Gordon Reid, president and CEO of Goodreid Investment Counsel
Focus: U.S. equities
MARKET OUTLOOK
While this market cycle is getting long in the tooth, there are signs that an economic recession and market correction may be mild. First, interest rates continue to be low by absolute measures and our estimation is that rates may rise only another 150 basis points before reaching their terminal rate for this cycle. Secondly, corporate America has never been in better shape, partly due to governmental stimulus, but also from the good governess that followed 2008. Fundamentals are strong and the backdrop benign.
TOP PICKS
CITIGROUP (C.N)
Latest purchase on September at $74.
Management has done an excellent job in bringing this bank back to respectability. They’ve simplified the balance sheet, improved credit quality and successfully passed stress tests to allow for a resumption of dividends and buybacks. As interest rates push higher, money centre banks will have the opportunity to expand margins. Combined with a continuation of compelling valuations, we see Citigroup as a core holding.
LEAR CORP (LEA.N)
Latest purchase on September at $158.
Lear Corp has been under the trade dispute cloud and has given back 25 per cent of its value in the last six months. With the NAFTA issues now settled, look for it to recoup losses on the back of strong growth and ridiculously compelling valuations. Lear supplies auto seating systems and electrical power systems to car makers around the world. It will likely grow earnings at a double-digit clip and it trades at less than eight times earnings.
WASTE MANAGEMENT (WM.N)
Latest purchase on September at $90.
Waste Management is a new addition to Goodreid’s large cap portfolio. It comes with superior price stability and earnings predictability, important as the market cycle evolves. Core operations are strong, with volumes in solid waste collection growing well and pricing being firm. Look for $4.50 per share in earnings in 2018 and a 10% growth rate in 2019.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| C | Y | N | Y |
| LEA | N | Y | Y |
| WM | Y | N | Y |
PAST PICKS: NOV. 10, 2017
ALPHABET (GOOGL.O)
- Then: $1,044.15
- Now: $1,211.53
- Return: 16%
- Total return: 16%
HALLIBURTON (HAL.N)
- Then: $44.58
- Now: $41.80
- Return: -6%
- Total return: -5%
KB HOME (KBH.N)
- Then: $28.11
- Now: $23.39
- Return: -17%
- Total return: -17%
Total return average: -2%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| GOOGL | Y | N | Y |
| HAL | Y | N | Y |
| KBH | N | Y | Y |
FUND PROFILE
Goodreid’s North American Balanced
Goodreid’s balanced approach allows investors to participate in the potential growth of equity holdings while mitigating risk through ownership of quality fixed income instruments.
Performance as of: June 30, 2018
- 1 Year: 8.9% fund, 4.2% index
- 3 Years: 7.3% fund, 4.3% index
- 5 Years: 9.9% fund, 6.5% index
Index: Globe Canadian Equity Balanced Peer Index Average.
Returns are after fees and include reinvested income.
TOP HOLDINGS AND WEIGHTINGS
- Canadian equities: 33%
- U.S. equities: 40%
- Canadian fixed income: 17%
- Cash: 10%
WEBSITE: www.goodreid.com
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