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| Mohsin Bashir of Highwater Capital Management |
|---|
| 501 Rowntree Dairy Road, Suite 5 |
| Woodbridge ON |
| L4L 8H1 |
| 905.265.0649 |
| Mohsin Bashir's website |
| Fax: 905.265.0646 |
| info@highwatercapital.ca |
| BUY | BCE Inc. | BCE-T | 39.340 | Has done a great job of insulating itself and being able to push forward focusing more on the data side of the business, which has higher margins. More competition coming but they will still be able to pay their dividend. | 2011-11-21 | ||
| PAST TOP PICK | Becton Dickinson | BDX-N | 71.840 | (A Top Pick Aug 12/11. Down 8.41%.) Still likes. 38 consecutive years of dividend increases. | 2011-11-21 | ||
| Comment | Canadian National R.R. | CNR-T | 78.750 | Premier operator in its space. Excellent dividend. Trading at a pretty high multiple. In the transportation area, consider TransForce (TFI-T), which is a strong operator with great barriers to entry. | 2011-11-21 | ||
| BUY | Enbridge | ENB-T | 36.230 | Just purchased Seaway pipeline, which will allow them to ship the glut of supply from Cushing to the US golf Coast. This gives them an advantage to insulate their cash flow and earnings. Gives them a greater opportunity to grow and keep their dividend consistent. | 2011-11-21 | ||
| BUY | Corning Inc | GLW-N | 14.530 | Optical fibre, cable and LCD producer. Very cyclical business. Has found a little bit of support in recent weeks. Business is heavily driven by the profits from the glass business. Negotiating the 6% revenues they get from Samsung, which is expiring in the next quarter. Great dividend payer and a low payout ratio of 10%-15%. | 2011-11-21 | ||
| DON'T BUY | Goldman Sachs | GS-N | 91.300 | Pretty much every US Bank has been facing challenges. The biggest issue is their ability to pick up margins in a volatile market with low interest rates. If you want to have a focus on the capital market side of the business, this is where you would go. Would prefer the retail banking side. | 2011-11-21 | ||
| PAST TOP PICK | Johnson & Johnson | JNJ-N | 62.940 | (A Top Pick Aug 12/11. Up 1.67%.) | 2011-11-21 | ||
| TOP PICK | PepsiCo | PEP-N | 63.150 | A leader in snacks and #2 in beverages. Took a beating because of market share loss in carbonated soft drinks and beverages in general. Over 3% dividend yield. Consistent grower cash flows. Acquiring a lot of snacks companies. | 2011-11-21 | ||
| BUY | Power Corp | POW-T | 22.180 | Has a number of underlying operations, which are great businesses. Have consistently been able to deliver cash flow. Historically has had a discount to NAV of 15% but is now about 21.5%. Good value. | 2011-11-21 | ||
| BUY | Suncor Energy Inc | SU-T | 30.940 | Long-term will be able to generate production of 530-580 thousand barrels per day. Great assets. Plan to increase 12% in oil sands production. Dividend is strong and can grow. Reasonable value. | 2011-11-21 | ||
| PAST TOP PICK | Toronto Dominion | TD-T | 70.490 | (A Top Pick Aug 12/11. Down 6.13%.) | 2011-11-21 | ||
| TOP PICK | Thomson Reuters Corp | TRI-T | 27.770 | Taken some time for their integration of Reuters but this will be coming to a close at the end of this quarter. Spins off a lot of free cash flow. On par to generate about $840 million in free cash flow in Q4. Have plans to grow their free cash flow $3 billion by 2013-2015. Even though you have to be patient, you collect a nice 4% dividend. | 2011-11-21 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Markets. Income is the philosophy he is following. If you go with companies that can generate and spin off a healthy degree of cash flow that is consistent, you have an advantage. He is heavier in the large-cap tech space and picking away at select opportunities in consumers and more defensive plays like healthcare and large dividend paying stocks. | 2011-11-21 | ||
| TOP PICK | Thompson Creek Metals | TCM-T | 6.280 | Looking out a few years, he sees it trading at about a 32% discount to its NAV. Just acquired a copper/gold project in BC. One of the largest producers of molybdenum and one of the few that can produce finished product. | 2011-11-21 | ||
