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Our Most Recent Live Chat Replay Is Here!

The Canadian investing team took to Zoom (NASDAQ:ZM) once again on April 30 for another live Q&A chat. The recording has been turned around by the production team, transcript and all, and we’re pleased to share the replay now.

Miss this event and want to attend the next? Stay tuned for an announcement of our next chat – and mark your calendar accordingly.

Enjoy!

Taylor:

All right. Looks like some fools are starting to filter in. Welcome to our Thursday April 30th edition of our all teams Q and A for our analyst team, from Stock Advisor Canada, Dividend Investor Canada and Hidden Gems Canada. I’m Taylor Muckerman and you know the players here. Bryan, Iain, Joey and Jim. Happy to have you all here again. We see we’re closing in on 200 attendees and just like the last few of these recordings, this is an open Q and A so be sure to put your questions in there and we’ll try to get to as many of them as we can possibly do. Again, this is recorded so if you miss something or have to log off early, we will have this posted on the site relatively soon along with a transcript which might follow slightly after the recording is up. So if you miss something, be sure to check back to the site and when this is all said and done and we’ll have it up there for you. And if your question isn’t directly answered, we might’ve answered it through someone else’s so keep your ears peeled. And guys, how’s it going? Market’s down today on an overall up week. I think we’re probably up since our last Q and A much to people’s confusion. Any general thoughts out there?

Jim:

Yeah, it is confusing. Just before we get started, Taylor, I’m going to suggest to people who are joining us, there’s some people putting things in the chat and also people putting things in the Q and A. I’m going to request that people try to put their questions in the Q and A things that go into the chat because we also might respond in there. It tends to get a little convoluted when we do this on the US side so I would encourage people to stick to the Q and A. We’ll hit the chat stuff and I don’t know if we can shut it down after that, but just try to corral questions everywhere. But yeah, [crosstalk 00:01:52]-

Taylor:

That’s great.

Jim:

… April is a fantastic month. Yay. Bottom’s in, everything’s fine. How are you doing? No. I have just as a… it’s something I shared beforehand but we can… I can throw it out just for members showing up here, just to tell you that… that may be confused and rightly so because I think it is a fairly confusing time frankly. We’ve never seen this before. But you know the thing that I have here is a year ago, if you can imagine going back a year ago and if I told you that unemployment would go up 400% from 4% to 16, 17. If I told you the interest rates in the US would go from two and a half to zero and basically they’re also zero in Canada. If I told you the purchasing managers index, which is a measure of economic activity, capital goods activity, goes from 52 which is bullish and positive to 37. That gold would go up by a third, that stock volatility would triple and that oil would fall by 75% and yet with all of that, all of these signs, end of days, that the stock market is flat roughly over a year. If you just looked one year ago and went to sleep, I don’t think anyone would have believed us. But that’s where we are.

Taylor:

The times are interesting indeed. I’m sure once this earning season kind of flushes itself out, we might have a little bit different story going forward, but at least leading up to this earning season somewhat exuberant in the month of April. So we’ll see if results change that tune at all. We can get to some questions here. I think Joey, you might want to take this one right off the top. Sea limited up 38% year to date and 56% since exception. I know I’ve heard you talk about this one a few different times.

Joey:

Yeah, I remember when we were talking about this at full the last year. Sea Limited is… so the way to think about them… so they have a payments platform, kind of like PayPal, not exactly. They have a gaming unit and an eCommerce unit. So you think three just ultimate growth engines. I mean they’re in the sweet spot of everything right now and for those of you that don’t know Southeast Asia, that’s how they get the sea. So they’ve got some hyper growth markets there and they’re just riding that wave where e-commerce is where they’re kind of hemorrhaging cash. But the gaming unit’s very profitable towards kind of funding everything else. So yeah, I didn’t even know it was up 38% year to day. Full disclosure, my entire 401k is Sea Limited. I love that company so much and I think it’s a couple… in a couple of services on the US side but yeah, I mean I continue to love that stock and it’s one that I plan on just adding to.

Taylor:

Okay. It sounds like a pretty big horse.

Iain:

High conviction.

Taylor:

Yeah, no kidding. I think that answer should suffice for Scott Elliot then. Iain, Western Alliance. I believe that’s one of the newer recs in Stock Advisor Canada and you still feeling good about it? I mean it’s recent enough to where I don’t think the thesis would have changed but-

Iain:

We’re eight days in so I’m pretty comfortable with how that’s going. That said, I mean the stock has actually jumped about 20% over the past eight days so little move, but it’s a company that I think is probably one of those that’s best left to it’s own devices. Sort of stick it in a corner of the portfolio and let it roll for five years and see where we end up. It’s probably not going to be as dynamic as a Sea Limited. It doesn’t have the three growth engines firing on all cylinders, but it’s a really well run bank and we like it a lot.

