  1. Bristol-Myers Squibb
  2. Bank of America
  3. Apple
  4. Merlin Properties
  5. CF Industries


WEBSITE: www.middlefield.com