| DON'T BUY | Ship Finance International | SFL-N | 13.810 | Owns, operates and charters out large crude carriers, oil tankers, product shipment and dry bulk. Freight rates are very low and a lot of companies are having difficulty generating cash flow. About 10.8% dividend. Has some pretty heavy debt maturities coming up in 2 years. | 2011-11-21 | ||
| DON'T BUY | CenturyLink Inc | CTL-N | 36.900 | 7.8% dividend. When evaluating a stock and a dividend yield, look for underlying roots were the underlying yield comes from. This company has 4 active segments of voice, data, access and other. Would be a little concerned with their 300% operating income payout ratio. Something like 300%. Would prefer a safer bet such as AT&T (T-N) with a 40% payout ratio. | 2011-11-21 | ||
| TOP PICK | Becton Dickinson | BDX-N | 80.280 | Medical technology. 38 years of consecutive dividend increases. Conservative payout ratio of 28%. 3 segments, medical, diagnostics and biosciences. All 3 have been growing at about 4%-5%. Met or exceeded earnings expectations for the last 5 years, usually 5%. | 2011-08-12 | ||
| DON'T BUY | Eastman Kodak | EK-N (Dead) | 2.070 | To continue to survive, they would have to sell their intellectual property assets. Would prefer Eastman Chemical (EMN-N), the spin-off. | 2011-08-12 | ||
| DON'T BUY | Husky Energy | HSE-T | 25.810 | Imperial Oil (IMO-T) or Husky (HSE-T)? The size, breadth and its ability of Imperial Oil to maintain and grow its market share would be a positive for him. Husky will have more volatility. | 2011-08-12 | ||
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| BUY | Imperial Oil | IMO-T | 41.520 | Imperial Oil (IMO-T) or Husky (HSE-T)? The size, breadth and its ability of Imperial Oil to maintain and grow its market share would be a positive for him. Husky will have more volatility. This would be a good entry level. | 2011-08-12 | ||
| TOP PICK | Johnson & Johnson | JNJ-N | 63.360 | Capable of withstanding a number of different issues, which it has. 8.5% earnings yield and 3.6% dividend yield. | 2011-08-12 | ||
| DON'T BUY | Manulife Financial | MFC-T | 13.180 | Good numbers in Q2, which they badly needed. Normally they do a readjustment to their actuarial assumptions in Q3 and that could be a one-time charge that will be material for them. He would watch for what that is before he would be comfortable with this as a long-term hold. | 2011-08-12 | ||
| PAST TOP PICK | Newalta Corp | NAL-T | 11.780 | (A Top Pick June 16/11. Down 6.88%.) | 2011-08-12 | ||
| TOP PICK | Toronto Dominion | TD-T | 75.920 | One of the best in class. Revenues stream is split about 88% personal/commercial and 12% wholesale. Likes their US operations. Very safe. | 2011-08-12 | ||
| PAST TOP PICK | Thomson Reuters Corp | TRI-T | 31.290 | (A Top Pick June 16/11. Down 13.68%.) | 2011-08-12 | ||
| Comment | United Technologies | UTX-N | 72.450 | One of the best elevators and escalators manufacturers. Recently won a contract making Pratt & Whitney engine for the A3 narrow body commercial jet. This makes them a candidate for long-term growth. Very cheap. | 2011-08-12 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Markets. There is a big spread between bond yields and equity (earnings) yields so he is currently investing in equities. | 2011-08-12 | ||
| Comment | Ag Growth International Inc | AFN-T | 41.000 | Manufacture farm equipment. Q2 results beat expectations. A lot of this was a result of sequential improvements in margins. Also have some new exposure to emerging markets. Trades at a discount to its peers. | 2011-08-12 | ||
| Comment | Dryships | DRYS-Q | 2.720 | Has a 50-50 split between the dry bulk industry and oil transportation. Have a younger drilling fleet for ultra deep water drilling. Company is very highly levered. Have $2 billion worth of vessels that they need to pay for. | 2011-08-12 | ||
| PAST TOP PICK | Visa Inc. | V-N | 83.830 | (A Top Pick June 16/11. Up 13.47%.) | 2011-08-12 | ||
| DON'T BUY | Imperial Sugar Company | IPSU-Q | 7.540 | The correction in the price is a result of bad earnings at a bad time. Taste the number of challenges. Recently one of its facilities had an explosion and resulted in supply inefficiencies. Also has a lot of competition. Big debt level and they are burning cash quarter over quarter. | 2011-08-12 | ||
| BUY | BCE Inc. | BCE-T | 36.950 | The big 3, BCE (BCE-T), Rogers (RCI.B-T) and Telus (T-T) are all facing threat of new entrants. This company’s strategy has been consistent and has been picking up and leading in market share in wireless. Extraordinarily strong company for the long term. Good dividend. | 2011-06-16 | ||