Taylor:

Good. Yeah. Any thoughts on… I mean I know we’ve got some questions about national banks down here. I think over the last few of these chats it’s been banks are in a good position cheaper than you’ve seen them in a while. Great value. BNS is our number one choice in Stock Advisor Canada. Has any of that changed since our last Q and A?

Iain:

Nothing on this front. I don’t know if anybody else has different views, but I mean yeah, you’re at least going to collect a pretty healthy dividend yield there and we think the multiples are such that there’s room for them to sort of normalize and that’ll give a bit of a capital appreciation angle as well. So yeah, I like the banks more than I have in years.

Taylor:

That’s awesome. I think, yeah, Jim’s made that same sentiment quite clear over the last few days.

Joey:

[crosstalk 00:06:09].

Taylor:

Yep. We got a few questions about a potential dip with this recovery. It looks like right now the recovery does look pretty Vish, but do we see this continuing or maybe flattening out? I know you never want to be put in a corner to answer a question like this, but just general thoughts. I think our… Jim’s intro kind of hinted at some skepticism about the current market going up since basically March 23rd but that seems to be just pretty significant in the comments here. Just questions about what we feel on the recovery.

Joey:

I mean I hope we tank again. I mean that was a lot of fun. I got to say March was a thrill. I mean that was a wild ride. I was buying like crazy and then it’s pretty much been just watching all those positions skyrocket ever since. So I mean I’m hoping we get one of those pull backs. I’ve got a target list of companies that I’d like to pull back. But yeah, now it’s one of those situations where you see where stocks fell on March 23rd and it’s kind of like, yeah, I want them back there. So everything seems so inflated from back there but yeah, Jim put out the laundry list of everything. You’d think the market would be back at 2008 lows, but with the way governments around the world are just printing money, it’s just making it rain on everybody. It’s like, oh you’re losing money, here you go. So who knows. I mean with the money [inaudible 00:07:32] around the world.

Jim:

You have to wonder if we’re actually capitalist societies anymore or you have to wonder if there’s any consequences to actions. And certainly the government money printing would suggest there’s less consequences than we thought there might be so free money for everyone. Is that too cynical? Is that too cynical? I feel that’s too cynical.

Taylor:

I’m sure it has something to do with what we’re saying now. You know I mentioned we’re not quite through the earnings season yet so certainly some more clarity. The company is still deferring their estimates. Royal Dutch Shell, one of the largest oil companies in the world just slashed its dividend by 66% so not many people saw that coming and they had already suspended share buybacks and cut capital allocation spending. But to see that dividend get more than halved was… caught a lot of people off guard. Stock down more than 10% today.

Jim:

To that point though Taylor, I mean these are… we’re finding out… I mean I know it’s a cliche and you can all just run me off the chat after this, but the old saw about when the tide goes out that’s when you find out who’s been swimming naked. My goodness. Most of North America has been swimming naked and so we have no… so everyone… as you say, we’re cutting dividends, we’re cutting buy backs, we’re slashing capex business.

Jim:

I mean if you follow the RITES and Bryan has let me into the RITE world a little bit and given me enough knowledge to be dangerous. But how many RITES Bryan are you reading from last month where 70% or less of rent was collected. How have we in one month, one month of a crisis, we’re not paying our rent 30% of the time. Was no one prepared for a recession? This is something that is baffling to me.

Taylor:

Yeah. We caught a hint of that here in the DC area where full headquarters is. When the government shutdown happened last year or maybe the year before, I think it was last year, and people were without a paycheck for less than a month and they were freaking out. And this is a pretty well-insulated part of North America, the US in particular. Wealthy… You have the three or four most wealthy counties in the country around DC and still it was palpable the stress people were under with just missing one or two paychecks. And here we don’t know how long this might last now. Certainly I’m confused as to why the markets are rallying so hotly and we haven’t even released our tier one of the go back to work plan in the United States. So it’s confusing as all hell.

Jim:

Look, and I get it. We are speaking… I am speaking from a position of privilege. All of us are probably working more hours than we were a month or two ago because it’s nonstop and we all enjoy our jobs and so we’re not really touched by what a lot of other people are being touched by. Who have been furloughed, who have lost their jobs outright, who are on government benefits, but you know this… I guess you can chalk me up as one vote for not really believing all of this as real. I’m not sure when we test the lows we got on March 23rd, although if we do it might be interesting. But you know the market does tend to overreact in both directions. I think March 23rd might’ve been overreaction downside. I think you can make a case that the present state is maybe an overreaction on the other side.

Iain:

I’m trying to-

Taylor:

That was my… yeah, go for it.

