Barry Schwartz, President and CIO, Baskin Wealth Management
Focus: North American large-caps
Top Picks: Fairfax, Fair Isaac Corp, TransDigm
MARKET OUTLOOK:
History shows that while the immediate impact of exogenous risk can be highly disruptive and unpleasant, generally the effects are not long lasting.
Companies adapt, as do consumers. Higher prices bring new producers into the market and inspire changes in behaviour. For example, the Organization of the Petroleum Exporting Countries (OPEC) oil boycott of 1973 to 1974 caused global oil prices to quadruple, but in the end, led to more efficient cars, conservation measures, and reduced reliance on OPEC suppliers. Medium term pain led to long term gain.
First quarter earnings season has started and for the most part, the fundamental results have been very strong. We know, from experience, that earnings are more important than anything else in determining the value and stock prices of public companies.
Investors need to look past the short-term impact of the Iran war.
Great companies adapt and patient shareholders are rewarded.
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TOP PICKS:
Fairfax (FFH:TSE)
Like Berkshire Hathaway, Fairfax is a disciplined insurer that has done a good job investing the float at consistent returns. The market is worried about a softer insurance cycle, but Fairfax focuses on specialty insurance and will remain prudent with underwriting. Shares are currently trading at 1.2 times book value and eight times consensus earnings for 2026, with free cash flow being deployed into buybacks.
Fair Isaac Corp (FICO:NYSE)
Fair Isaac Corp (FICO) is the leading provider of credit scores for consumer loans with 98 per cent market share for mortgages, auto, and credit card loans.
Shares have fallen sharply due to the approval for VantageScore 4.0 to be used in agency mortgage loans and the corresponding impact to FICO’s market share and pricing power.
We believe these worries are overblown and expect FICO to maintain market share due to their integration in the securitization market.
The valuation is attractive at 25 times earnings for an asset-light monopoly with pricing power.
TransDigm (TDG:NYSE)
TransDigm is a leading provider of proprietary parts for aerospace and defense markets.
These parts are qualified into the aircraft, making it a high-margin recurring revenue stream.
Shares have been impacted by weak aircraft production at Boeing and Airbus, inventory de-stocking issues and worries about dual sourcing by the Pentagon, even as financial results remain strong, providing an attractive opportunity to buy a high-quality compounder.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| FFH:TSE | Y | N | Y |
| FICO:NYSE | Y | N | Y |
| TDG:NYSE | Y | N | Y |
PAST PICKS: JUNE 3, 2025
Apple (AAPL NASD)
Then: US$203.27
Now: US$271.35
Return: 33%
Total Return: 34%
Berkshire Hathaway (BRK.B NYSE)
Then: US$497.83
Now: US$473.60
Return: -5%
Total Return: -5%
Constellation Software (CSU TSX)
Then: $4945.36
Now: $2473.89
Return: -50%
Total Return:-50%
Total Return Average: -7%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| AAPL NASD | Y | Y | Y |
| BRK.B NYSE | Y | Y | Y |
| CSU TSX | Y | Y | Y |