| DON'T BUY | CitiGroup | C-N | 37.630 | You want to go into this one when the risk trade is on and we haven’t seen this at this point. Have been making some headway in building itself out internationally. | 2011-06-16 | ||
| BUY on WEAKNESS | Enbridge | ENB-T | 30.300 | Chart is a basically a 45 degree up trend over the last 2 years, but there is a significant multiple that you are paying for. Upside is fairly limited but quality of the assets, services and diversification allows them to pay a very healthy dividend. Would prefer it under $30. | 2011-06-16 | ||
| DON'T BUY | Gap | GPS-N | 17.700 | Clothing retailing is a very fickle space. Cotton prices have doubled, which have affected everyone by squeezing margins. Recent sales have been very poor internationally. | 2011-06-16 | ||
| BUY | Eli Lilly & Co. | LLY-N | 37.220 | Industry could be considered a value trap. A large number of large scale pharmas are trading at depressed values because of US health reforms and patents expiring. However this one is in one of the better positions to see itself through this cycle. Have about 70 drugs, mainly in oncology, neuroscience and diabetes that they are working on in their pipeline. | 2011-06-16 | ||
| TOP PICK | Newalta Corp | NAL-T | 12.500 | Canada’s largest industrial waste recovery business. Maximizing the benefit of having their intellectual properties. Their facilities have been generating double digit growth and revenues but the onsite has been spectacular in growth, excess of 50%. | 2011-06-16 | ||
| BUY on WEAKNESS | Pfizer Inc | PFE-N | 20.240 | This would be his 2nd choice after Eli Lilly (LLY-N). Facing the issue of a patent cliff where drugs are coming off patent. Has about 4 drugs expecting to move into phase 3 trials. Very attractive multiple. Good dividend yield. | 2011-06-16 | ||
| BUY | Power Corp | POW-T | 26.040 | Power Financial (PWF-T) makes up about 90% of the NAV. Also owns a couple of assets in Europe and Asia. Trading at about 21% of its NAV, which historically has been at about 15%. | 2011-06-16 | ||
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| SELL | Research In Motion | RIM-T | 34.370 | Wouldn’t be comfortable stepping in yet. Looks like a falling knife. Listen to the conference call coming later today to hear the language and the tone. | 2011-06-16 | ||
| TOP PICK | Thomson Reuters Corp | TRI-T | 36.240 | Has 5 segments including, markets, legal, tax and accounting, scientific and health care. (Looking to divest itself of health care.) Moving back to its core franchises and focusing more on the legal and markets. Subscription based business with a high renewal rate of 86%. Can generate $3 in free cash flow. (He is using options, selling Puts, to pick this one up.) | 2011-06-16 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Markets. There are a large number of macro factors that are putting pressures on, where normally there is only one. 1) Greece has been downgraded to triple C junk rated, 2) inflation issues in emerging markets and 3) debt ceilings are being reached in the US. There are also housing and unemployment issues in the US. Has gone defensive in the last few months and gone to cash in a number of positions. | 2011-06-16 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Canadian Banks. His favourites are Toronto Dominion (TD-T) and Royal (RY-T). Royal normally trades at a higher multiple and is shrinking to an interesting level. He sees good prospects in retail banking where TD is pushing very hard on growing this in the US. | 2011-06-16 | ||
| Comment | A Comment -- General Comments From an Expert | A Commentary | 0.020 | Shipping Stocks? If you look at the overall freight rates or any name in the industry, it is understandable that you could lose faith. However there are select opportunities but it takes time. You’ll have to be patient. Diana Shipping (DSX-N) is one with practically zero debt and $373 million in cash. They won’t do large-scale acquisitions but will be very selective. | 2011-06-16 | ||
| PAST TOP PICK | Churchill Corporation (The) | CUQ-T | 16.800 | (A Top Pick March 25/11. Down 12.58%.) Trimmed his position because some of the backlog of their big acquisition was priced too aggressively. | 2011-06-16 | ||