Iain:

Yeah, just going to say just a slightly different spin. And I’m sitting here, I’m just trying to think of once over the past 20 years where I’ve been, yeah, I got a handle on this. The markets, I know what’s happening out there. I can gauge this pretty well. So I think it’s always a situation where there’s confusion over the market, whereas if you sort of cut through that and get down to the company level it becomes a whole lot more clear. I mean obviously companies are hurting right now, but I think that’s where time needs to be spent instead of worrying about… there’s so much talk of timing and I mean it’s something that we put forward to ignore entirely yet. I mean the forums in Stock Advisor Canada I know are just filled with talk of timing and what did I miss. And it’s like cut through that, get to the company level and you’ll be able to make far better decisions if you understand the businesses that we’re putting forward.

Taylor:

Yeah. And then averagely and I know personally I was averaging my way down until late March and I obviously was like, oh I bought too soon, blah, blah, blah, but then here we are a couple of weeks later and those positions are slightly in the green. So yeah, you just kind of ease your way into it and take a bite as the market drops and rises and you end up… if you can hold long enough history has shown that’s the case-

Iain:

Totally.

Taylor:

… you largely average out.

Iain:

Extend the time horizon and it makes life a whole lot easier.

Taylor:

Granted, this is a little unprecedented, especially with all the money printing going on so who knows what’s going on. But one stock… we changed our Toonami in. And you’ve flagged that one for yourself as Starbucks, that we recently sold in Stock Advisor Canada. A long time holding and still a recommendation elsewhere in [inaudible 00:12:52] but we had an issue to sell guidance on that stuff.

Iain:

Yeah. And I wanted to flag this actually more just to speak to the process of selling as opposed to Starbucks specifically. I think we laid out the rationale for Starbucks specifically and frankly it took… I think all of us were around… or some of us were around the table as we discussed it. It certainly took me by surprise. I know bucket sort of raised it and I was like, all right, let’s hear him out. And I mean it hit home. This process of capital allocation of raising piles and piles of debt to buyback borderline expensive stock really is not a great use of money. And as Jim alluded to… I forget… I think it was before we came on. Now companies are cutting their buybacks when in reality they should be stepping up their buyback. So the whole world of capital allocation has been more, but in terms of the sell process in general, it’s by far the hardest decision in investing.

Iain:

And frankly, I think for me personally, perhaps even within the scorecard, it’s been the most expensive decision in investing because it tends to leave thousands and thousands and thousands of dollars on the table when you cut something short. So it’s one that we take very seriously. It’s one that we don’t like to make frankly, but the case was such here and the case generally… the case needs to be such that we’re willing to let them go, but our inclination is to not make that decision. We’re far better off with the businesses and just letting them roll. And if people have anything to add to that?

Taylor:

Yeah, no personally I know it’s definitely something that everyone wonders why we don’t do more of it in Stock Advisor Canada but… or other services but it’s not as easy as it might seem. And a lot of those conversations get started with hindsight as a benefit.

Iain:

It’s super easy in hindsight. That’s right.

Taylor:

So by all means, if there’s a company that you think we might want to sell now, put that in the forums and then we can have a discussion about that. But I think a discussion about we should have sold something in the past is kind of… it’s a dead end street because it’s too late. So Joey you’ve got your hand up for Zoom. The stock that made the news for another negative reason here today or this morning. But not reacting too terribly and it’s been a high flyer in the market since COVID struck home and we’ve all been forced to work remotely or try and talk to family more remotely.

Joey:

Yeah, it’s one of those… we talked about this last time. The valuation was a concern but then you see all the security concerns… which trust me this chat is secure so you’re fine watching this. But this whole, hey we went from 10 million users to 300 million users and then going back and changing the blog post to have a correction but not telling anybody. It’s just way too shady for me. And I have a rule. If a company lies to me, they get put in the penalty box for a year. So you get valuation concerns on top of basically lying or hiding something and it’s just an absolute no go for me. But I know a lot of fools that absolutely love it, so I mean, not going against them, but me personally it’s just a absolute no-go.

Jim:

I love that Joey. I just want to say… no, I’m dead serious. People do not like to be lied to and I can give you a few other candidates that fit into that box.

Taylor:

Speaking of [inaudible 00:16:13] boxes, we’ve got a few comments about Jim’s hat. People are very big fans of the Nordique sign.

Jim:

Le Nordique. Has anyone been to Quebec City in the last few years? Any of the guys here?

Taylor:

Not me personally.

Iain:

I have.

Taylor:

Only Montreal.

Jim:

If you go to Quebec City, they are a bigger deal today 25 years after they left than they were when they were there and they’ve been gone longer than they were there. But every store downtown, there are walls of Nordique skier and you can buy Peter Stastny jerseys. I even say an Eric Lindros Jersey, which was weird because of course-

Taylor:

That’s a throwback.

Jim:

… he famously… well no, he famously wouldn’t play for them.

Iain:

He snubbed them.

Jim:

He made them trade in the fillers.

Taylor:

Oh yeah. For the Flyers.

Jim:

Yeah. I mean the Flyers traded their entire team to the Nordiques and the Nordiques moved to Colorado and won two cups out of it so, you know. Thanks Eric.

