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
DM Monthly Report – May 2018
MANAGING RISK THROUGH INTERIM POSITION MANAGEMENT – In June of 2013, we first purchased shares in IAC/Interactive Corp., a company that owns more than 150 media and internet brands and which had established a long history of creating shareholder value through the management of its assets. Our investment thesis at the time said that the company would provide our portfolios with exposure to two of the fastest growing online business segments:
Search – IAC’s “Ask.com” is a niche offering, providing search functionality based on natural language questioning; it’s the world’s fourth most popular search engine.
On-line personals – IAC was (and is) the global leader in online dating, both through its flagship “Match.com” and other brands at the top of the space.
Click here to read more: DM-Monthly-Report-May-18
Provisus Monthly Insight – May 2018
CLOSING THE GAP – Dividend paying stocks have been very popular with investors in recent years due to weak returns in the bond market. That picture appears to be shifting in Canada for the first time in almost a decade. As the Bank of Canada has slowly tightened monetary policy, bond yields have naturally risen, yet still remain well below the levels seen before the financial crisis. As bond yields rise, investors may cut their exposure to equities. Historically bull markets tend to end once interest rates have risen too much, too fast. The current long-lasting uptrend is beginning to show signs of entering the euphoria stage. If dividend yields drop below bond yields it could be another indication that the high-flying stock market is headed for a correction.
Click here to read more: Monthly Insight – May 2018 – Closing the Gap