| TOP PICK | Visa Inc. | V-N | 74.880 | (A Top Pick March 25/11. Up 4%.) Debit card fees have put all the credit card companies in the limelight, which has put some short-term pressure on this stock. Thinks their growth prospects are outside of this debit card issue. Their growth prospects are in emerging markets, particularly in new technologies in emerging markets. Moving to build out it mobile technology capability. | 2011-06-16 | ||
| PAST TOP PICK | Diana Shipping Inc. | DSX-N | 11.240 | (A Top Pick March 25/11. Down 8.16%.) Still likes. | 2011-06-16 | ||
| DON'T BUY | Apple | AAPL-Q | 350.440 | Have the ability to innovate and develop a product that effectively created its own market. A little too rich at this time. | 2011-03-28 | ||
| Comment | Bombardier Inc (B) | BBD.B-T | 6.330 | Large CapX in their aerospace division, particularly in the C Series jets. Facilities both in Belfast and China. Doesn’t expect a dividend hike until there are significant orders on their C Series. Book to Bill orders has been dwindling on this jet. Transportation side is going very well. | 2011-03-28 | ||
| DON'T BUY | Cameco Corporation | CCO-T | 29.290 | Waiting on the sidelines regarding uranium. China has held off on their nuclear development and are taking more interest in natural gas, which is where he prefers to be. | 2011-03-28 | ||
| DON'T BUY | CitiGroup | C-N | 4.430 | Going to have a 10 to 1 split. A reverse split is rarely a good sign. Looks like there are still some hang-ups coming from Europe. Still sees global de-leverization. | 2011-03-28 | ||
| BUY | Canadian Natural Rsrcs | CNQ-T | 46.810 | Prefers over other oil sands companies because of the discount to NAV. Had a bit of a hiccup on the Horizons project and he bought on that. Longer term oil sands is getting global attention. | 2011-03-28 | ||
| DON'T BUY | Lockheed Martin | LMT-N | 80.260 | All aircraft and defense names trade at a fair discount on an EBITDA basis. Prefers something like Raytheon (RTN-N) because US Defense Dept is not looking for newer planes but to refurbish older ones. | 2011-03-28 | ||
| DON'T BUY | Teck Resources Ltd. (B) | TCK.B-T | 51.500 | Recently had lower production levels in their copper. Also their BC coal mining operation is still on strike. Would like to see an increase in production before looking at it. | 2011-03-28 | ||
| BUY | Wal-Mart Stores Inc. | WMT-N | 52.190 | Excellent clout and market share. Challenge will be rising input costs. There is an opportunity of increased sales volumes. Will be a margin squeeze but are hoping for greater sales. Reformatting stores to a more super market style. Good long-term value. | 2011-03-28 | ||
| Comment | Tim Hortons | THI-T | 44.440 | Facing a couple of headwinds, including rising input costs and more competition, particularly in fast service breakfasts. Very loyal Canadian following. A catalyst would be them going into the single serve coffee business. | 2011-03-28 | ||
| BUY | Oshkosh Truck Corp. | OSK-N | 35.360 | Main catalyst is their drive train system. Got a very large order from the Dept of Defense for all-terrain vehicles. Also do fire trucks, aircraft support and construction vehicles. Able to piggyback their expertise into military vehicles. A lot of international orders. | 2011-03-28 | ||
| TOP PICK | Churchill Corporation (The) | CUQ-T | 19.700 | Acquisition last year effectively doubled the size of the company. Margins are almost double some of its closest competitors. | 2011-03-28 | ||
| TOP PICK | Visa Inc. | V-N | 72.750 | Clamp down on fees gives an opportunity. Language on the proposed bill is a little softer. Likes the technological advances they’re making. | 2011-03-28 | ||
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| TOP PICK | Diana Shipping Inc. | DSX-N | 12.020 | Headquartered out of Athens. Ships iron ore, coal and grains globally with some ownership in a container ship business they spun off. Industry has been decimated. Characteristically this normally has a positive relationship to commodities but lately has had a negative relationship. Believes this will revert back again and this company will be best positioned for this. Have $311 million available in cash. Fleet averages 4.7 years versus peers of 8+. | 2011-03-28 |
