Jaime Carrasco, portfolio manager at Canaccord Genuity
Focus: North American equities

MARKET OUTLOOK

If history teaches anything, is that it “rhymes” and patterns repeat, as Mark Twain observed. In that context, the recent EU elections in my opinion are but another example of the same populist wave that elected Donald Trump. Citizens are walking away from the status quo for the same reasons as in the 1930s: Too much debt is killing economic growth, pressing the populace to choose political alternatives — whatever they might be. As such, it’s important to recognize that systemic risk is rising while we face greater geopolitical uncertainty of outcomes. From an investment perspective, that fact must be hedged. Oddly, the Gold World Counsel reported that central banks are doing just that, having purchased more physical gold last year than at any time since Richard Nixon unleashed the fiat system in 1975.

Accordingly, I continue to advice that clients have at least 15 per cent of their investable assets in the precious metals sector and feel in good company, judging by Bridgewater’s recent increases in the sector as per their first-quarter filings. Ray Dalio’s quote from two years ago should ring true in the face of the lack of investor participation in the sector: “If you don’t own gold, you know neither history nor economics.”

In the portfolios, I remain cautious and continue to carry higher levels of fixed income, with much of the cash raised in the fourth quarter now sitting in good-quality convertible bonds with good yields purchased before the recent yields’ decline. Furthermore, I continue to underweight equity positions, sitting only in good-quality, dividend-paying blue chips mostly in REITs, pipelines and utilities.

The only industry that I’m comfortable adding to in this environment is in the cannabis extraction sector, in companies working mostly in CBD for medical purposes .These are only just beginning to take market share from the opioid-based pharmaceuticals, a sector that could greatly benefit from some “wholesome” competition and with much market share to win. Lastly, I feel good about having added to my favorite blockchain play when cryptos were bottoming and Bitcoin reached $3,000: it now sits above $8,000.

TOP PICKS

METALLA ROYALTY & STREAMING (MTA.V)

A new position in the portfolio, Metalla is a junior royalty company. It was chosen because it’s just beginning its growth cycle, having only recently declared its first dividend. Moving forward, as more and more projects come online, I feel comfortable in the appreciation of cash flows and equity value. Metalla is not followed by Canaccord.

CHARLOTTE’S WEB HOLDINGS (CWEB.TO)

Charlotte’s Web is a market leader in the production and distribution of wellness products made from CBD (cannabidiol), a compound extracted from industrial hemp. I have been invested in the company since the Canaccord-led IPO and recently added to this position again. We rank Charlotte’s Web as a “buy,” with a $29 target.

HALO LABS (HALO NEO)

Halo is a new addition to the portfolio, having participated in the recent convertible bond issue they did. Like Charlotte’s Web, they are a CBD extraction company with growing market share. Halo is not followed by Canaccord.

PAST PICKS: AUG. 14, 2018

FRANCO-NEVADA (FNV.TO)

• Then: $91.89
• Now: $104.14
• Return: 13%
• Total return: 15%

DETOUR GOLD (DGC.TO)

• Then: $11.10
• Now: $13.30
• Return: 20%
• Total return: 20%

AMERICAS SILVER (USA.TO)

• Then: $2.98
• Now: $2.46
• Return: -17%
• Total return: -17%

Total return average: 6%