Jul 12, 2018
Stephen Groff's Top Picks: July 12, 2018
Full episode: Market Call for Thursday, July 12, 2018
Stephen Groff, principal and portfolio manager at Cambridge Global Asset Management
Focus: North American dividend stocks
"It's a real mixed bag out there. Earlier in the year, when rates moved up, we found some really good opportunities in some utilities sectors and parts of consumer staples ... But now, it's a lot of one-off opportunities."
"Energy is interesting. I would say in general the valuations aren't as compelling as they were even a couple of months ago, but within the space there are still some very high-quality players we do believe in."
Walgreens is a high-quality business which has de-rated substantially. While there are competitive headwinds, we believe the business does enjoy various moats which will enable it to generate material amounts of free cash flow. Management is well aligned and we trust they will allocate capital prudently. We believe the challenges faced by the industry are more than reflected in the current valuation. Most recent purchase on May 23, 2018 at $63.88.
BLACK STONE MINERALS (BSM.N)
Black Stone has an excellent business model as it benefits from the capital spent by others across their asset base. It remains well diversified across basins and is run by a returns-oriented management team. We believe they remain well positioned to compound free cash flow per share in addition to paying an attractive 6.8 per cent yield. Most recent purchase on April 20, 2018 at $17.72.
CROWN HOLDINGS (CCK.N)
Crown operates in a more mature industry, but it has shown an ability to drive strong returns on incremental invested capital over the long term. While their recent deal has resulted in higher than historical leverage, we believe in the merits of the deal and their plan to deleverage the balance sheet. We expect this to create material shareholder value over a multiyear time horizon. Most recent purchase on May 1, 2018 at $48.33.
PAST PICKS: SEPT. 6, 2017
- Then: $131.77
- Now: $163.15
- Return: 24%
- Total return: 27%
VIPER ENERGY PARTNERS (VNOM.O)
- Then: $17.21
- Now: $32.07
- Return: 86%
- Total return: 96%
- Then: $38.62
- Now: $48.82
- Return: 26%
- Total return: 28%
Total return average: 50%
Cambridge Canadian Dividend Fund
Class F performance as at June 30, 2018
- 1 Month: 2.3% fund, 1.7% index
- 1 Year: 7.9% fund, 10.4% index
- 3 Year: 9.6% fund, 7.0% index
* Index: S&P/TSX Composite Index
* Fund’s returns are based on reinvested dividends and net of fees.
TOP 5 HOLDINGS AND WEIGHTINGS
- Walgreens Boots Alliance Inc: 5.0%
- Canadian Natural Resources Ltd: 4.5%
- Alimentation Couche-Tard Inc: 4.4%
- Emera Inc: 4.1%
- Hydro One Ltd: 4.0%