Subtitles for Searching for best stocks within North America

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them even
Tom mom
I'm here James a portfolio
manager at Caldwell Investment
he's a value manager & Co man
just called well balanced fund
James thanks so much for joining
thanks for coming so you're
stopped selection process is a
bottoms-up approach
so what criteria do you use
words like and stuff yes
so for smaller criteria starts
by we're a little bit different
than the typical value manager
and that we look at the whole
universe and we say we're both
looking for the best ideas
within North America
and from there we filter down so
we're not focused on a benchmark
rate hike that we have to hold
stocks within certain sectors
and then it's a value it's a
value-based approach that's
restart we look for companies
that are undervalued relative to
their peers in the sector
gonna look at the balance sheet
which is something that's which
is a key in the market
environment like this is never
know when the shocks gonna come
unique companies that are going
to be able to withstand that
kind of shock and thats
the balance sheet if look at the
companies that have cut their
dividends this year
because they had poor balance
sheets and they consist and a
Down sustained downturn
and not cause its capital
depreciation stock and the next
we look at the management and
then we look at the environment
that we're in to make sure that
we're not in store
company's other in a secular
decline like think about pcs
we're looking for things that
are actually gonna can increase
you don't want to get into any
kind a value trap like you would
with that with PCs or maybe with
gold for example those urs
some ideas if I've sectors that
we can get comfortable with
okay so what stocks are you look
at right now we're standing L
well in Canada particularly
first of all we're looking more
to the US than in Canada but we
have a 45 percent are women
candidates will focus on
some names that we see their and
all other names are different
than what the typical Canadian
manager with look for
for example we don't hold any
bags but we hold one we just
recently added a bank but
its creditors thing as a
Canadian portfolio managers the
holding in the big banks and
so the first doctor I was going
to talk but today is on x so on
x's a
private equity company as you
know in Canada and they've been
doing quite a good job over the
last 25 years
growing their net asset value
through private investments
so the great thing about a
company like on x is that the
diversified in sectors and they
often invest in companies that
you don't get a chance to invest
in yourself as a public
portfolio manager
so the trading at around their
net asset value so it hits the
parameter they've got a great
balance sheet they have no debt
and then the environment right
now with the management team is
you know its next head its next
to nobody got a fantastic
management team
and the environment itself is
very attractive right now if you
think about
low interest rates when you
gonna buy companies are when can
you monetize assets for private
equity company it's right now
when people can actually afford
to take a big stake
in some other businesses they
hold in their portfolio so
that's one stock that we like
that's a little bit different
than the typical manager who
stick to some other big banks
okay so I was just at the
Morningstar investment
conference in Chicago as telling
earlier and a lot of people are
interested when i was thinkin
in sectors because we have
trouble with asset allocation
I so what sectors are you
finding value in right now the
Katy marketplace
in the key market I information
technology believe it or not is
somewhere we're finding a lot of
great value
and we're not talking about
Research In Motion that's a
stock that we couldn't really
pass our environment criteria
were that we weren't sure where
that was gonna go
a companies like CGI Group which
is a great Canadian story
the recently made an acquisition
Inc in Europe Logica
and this is a transformational
acquisition for them it's going
to be accretive to earnings in
the tune of 25 to 30 percent
and they're actually well ahead
of their initial time frame so
if you believe in the story
which we do and we believe in
their management team
this what they do they buy
companies they integrate them to
their model and they've been way
ahead of schedule on this with
on the biggest acquisitions
they've ever made so is a great
Canadian companies actually
undervalued at the moment it's
trading at around 12 times
earnings we think they could
treat a fourteen times
so as far as an information
technology company in Canada
this is one of the ones that
that we were definitely own and
a note to celeste is another
great name that's had a really
good run
recently and they do
manufacturing about it. part so
this is another company that's
undervalued to generate a lot of
cash and we think that
those two companies are great
holdings in the Canadian equity
that's great and I know I'm your
obviously I have read a verse
5 in the US market as well so
what %uh sector there standing
US in the US is actually
technology as well technology
and industrials
so we're seeing a lot of value
in the large-cap technology
companies for Cisco's your
I or call which reports tomorrow
which were which were paying a
lot of attention to so these are
these are companies that
that we're focusing on their
very cheap they're increasing
their dividends they've got a
lot of cash on the balance sheet
and if we get an uptick in US
GDP a global GDP in the next
year may be looking at 2 2014
they should do increase should
start to do very well driven a
lot of operating efficiencies
through the downturn
it's the same story with the
industrials you look at
companies like FedEx or some
other rails in the US which are
we think are much better value
than the rails in Canada
their trading at discount
multiples to their history
they've created a lot of
operating efficiency in the
and if we get an uptick in the
US economy should start to do
extremely well
that's great so my last question
for you James as co manager at
Caldwell bounce fun what's your
overall strategy which are all
overall approach things you want
investors now
watching yeah well I think you
you want to know that were
concentrated so we don't take
we don't look at the whole
market and say we need one on a
piece of everything we just look
for the best ideas
in the global marketplace and
for us we've we focus on North
and if we find cheap stocks that
hit all the park right here that
I mention the value the balance
good management team in there in
a solid environment that's a
stock that we won on so
we don't try to manage ourselves
to any kinda benchmark which is
really important in environment
like this
where the market is actually
fairly valued if you look at the
valuation S&P 500 in the TSX
we're not in that cheap state
anymore we can just throw darts
and buying stock so
stock-picking is becoming
increasingly important and
avoiding sectors that are going
to underperform
is becoming increasingly
important so you pick your pics
your entry points and stocks
that hit your criteria on the
value side
better cheaper than the market
should do well water great
thanks so much to expect project
corporation on stocks go stock
section Morningstar .ca
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Onex Corp and CGI Group are two companies that stand out, says James Telfser, Portfolio Manager at Caldwell Investment Management Ltd.