Iain:

There are retro games going on on sports… sorry, this is right off topic, but quickly, because it was on last night. Last night on Sports Net, there was a 1984 playoff game between the Canadians and the Nordiques and the second period ended up with an all out bench clearing brawl. It went on for about 15 minutes. Somebody got knocked out. It was something else.

Taylor:

The good old days.

Jim:

Joey’s like, baseball has bench brawls all the time. What’s the difference.

Joey:

Hey, I’ve been watching a lot of old baseball games and man… just, Ken Griffey Jr’s swing.

Jim:

He was sweet.

Joey:

I could just watch the whole thing.

Jim:

And now we’re right off the topic.

Taylor:

It gets you through the lean times. To try and drag us back to stocks. Bryan and Jim.

Iain:

Sorry.

Taylor:

That’s okay. I mean it’s hockey, it’s Canada. Let’s talk about some sports every now and then. Especially since we don’t have any. My Blues were in first place and then the season got cut short as we were going for a repeat so who knows what’s going to happen.

Jim:

Hey Toronto… the Leafs, we’re getting ready to spit the bit like usual. Oh wait, that’s not good.

Taylor:

Energy stocks, dividend values. Bryan and Jim, you flagged yourself on that one. I know Bryan, you’ve got some stocks on the DI-

PART 1 OF 4 ENDS [00:18:04]

Taylor:

Jim, you flagged yourself on that one. I know Bryan, you’ve got some stock on the DI scorecard and likely just some on your watch list in that sector. And I know we’ve talked about it on a lot of calls, but has anything changed as we’ve continued to see this prolonged downturn in oil prices? Now the U.S. Government’s talking about leasing Reserve space to some of the big majors here in the U.S., so definitely continuing to change in that space.

Jim:

I think I flag… Bryan, you go ahead, I’ll [crosstalk 00:18:31]-

Bryan:

No, go ahead. No, go ahead.

Jim:

I flagged one. I don’t like energy stocks on most days, just because the economics of them are generally not great. They only spend $1.20 for every $1 they bring in and they insist on paying dividends, which makes the cash hole bigger. And then when prices drop, they all get taken out behind the barn and shot. But that said, someone was asking an energy company with a good dividend, and I’m going to throw it out there. It is a Stock Advisor Canada recommendation, Kinder Morgan. Kinder Morgan in the middle of all this… Quick poll. How many energy companies, we talked about Shell earlier dropping their dividend by two thirds, how many energy companies have raised their dividend in the middle of all of this?

Taylor:

Yours as far as I know.

Jim:

Kinder Morgan. Yeah, Kinder Morgan. They were supposed to go up 25%. They only went up 5%. They said, “We can afford to do 25. We’re going to hold off for two or three quarters because, you know what, when we made our original plan to run our dividend up, it was a different world. It was $60, $70 barrel oil. There was no virus. Unemployment was 5% or lower. We’re going to hold off.” And their cashflow will take a bit of a hit this year, mainly due to oil-related stuff. They’re about 90% cashflow tied to natural gas by the way, but the oil related stuff did take a hit. But they’ve also cut back because of lower energy commodity prices. They’ve also slashed a bunch of their capex because it’s like, well, it doesn’t meet our required hurdle rate anymore.

Jim:

They want EBITDA to come in at 1/6 of capex that they spend. And so EBITDA’s fallen off because commodity prices, those projects come off the table. In Q1 they announced that they’re going to have, yes their cashflow will be down this much, but their capex, because of that reduced projects, will actually go down lower. So they’re actually going to have more coverage on the dividend that they have now. Stock’s trading about %15, $15.50, I think. Currently paying $1.05 dividend. What’s that? 6.5%, 7%. You could do worse if you want an energy space. And I think the upside is reasonable assuming we don’t go into multiple quarters of 20 plus percent GDP down.

Bryan:

Yeah. Yeah, Jim-

Jim:

We’re going to get one. We’re going to get one of them, but…

Bryan:

I knew you’d go with Kinder, Jim. That’s why I had to go first. Kinder is [crosstalk 00:03:08]. No, just, they are. Jim, you called us early on-

Jim:

I’m predictable.

Bryan:

… in the downturn that Kinder would be well positioned and they have proven to be well positioned. Another, TC Energy, the old Trans Canada, is another one that seems to be more well positioned than others. We have [PennBeana 00:21:28] pipeline, another midstream company on our score card. Not as well positioned as Kinder or Trans Canada, but also has a decent amount of upside. It’s been beaten down pretty well. All of those companies have a lot of leverage though, so, but probably definitely better positions than the producers, the EMPs that are out there right now that just must be very scared at what the future holds for them.

Bryan:

And if you want to get real risky, you could go with a royalty company that has a low cost structure. We have freehold royalties on the dividend investor scorecard, so if you want to make a bet that oil prices are going to rise, this is a way to do it with a lower cost structure, less debt, than a typical EMP. Otherwise, energy’s just a tough space. My advice would be, choose an allocation percentage as a percentage of your portfolio for energy, oil and gas related stocks, and don’t go over it. If you really want to add something, maybe switch something out and add something in.

