DM – Q2 Portfolio Commentary
Checking the math – One of the most fundamental operations that students learn at business school is how to estimate the value of an asset based on the cash flow it generates. In this calculation, an appropriate current price is derived by “discounting” income streams at a given rate, often the prevailing bond yield of appropriate maturity or the return that the individual requires to commit capital to the investment. All else equal, if the asset can be acquired for less than that figure, the investor should go ahead; if not, he or she may want to look elsewhere. This method can be used to gauge fair price for income producing real estate, privately held businesses, listed stocks, and just about anything generating (or expected to generate) ongoing earnings. We can also use the technique to get a sense of where an entire equity index is trading relative both to its underlying fundamentals and how investors have valued those characteristics in the past.
Click here to read more: DM-Portfolio-Commentary-Q2-18
DM Montly Report – Summer 2018
PERCEPTION AND REALITY IN ENERGY MARKETS – The modern electric car is an engineering marvel and most of us would love one in our driveway. Wind farms are sprouting up like dandelion patches in several regions and solar is now so efficient that it’s become a viable power alternative for many homes and buildings. With renewable energy technology racing ahead and western nations focused on moving beyond fossil fuels, it’s hardly surprising that global demand for oil and gas is in decline. Except that it isn’t. In fact, aside from a brief setback during the deep 2008/09 recession, yearly consumption has risen steadily and now sits at all time highs.
Click here to read more: DM-Monthly-Report-Summer-18
Cardinal Update – June 2018
THE CANADIAN BANKS – The Canadian banks have been consistent operators over the last several years, (even through a severe oil and gas downturn) yet remain largely underappreciated. This is partly attributable to the media’s focus on the slowdown in Canadian housing, due in part to new mortgage rules and high consumer leverage, and the potential concerns these raise for the banks. With the Canadian banks having recently completed another quarterly reporting season, it is worthwhile to look at the data points that help to assess the concerns, as well as some broader trends supporting the investment thesis.
Click here to read more: Cardinal Update – June 2018
Cardinal Update – May 2018
FEDERAL BUDGET 2018 – TAXING PASSIVE INCOME – The federal government released a consultation paper last summer targeting tax planning strategies using private corporations. This proposal was met with strong criticism from the business community and resulted in some awkward town hall meetings for Finance Minister Bill Morneau. Five months after the close of the consultation period, we are being presented with a federal budget far less dramatic than originally feared. But there are still some material changes that we need to understand. One of the more impactful changes involves passive income earned within a Canadian Controlled Private Corporation (CCPC). Passive income is earned on corporate investments separate from active business operations.
Click here to read more: Cardinal Update – May 2018
