I love that picture. I’m going to start sexting it to
people my wife, obvs.
“What are you wearing?”
(Sexts Simpsons character)
“You’re still a virgin, aren’t you?”
January was a busy month for the ol’ FU stock portfolio, which is like other portfolios but faster. It makes a lot of SLASHING and CUTTING moves as it DASHES through the markets and into all your hearts. Awww. A happy ending.
That’s probably enough preamble. Let’s take a closer look at what I bought this month, existing positions I added to, and the one stock I punted from the portfolio.
I’ll be honest. Even though I try to focus on high quality businesses, I’m not entirely convinced Magna International (TSX:MG) fits the bill. Auto parts are really competitive and they don’t really have fantastic margins. It seems a little bit like a commodity business, which I try to avoid.
But management is really doing a lot of things right. They continue to make the odd acquisition, which helps grow the top line nicely. We’re talking 5-7% a year here, just enough to get me excited. The dividend is a very reasonable 2.5% and there’s plenty of room to grow the payout. And the company is gobbling up its own shares with the enthusiasm of my cat eating her beef and liver pate. Yeah, that’s right. I feed my cat fancy shit. I’m one of those guys now.
I get all that for about 7x earnings? Sign. Me. Up. But I just didn’t have the balls to make it a full-sized position. I bought 50 shares at $63 each. Shares are just below $69 as I write this, so it’s been a good result.
I just cannot help it. I love me some deep value and I cannot lie.
Altagas (TSX:ALA) might be the cheapest stock on the Toronto Stock Exchange. Let’s look at price-to-book first, which stands at 0.7x. Now about half of the company is newly-acquired WGL Holdings assets, which should trade at right around book value. Yes, Altagas paid more than book, but it created goodwill to get that inline. If the whole company trades at 0.7x book then it implies we are getting the legacy assets between 30% and 40% of book. But those should be worth a multiple of book value since they’ve been slowly wrote off over the years.
Management told investors the company would generate between $850 and $950 in funds from operations in 2019. And nobody paid attention because they cut the dividend at the same time. The equity has a market cap of $3.6 billion. You can do the math. Altagas is daaaaaaaaaamn cheap right now.
Yeah, they cut the dividend. So what? I’m still getting a 7.1% yield. I think the stock could easily double in the next 3-5 years and I’ll get a slightly higher dividend to boot.
I bought 400 shares at $13.83 per share. This qualifies as a medium-sized position.
I’ve had my eye on Smart REIT (TSX:SRU.UN) for a while now and it just won’t get cheap. In hindsight I should have picked some up when everything was going to hell in December but I was too distracted by shiny things. Ooh, piece of candy.
I think this company has the finest management team of any REIT in Canada, and they’re almost at the top, period. Mitch Goldhar and his team are grade-A developers with the added bonus of always getting the first call when Wal-Mart wants to expand. Something like 33% of all Smart’s rents come from Wal-Mart.
After conquering retail Smart has big plans. It wants to redevelop existing shopping centers into mixed-use facilities. And it plans an expansion into self-storage and senior living through partnerships.
I paid $32.53 each for 100 Smart shares. I’ll average down on an periods of weakness. Oh, and I’m getting a 5%+ yield too, a payout that has grown each of the last few years.
Positions I added to
Brookfield Renewable Partners
I’m not exactly sure why Brookfield Renewable Partners (TSX:BEP.UN) keeps languishing around the $37/share mark, but I took advantage to add to my position. I now own 130 shares.
Not really much to add here. I like the asset mix and the worldwide exposure. And I love the dividend, which currently yields 6.7% with growth expectations of between 5-7% annually. I’ll nibble on more during any periods of weakness.
Brookfield Property Partners
If you forced me to come up with a top pick for the next 12 months, I’d say Brookfield Property Partners (TSX:BPY.UN) would be it. It trades at about 70% of book value and has a pretty attractive price-to-funds from operations ratio. It owns some of the world’s finest real estate and the recently-acquired shopping mall portfolio should perform well since it owns the best malls. And I’m getting 7.1% to wait, another payout I think grows by about 5% a year.
I now own 350 Brookfield Property Partners shares, which is about as high as I’ll go. The average purchase price is right around today’s levels.
Had some dividends sitting in my RRSP account that needed to be put back to work, so I bought a few more CIBC shares for around $109. Still think Canadian banks are a decent buy today.
I punted a straggler from my deep value days, Advent-AWI Holdings (TSXV:AWI). I lost about 1% a year on this one after accounting for dividends.
When I bought the company it was a successful cell phone retailer operating under the Rogers banner. It then sold its Vancouver-area stores and was forced to sell its Ontario stores after Rogers announced it wasn’t renewing their agreement. The company has expanded into unsecured loans for dirtbags, a new division which has yet to make a profit.
The longer I owned this one the less I liked it. I can’t really point out any one thing that caused me to sell, but a bunch of little things all just came together to make me uncomfortable enough to pull the trigger.
That was it for sales. I will likely do a similar amount of buying in February before things really quiet down in March. I still have some cash to put to work.