Bryan:

Just given the environment, I would be apprehensive to overweight oil and gas in my portfolio. I think you can take a measured approach and make a decent bed as a percentage of your portfolio, but try not to overweight. I know it’s tempting because the stock’s been beaten down so long and the downturn since 2015 in Western Canada just hasn’t gone away. So I just have a feeling a lot of investors have had a lot of time to add a lot of energy names in exposure to your portfolio. So with that in mind, I would just say, try to keep it reasonable and rational.

Taylor:

Yeah. And we’ve seen several times how easily, or relatively easily, Russia and Saudi Arabia, et al. can turn it on or turn it off. So you really are at the whims of so many different variables here. And we did have a question about Enbridge. I know it’s a rec on our scorecard, and as I see from a long time ago, by way of Spectra Energy, and that deal is probably the one reason why I would still consider holding Enbridge is because it boosted that exposure to natural gas, shifting a little bit away from oil.

Taylor:

One thing that I like most about Kinder Morgan is that gas exposure versus oil. And so you’re seeing a little bit of that with Enbridge and that Northeast U.S. corridor that it has exposure to. Which is pretty niche exposure, because not many gas pipelines are in that Northeast corridor. And Spectra was the big fish there. So that would be the one reason why I would personally hold Enbridge, along with it just being one of those seemingly too big to fail companies, but in the energy space. But yes, look at the balance sheets, look at the bigger names, because they’re probably going to be on an acquisition spree if you do see some green sprouts showing in that industry.

Bryan:

Speaking of balance sheets, Taylor, I know me and Iain have Pason Systems on our scorecard and their results are going to take a big hit this year, but they do have about $160 million in cash and no debt on the balance sheet. That’s an old oil field service company that you might want to keep on your radar just given their cash position.

Taylor:

Right on. Yeah, good call on that one. And that’s ticker PSI, if I remember correctly?

Bryan:

Yeah, PSI. Yep.

Taylor:

Cool. We had Joey flagged one on Shopify, I think there was a short report out in Barron’s, or a negative report. Maybe not a short report. But we have a few other shop questions here, so Joey, if you just want to talk through that and maybe that can turn into a broader discussion on the stock if we want to.

Jim:

A rant. Let’s turn it into a rant. Let’s go.

Joey:

Well, just to have some fun with Barron’s, they’re about as useful as toilet paper.

Iain:

Pretty useful.

Joey:

I brought up an article from-

Jim:

I was going to say, toilet paper’s pretty useful [crosstalk 00:25:21]. Not quite the metaphor you thought it was.

Joey:

[crosstalk 00:25:29]. Okay, so May 14th, 2019. It’s time to stop buying into Shopify stock. And that was 151% ago. So I mean, these analysts, they’re always going to voice their opinions and say, “Oh yeah, something’s overvalued”, and watch it run. I mean Shopify, they’re in the sweet spot of e-commerce. They’ve got shop pay, they just launched the shop app where it aggregates all the different products and allows people to look for all different products. I mean, Shopify is just doing everything right right now. And I mean, it’s easy to try to say it’s overvalued and everything because it’s always been overvalued, and whether it’s on sales, anything, it’s expensive. Well, when I look 10, 15 years out, I think this company will be significantly larger than it is today.

Taylor:

Yeah. It’s only a $75 billion Canadian market cap. So I mean, I don’t expect it to be an Amazon, but it certainly has some characteristics of Amazon’s eCommerce business. So certainly $75 billion longterm seems like a-

Jim:

I think it’s a bit more than that, Taylor, isn’t it?

Iain:

It might be U.S.

Jim:

I think we were coming up to $100 billion last week.

Taylor:

Oh, that must be the U.S. then, sorry.

Iain:

Yeah.

Jim:

But I mean like, this was before Joey’s time. Not on this planet, but in the Fool. But in 2017, I think you were a contract writer at the time, Joey, but I don’t think you were behind the paywall. But there was a short report that came out of, what’s their name? Citron. Citron Research. Who I like to call a mook in a shirt because he’s… I don’t know how anyone could watch Andrew Left when he does his little YouTube videos and then take him seriously frankly. And it’s all histrionic and it’s all insane. And he was like, “Nope, this is going down.” And of course he’s already positioned itself beforehand, right? Because that’s not dodgily ethical at all. But he’s positioned himself. Then of course he talks it down, and he’s probably selling it into the panic that he’s inducing, which again, I have a little bit of a problem with that. But you know, at the time, I think the stock was about $160 bucks Canadian. But anyone, what is it today? What is it today?

Iain:

Higher.

Taylor:

I don’t have it yet.

Jim:

Higher?

Taylor:

Much higher.

Jim:

$850, $900?

Taylor:

Much higher.

