Bryden Teich, partner and portfolio manager at Avenue Investment Management
Focus: North American equities

MARKET OUTLOOK

The last few months have been an extraordinary period for global markets. With regards to the state of the economy, the best analogy we have heard compares our current state of quarantine to being stuck in a grounded plane while there’s a “flight delay,” a frustrating and helpless feeling. Despite the uncertainty, we significantly added to our investments during the depths in March. Our focus has been on:

1. Wanting to own businesses that are going to remain solvent during the shutdown.
2. Buying new positions in companies that we believe can succeed once the economy starts up again.

There remains a tug-of-war between the economic fundamentals and monetary and fiscal policy actions. Economic gravity would justify much lower stock prices, but unprecedented central bank action and fiscal policy is attempting to counter-balance against this.

Our strategy is to maintain investments in good businesses that can navigate the changing world, along with owning investments in hard assets like real estate, gold and utilities.

TOP PICKS

Brookfield Infrastructure Partners (BIP-U TSX)

Brookfield Infrastructure Partners owns different global infrastructure assets, including toll roads, energy terminals, shipping container ports and rail tracks. Brookfield has the advantage of being able to allocate their capital around the globe towards different infrastructure assets. We believe they are in a strong position to buy distressed assets during this period of time.

Enghouse Systems (ENGH TSX)

Enghouse is a Canadian technology company that focuses on enterprise software services. They provide critical technology services for the management of network infrastructure such as telecommunications services, customer service call centers, and video conferencing technology, including tele-health and Skype. The company has an excellent track record of making acquisitions and generating high rates of return on their invested capital. They also have zero debt.

Barrick Gold (ABX TSX)

Barrick is one of the best managed gold companies in the world with a diversified asset base. Our view is that the current period is an important time for investors for investors to have some exposure to precious metals and that is why we have a core position in Barrick.

PAST PICKS: APRIL 25, 2019

Superior Plus (SPB TSX)

• Then: $11.78
• Now: $8.90
• Return: -24%
• Total return: -20%

Vermilion Energy (VET TSX)

• Then: $35.76
• Now: $5.10
• Return: -86%
• Total return: -83%

PrairieSky Royalty (PSK TSX)

• Then: $20.31
• Now: $8.98
• Return: -56%
• Total return: -53%

Total return average: -52%

WEBSITE: https://avenueinvestment.com/
YOUTUBE: Avenue Investment