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

FOCUS: Canadian Equities

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MARKET OUTLOOK:

Markets might be in for a period of constructive calm now Hillary has wrapped up California and the Donald has read a prepared speech with his family looking on anxiously. I think we suddenly got closer to the election of the only candidate with internationally applied statesmanship, the end to threats to beat up Wall Street and breaking up the big banks and the reduction of Trumpitude into a helpful state of turpitude. Whether you want Hillary or not – with or without the emails and the speaking fees – she should walk again across the Middle East where the Americans were a major factor in the unsettling destruction of several of the great dictatorships and at home she should be made to work to win over angry people. Markets should work better. In particular, this is already evident in Canada though I fear that it will be difficult for normal diversified portfolios to perform at better than half the rate of market indices leveraged by the disproportionate success of stocks in gold, silver, oil, gas and probably the base metals.

Top Picks:

Napec Inc (NPC.TO)

First a Smedley “discovery” – Napec Inc, an electrical engineering services provider operating mainly in Quebec, Ontario and also the eastern United States where 70 per cent of its revenues are derived. Its clients are utilities and heavy industry. It is beginning to ride high on the back of management change, acquisitions, several quarters of improving numbers and an impressive backlog of business.

LinkedIn (LNKD.N)

Moving to the big league, I choose LinkedIn trashed by 50 per cent earlier in the year, amazing worst case treatment in the style of the times on a cautionary comment about future results. In my view this is the only web giant that primarily serves workplace needs and is certainly the only foreign internet company allowed to operate inside China – because of the central government’s concern about the employment of the population.

OTC Markets Group Inc (OTCM.US)

Finally, helping to make America great again! OTC Markets Group Inc., the descendant of the “pink sheets,” listing 10,000 securities, the virtually unknown brainchild of R.Cromwell Coulson, a youngish ex-portfolio manager and trader who is now doling out growth and dividends for himself and early investors in a small cap way. He has put together platforms and other services through which small enterprises are graduating to the bigger exchanges, as well as providing listings for foreign giants like Nestle, Roche and Volkswagen.

Past Picks: June 30, 2015 

Premium Brands (PBH.TO)

• Then: $32.10
• Now: $54.35
• Return: +69.31%
• TR: +73.93%

Stella Jones (SJ.TO)

• Then: $41.52
• Now: $48.84
• Return: +17.63%
• TR: +18.51%

Hudson’s Bay Company (HBC.TO)

• Then: $27.75
• Now: $15.43
• Return: -44.39%
• TR: -43.94%

Total Return Average: +16.17%

Fund Profile

Smedley Special Opportunities Fund

Top Holdings and Weightings

1. The Middleby Corporation - 7.1%
2. Morguard Corporation - 5.3%
3. Kinaxis Inc. - 5.2%
4. Knight Therapeutics Inc. - 4.8%
5. Premium Brands Holdings Corporation - 4.6%

Website: www.mmainvestments.com