Jim:

So it had already gone up four times in value and he’s singing from that hymnal. A year or so ago now, it’s slightly over a year, he came out again, and this time he’s talking U.S. dollar value, and he said, “I believe…” Taylor, quote me if I’m wrong. “If this stock a year from now is not below $200, I will donate like $200,000 to a charity.” Some charity, whatever, like that. Again, what is it today? Higher?

Iain:

Yeah. Yeah, yeah.

Taylor:

Much higher. I think it was, $300 was his level. But either way, it’s significantly higher than-

Jim:

Either way, he’s been blown off the table. And the point is, we have had, whether it’s Barron’s, whether it’s Andrew Left and Citron, there’s a bunch of other ones, there’s been a ton of these short reports that keep on coming out. And Joey’s hit the points exactly that I would hit it. Yes, it’s expensive. We know that. Yes, it’s gotten more expensive since we recommended it and own it. We understand that. I’ve said before, you know, that you always want to watch out when something that’s not a bank becomes the largest company in Canada because they invariably blow out. Now they could blow out several multiples above where we are now. But you know, Shopify might be the one company that has the chops to keep going, because what is the limit on online selling and online small and medium sized businesses? And the answer is, there isn’t really one. And especially in a world now where we’re buying everything online, we’re too scared to come out of our homes, Shopify is in the sweet spot folks.

Taylor:

Yep, sure is.

Jim:

So you might want to ease into it because it is expensive, but I’m not going anywhere near selling it, frankly. And I’ve got enough, so I’m not [crosstalk 00:29:21] anymore.

Joey:

I just brought up that Citron. That was April 4th, 2019.

Jim:

That’s the second one, Joey. There was one in 2017. October, 2017.

Taylor:

Yep.

Joey:

Yes, so he’s supposed to be donating $200,000 to the Robinhood Foundation, so we’ll see how that comes out. And I realize I said Barron’s was-

Jim:

I know how it’s going to come out.

Joey:

I just realized as I was looking that up, I said Barron’s is as useful as toilet paper, and that was just like the ultimate positive for them. So rather than correcting myself, I’m just going to take the loss on that one.

Jim:

[crosstalk 00:29:51] homemade toilet paper, how’s that?

Joey:

Yeah, you know what? Just [crosstalk 00:29:54].

Iain:

I think Shopify falls back to that sell discussion on timing these things, and market timing in general, because again, that’s the big question. Did I miss it? Am I too late? What’s the right level? I mean, the only answer has been to just buy it. And I don’t know why that’s different now than at… I mean sure, we’ve always thought there’s a 50% haircut out there. We’ve never gotten there. There probably still is. There’s probably several over the course of the next five to 10 years, but there’s just no reason to think that that business doesn’t have huge potential beyond what’s even occurred to this point.

Jim:

I believe I’m going to be roughly right but precisely wrong. But I remember at one point in about mid 20 teens, I went back and looked at how many times Amazon had fallen from its all time high 50% or more. And I’m thinking this is around 2014, 2015. So there’s been opportunities to add to this number. I believe from about 1999 to the middle part of last decade, it was north of 20 times you had a 50% or higher drop at Amazon. Someone can go verify that if they want. But, you know, you’re going to have that. Is there anyone who wouldn’t, if we had a time machine, go back to even the height of 1999, okay, when it was at its all time high valuation peak, is there any of us who wouldn’t go back and put our entire net worth into Amazon at that super super high price? I would.

Iain:

Yeah.

Jim:

If I have a time machine I’ll be doing some other stuff too, but…

Taylor:

Very well may about Shopify. No. I expect another like 4 or 5x over the longterm, at least, with that company. So I’m holding on and it’s closing in on my number one position, personally, since buying it back when Stock Advisor first recommended it. We’ve got a number of questions about the Brookfield family. I think rather than talk about each individual stock and which one you like most, maybe just talk about how this COVID crisis might impact each of those names individually. Or maybe rank which ones might be safer in your minds given the current market environment rather than diving into just saying, “This one’s my favorite.” Maybe in this particular environment, which stock would you say is the most insulated? And which would you say is the least insulated from everything going on right now?

Jim:

Well the least insulated is Property Partners. I think that’s fair to say.

Iain:

Yeah.

Bryan:

I would say probably Brookfield Renewable Utility cashflow.

Iain:

I was going to say the most, probably, is the mothership.

Jim:

Yeah. That would be my vote.

Taylor:

Yeah.

Jim:

Even though they do have the Property Partners exposure as well.

Iain:

Yeah, yeah. But then the flip side-

Jim:

They’re also got Oak Tree. Oak Mark? Oak Tree?

Taylor:

Oak Tree.

Bryan:

Oak Tree, yup.

