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TSX is largely gold, so that's what's driving the bus. It's the only sector outperforming the index this year, and it's outperforming by so much that it's raised the average of everything else.
Under the surface, the infrastructure stocks they own are doing pretty well. So he's happy with where things stand.
We're in some sort of changing of the world order. US government taking positions in private companies. Ongoing trade war which escalates and de-escalates day by day. A lot of that is filtering into gold. His firm is a bystander in this. They own a bit, but not a lot.
He's been watching the dichotomy between gold and Bitcoin. Bitcoin is supposed to be digital gold and better because it's portable and costs less to store. But it's not performing the same way gold is. That tells him that adoption isn't there yet. As well, when the person on the street is chatting about gold, that's a warning sign of bubble-like behaviour.
The changes we're seeing in the US treasury market and in many countries makes it hard to tell exactly how assets should be valued. Assets are valued relative to each other. A year ago, gold was clearly undervalued relative to other assets, and now that's changed.
You can make logical arguments both that there's room to run higher, as well as that we're overheated here and due for a pullback.
Well managed. With NFLX, video on demand, and the changing landscape of movies, it's not the same company it used to be. Could be more assets to divest, and could capitalize on real estate. Still, not sure what next move is. Look to exit.
As to what to move to, though it depends what's already in your portfolio, he still really likes energy infrastructure companies. See his Top Picks for some ideas.
Some investors like the entertainment and streaming segments, but his firm doesn't find those areas durable enough for their clients. That world just moves too fast for them.
Just this morning, he had a discussion with a client who's retiring at the end of this year. She's 58 and has worked for the same company for 30 years. It's not as though she's retiring with a massive portfolio, but it's enough for her to live off of. This portfolio has to take her to, say, 98 years old. That's 40 years. She needs something that's very durable and will last that length of time. Produce income for her to spend, protect the downside, and provide some upside if there are worries about inflation or currency debasement.
His firm prefers the larger caps for safety, durability, and dividend yield. For smaller caps to outperform, you need the commodity to work for you (and right now oil and gas are working against). Gradually people are returning to Canada on the basis of our lower decline rates, better prospects for transporting oil out of the country, and a government that might support further investment. All that's helping to buoy a company like this, that would normally be down with the commodity prices.
Good case to be made that oil prices could rally from here.
Interestingly, whole Canadian energy space has been pretty resilient. Gradually people are returning to Canada on the basis of our lower decline rates, better prospects for transporting oil out of the country, and a government that might support further investment. Good case to be made that oil prices could rally from here.
In 2026, you'll really want to watch drilling plans for US shale drillers. If they're not drilling, that could set the stage for a pretty good environment in Canada.
If you bought in April around $55 and today it's trading ~$72, that's about 10+%. Plus you get a 3-4% dividend yield, with 3-4% dividend growth. Pretty good for a regulated utility, and he's happy to own a company that puts out high-single or low-double digit returns sustainably every year. There aren't many companies more durable than this one.
Lots of growth ahead, but it won't be 20% a year. He'd rather have 8-10% total return a year for 20 years than 20% for 3 years (and after that who knows what happens?). Shows what the expectations are out there, everyone's looking for bigger pops.
Very tied to TOU, in terms of royalties and infrastructure. TOU is reducing its stake over time, which should help trading liquidity. Well run. Likes gas processing and royalty assets. He owns similar companies in the space, but those don't have concentrated exposure to one company. Add on weakness, don't trim here.
Likes that BN continues to source deals for them to do. Well run. Lots of infrastructure opportunities to support both energy and data centres.
Best to put in a registered account if you can. (There's a chance in the future that the Brookfield structure gets harmonized, this stock should pop, and a registered account will protect any upside.) It'll also protect the higher yield along the way.
Gas is priced regionally, where it's produced. TOU is good at getting gas to other hubs to secure better pricing, but the Alberta market has not played out as expected. There's a storage glut, but turnaround time for processing at LNG Canada is starting to come down. He owns it for a longer-term structural play. Wouldn't worry about these bumps.
Still sees it as a pretty asset-rich company. Dividend's been reset. Stock has attracted a few upgrades. Bounce from $29 to $34 is already pretty significant. Happy to buy down here where nobody wants it. It's one of those durable companies, need for telecommunications is not going away.
He doesn't see his firm ever selling this one. Well managed, really good assets. The price will ebb and flow with the commodity price. Dividend has increased ~20 years straight. Just finalized oil sands acquisition of outstanding percentage not already owned, which will increase FCF. Commodity has a good medium- to long-term setup.
Likes it for the dividend yield. Don't expect more than that unless the commodity price moves. Has actually performed quite defensively through the oil price selloff. More defensive than your average oil stock.
To accumulate, he'd be looking in the $12 range. Your buying opportunity would be 10-15-20% downside from where it is today.
