Andrew Pink, portfolio manager at LDIC Inc.
Focus: North American large caps, preferred shares and fixed income
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MARKET OUTLOOK
We continue to believe the U.S. economy will outpace Canada. Employment trends are more prolific in the U.S. — the country’s year-to-date job creation of 1.8 million is outpacing Canada’s 48,000 (well, outpacing on a per-capita basis). Housing prices are more stable in the U.S., and household debt is contained. Tax and regulatory reforms have helped consumers and have made U.S. enterprise more competitive compared to global peers. The implications of USMCA will ultimately benefit the U.S. economy more than the other two nations.
We think the Federal Reserve has a greater ability to raise interest rates than the Bank of Canada, but the terminal rate of approximately three per cent is still quite accommodative, and gives the Fed control to stall or reverse on future hikes if market conditions warrant. We are unhedged on U.S. investments and expect to benefit from the relative strength of the U.S. dollar relative to the Canadian dollar, as interest rate differentials widen between the two nations.
TOP PICKS
CHORUS AVIATION (CHR.TO)
A regional airline under contract by Air Canada, and has more recently seen growth in its aircraft leasing business. The stock has come under some pressure this year, which has created a unique buying opportunity for investors looking for a sustainable seven-per-cent dividend yield backed by a compelling growth strategy, and a company run by a top-tier executive team.
ENERPLUS (ERF.TO)
A Canadian-domiciled energy producer with the large majority of its revenue-generating assets located in the United States. With assets located in the North Dakota Bakken and Marcellus Shale, the company benefits from much higher prevailing world energy prices rather than discounted Canadian prices — the result of deficient take-away capacity. Enerplus is trading at a wide discount relative to its U.S. producer peers and boasts the strongest balance sheet amongst the group.
PARKLAND FUEL (PKI.TO)
A North American based fuel-distribution company with strategic assets spanning the length of the energy supply chain. The company leverages its refining capacity and strong procurement pricing power through its growing commercial and retail distribution networks. Parkland most recently acquired a 75-per-cent stake in SOL, the Caribbean’s largest independent energy producer, for $1.57 billion.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CHR | Y | Y | Y |
| ERF | N | N | Y |
| PKI | Y | Y | Y |
FUND PROFILE: NORTH AMERICAN GROWTH & INCOME FUND
PERFORMANCE AS OF SEPT. 28, 2018:
- 1 month: Fund 0.0%, Index* -0.79%
- YTD: Fund 6.35%, Index* 3.76%
- 1 year: Fund 11.37%, Index* 8.72%
- 3 years: Fund 9.14%, Index* 10.15%
* Index (Benchmark): 70% S&PTSX, 20% S&P 500, 10% DEX Universe Bond Index
TOP HOLDINGS AND WEIGHTINGS
- Honeywell International (HON.N): 4.0%
- Descartes Systems Group (DSG.TO): 3.7%
- Vermilion Energy (VET.TO): 3.6%
- Nutrien (NTR.TO): 3.5%
- CenturyLink (CTL.N): 3.5%
TWITTER: @LDIC_Inc
WEBSITE: www.ldic.ca
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