Michael Smedley, Executive Vice President & Chief Investment Officer, Morgan Meighen & Associates

FOCUS: Canadian Equities

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MARKET OUTLOOK:

Nothing much has changed since I wrote in June except that the rude political jousting in the United States has clearly devolved into a horror show from which the queen of the emails will emerge victorious but not really supported. It is an outcome of the gradual moral decline of the United States.

It might be a warning: the U.S. is not as rich as it used to be and its power in the world is also softening. ISIS, simply one of the better forms of organised anarchy and revolt, a condition always with us, is being contained. The U.K. might be embarked on showing us how countries can cooperate deregulated and free.

As I have said consistently before the start of the year the precious metals stocks are in leadership, the metal is firm, the producers are getting stronger and scarce development projects are getting funds. The sector is not expensive and could have a long way to run. I could recommend almost any name blindfold just now but instead I would report that even if the run falters or ends Agnico Eagle, which held an investors’ presentation yesterday will continue to look like an blue chip, doing well relative to its peers through all times of adversity, a late buy for the short term but early for the long term. Behind the golds sequentially, oil and gas are throwing up recoveries.

The biggest fixation in Canada right now is the fired up state of the Toronto and Vancouver housing markets where a layer of tax on the small but immensely cash rich foreign and mainly Asian component will add to prices and provide extra funding for the public coffers. I note that a book is about to be published on the attractions of property rental. There is always more than one direction and there is always lots of opportunity in the stock market. That will never change.

Top Picks:

Spin Master (TOY.TO)

It is relatively new to the public market but one of the most deeply skilled toy and entertainment property companies and becoming increasingly global and connected. Very Canadian and very serious.

Intertain Group (IT.TO)

Timing with Brexit unintended, a social gaming leader shifting into the “new U.K.” to profit by the power of its stock market gaming sector while maintaining an exchangeable share in Canada. Sterling recovery might be one of the attractions for investors who hold a stock that should be on the way to recovery.

Nintendo (NTDOY.PK)

A plunge into the part owner of Pokemon Go and other inventions in the new world of augmented reality.

Past Picks:  August 5, 2015

AirBoss of America (BOS.TO)

• Then: $24.43
• Now: $13.35
• Return: -45.35%
• TR: -44.52%

Detour Gold (DGC.TO)

• Then: $12.02
• Now: $31.92
• Return: +165.56%
• TR: +165.56%

GoldMoney (XAU.TO)

• Then: $5.45
• Now: $4.28
• Return: -21.47%
• TR: -21.47%

Total Return Average: +33.19%

Fund Profile

Smedley Special Opportunities Fund

Performance as of July 31, 2016

* Index: S&P/TSX Index

* Identify if your fund’s returns are based on reinvested dividends. Returns provided must be net of fees!

Top Holdings:

1. Middleby Corp - 7.2%
2. Morguard Corp - 5.9%
3. Premium Brands - 5.2%
4. Kinaxis - 4.8%
5. Knight Therapeutics - 4.6%

Website: www.mmainvestments.com