Iain:

I mean the flip side is, which one’s been pounded the most by the market? And that’s Property Partners. So it’s like, sure it’s most exposed, but has that been already reflected? And I got to say, it’s hard to know. I think we talked about this last time or somewhere along the line. There’s got to be some interesting conversations going on within Brookfield on what to do with that BPY situation because it’s so far under a normalized net asset value that, I mean. And they’re value investors. So, I mean, are they thinking about taking it in? But then they’re going to leave a whole pile of shareholders angry if they do that. So I’d love to be part of those discussions or see what plays out there. But I got to think there’s some corporate actions being discussed.

Taylor:

Yeah, I know that yield was well north of 10% for a little while. I don’t know if it still is, but…

Iain:

Oh I think so. Yeah.

Taylor:

Yeah.

Jim:

It still is.

Taylor:

Yeah.

Iain:

Yeah.

Jim:

My vote’s they’re going to pull it in and just tick off people. But…

Iain:

And I think you had the idea, maybe they’ll give back Bam shares for it, which is probably a reasonable outcome. But yeah. It’s just too cheap and the public market hates it, so I’m sure they’re going to take advantage somehow.

Taylor:

Let’s talk about one other buyer of businesses or investor in businesses, and that’s Fairfax Financial has come up on here. Maybe we can tie that in with Blackberry since they’re a pretty big owner in that and I see a few comments on Blackberry. And again, we’ve talked about Blackberry a number of times, just waiting for the market to realize what we think exists within this business. It’s been a long wait, but it’s tied into some pretty heady industries if you look forward into the future in terms of security and autonomous driving and things like that. So I’m a shareholder of both and I’m not selling anytime soon, as a disclosure, but any thoughts on Fairfax? I think we’ve probably beaten Blackberry to death on these Q&A’s, but Fairfax, I don’t remember us talking much about it in particular.

Jim:

Iain.

Iain:

I know-

Jim:

They don’t want to hear my opinions.

Iain:

Jim perennially hates it. I don’t-

Taylor:

Fairfax, that is.

Iain:

Yeah. Yeah, yeah. Fairfax. I mean it’s hard to argue that his investing tracker could have been terrible the past decade or so, and the company simply hasn’t performed as it did prior to the past decade. Insurance wise, I think it’s become good insurance company and that wasn’t always the case, so this kind of flip flopped. It’s become a good insurance company with crappy investing performance. Whereas historically it’s been the other way around. Good investing performance has really driven the boat. Does investing performance turn? Don’t know. I think though that their insurance companies are solid, and when you start considering valuation, it’s cheap. It’s like as cheap as it’s ever been, way below book value. So I think that sort of pushes me to the favorable side of the equation on it, just how cheap it is.

Taylor:

I’ve been thinking about it, but then I look at my Blackberry exposure already and shying away from that decision.

Iain:

Yeah. And I mean, I was going to say, Blackberry, I have no issue with Blackberry as like a 2% position in a portfolio just sort of out there. They’re obviously heavy on Blackberry. I don’t know what accounts for as their… But they’ve got a few in there too. I know we’re not huge fans of Stelco. Jim sort of sniffed that one out and we think it’s a…

PART 2 OF 4 ENDS [00:36:04]

Iain:

We’re not huge fans of Stelco. Jim sniffed that one out and we think it’s a potential zero.

Jim:

I’m a little shocked it’s up 30% in the last month-

Iain:

Yeah, it’s held in pretty well hasn’t it?

Jim:

Because the steel prices are driving the bus there and I don’t know if you guys have looked at steel prices, they’re not up.

Iain:

Yeah.

Jim:

But sure, buy Stelco. have fun. I want to know who it was who managed to sell Stelco to Fairfax at $22 a share because that is the guy we need to hire as our chief sales manager because that was well done.

Iain:

Yeah.

Speaker 2:

All right. Anybody has flagged any that they want to talk about in particular?

Iain:

Yeah, they’re flying in here.

Speaker 2:

Yeah.

Iain:

I was going to say anything further on insurance companies? Insurance companies in general are pretty … I know [bucks 00:36:51] pounds the table on them every time we talked to him. The insurance industry in North America is really hardened, so that’s going to be very good for the insurance operations. It’s just they’re fighting the markets at the moment. But from an insurance perspective, these companies are … The businesses is as good as it’s been. Intact is one that’s on the stock advisor [cannon 00:37:11].

Bryan:

It’s done really well.

Iain:

And it has not cheapened up. It’s come off a little bit. But man, if that’s one that ever went below two times book value, it’d be really attractive.

Jim:

I’ll hit three in a real quick succession here. None of us [attendee 00:37:27] wants to know thoughts on constellation software. Is the price worth the current environment? Yes. Polaris Infrastructure. I own it, yes. Polaris Infrastructure, CRH Medical and neat.com, yes, yes and yes. Like all of them at the current prices. Polaris I think should be a somewhat defensive play frankly, but they’re still sitting there.

Jim:

The bought Village Farms, any hope? I’ve actually been talking with a number of other fools who are more knowledgeable in the marijuana space than I am, which is not hard frankly, about Village Farms. And I understand the logic of why some people like it and I think I like it better than some others, but they are still a cash burner. The only hope that I would have there, well not the only hope, but the hope that I would have in them that I would probably not have with very many, if any other ones, is they are a professional management team with a very long history and with a very large comparatively speaking ownership stake. And I think that those types of management teams tend to think more longterm than perhaps some of the other more fly-by-night companies in this space, so I think there’s some hope there but they need to change that cash burn. And also, we mentioned buck. Buck really likes them still and still talks about they have a large, largely they have industry leading low price per up production, which is good.

Iain:

I think in a commodity business, which marijuana is, that’s where you want to focus on [crosstalk 00:03:19].

Jim:

We call it weed, right?

Iain:

Yeah.

Jim:

It’s literally called weed.

Iain:

Low cost producer and you really shouldn’t go anywhere other than the low cost producer. And I think Village Farms is doing a pretty good job of making its mark on that front.

Speaker 2:

Speaking of buck, we’ve had a couple of questions on Stingray, the elevator music company and karaoke company among other things. But any thoughts on where Stingray is right now?

Iain:

Did anybody else see the stat on Spotify’s subscriber numbers? I feel I saw a huge increase through this period, so I don’t know if this environment’s been good for these services. And Stingray’s certainly beyond a streaming service given the radio station exposure and whatnot, but it’s another one that when you throw valuation in the mix it’s really attractive. And we like the company for all the reasons that we put forward, but at this valuation I like it a lot. Great cash flow business, a good dividend and I think too cheap for what you’re getting there.

Speaker 2:

Yeah, we’ve-

Jim:

What’s your favorite place to do karaoke?

Iain:

Anywhere. I’m just always karaoke-ing.

Speaker 2:

Yeah. With Spotify, I think they said everyone is listening as if it’s the weekend every day of the week, so you don’t see the prime time people listening to podcasts in their cars and before and after work. It’s just like [crosstalk 00:40:44] the day. Maybe not as much, but they beat expectations across the board.

Iain:

Maybe it was usage then as opposed to subscriber growth per se.

Speaker 2:

Yeah.

Iain:

And I’ll say too, I think Stingray’s moved with some of its streaming services to a more ad based model, so that actually might help them. They’re not necessarily reliant on subscriber numbers, but if listening time increases that’s got to be a good trend for advertising dollars.

Speaker 2:

Bryan, we had one just on [rates 00:41:10] in general. I don’t know if you want to share just the Cliff’s Notes version, or-

Bryan:

Sure.

Speaker 2:

What’s the Canadian Cliff’s notes?

Bryan:

Cole’s Notes.

Speaker 2:

Yeah, Cole’s Notes. Maybe you want to, so Jim said you led them into the inner sanctums of [inaudible 00:41:23]. I don’t know if there’s a Cole’s Notes that we could give or maybe just the quick top three do’s and don’ts when looking at rates.

Bryan:

Yeah, I’d say with the rates right now, some of the smaller rates in Canada, there are some concerns around high payout ratios. I know I’ve mentioned that ad nauseum since the downturn, but that was something that’s been in place for years in the Canadian and US to some extent. [Reets universe 00:05:54] is high payout ratios for some of the smaller [reets 00:41:57] to attract investors in. That creates far less flexibility during a time like this, so that’s one thing to keep in mind. All three of our industrial rates are on our best buy now list. We still like them while we also acknowledge that maybe if tough conditions prolong and extend longer than expected, maybe they have to trim their dividends. And our thinking is looking at the actual price of the rate that there’s still nice value there.

Bryan:

So just keeping in mind that [reets 00:06:33], there hasn’t been many announcements since the downturn in terms of corporate actions. We’ve seen corporate actions regarding dividends from a number of different companies, especially in the energy space. I’d say the next two earning seasons could be somewhat volatile for some of the smaller [reets 00:42:50] with high payout ratios, especially if they have elevated leverage on the balance sheet.

Bryan:

In terms of categories, office is a tough spot. Retail’s a tough spot depending on what sort of retail property you have. Multifamily should hold up, barring a very long extended downturn with high unemployment rates. That’ll eventually trickle through to the multifamily rates. Industrial is generally one of the more valuable categories. They will feel some disruption during this because companies, they rent. Some of their tenants are small businesses, so just like office rates, you’re going to have businesses that can’t pay rent, so the industrial rates should come out of this in good shape, but there’s going to be some disruption in the industrial rates. One of the longterm stories related to them is the growth in e-commerce. You need to be selective in terms of which industrial rates play into that theme. But in general, I expect them to bounce back. If we look out a year from now, they should go back to being valued a little higher than they are today given the impact that we’re likely to see in the near term from their tenants.

Bryan:

Hospitality is probably the worst. Hospitality hotel rates are probably one of the hardest hit places, so tread carefully there.

Speaker 2:

Stay with that. Real quickly, we’ve got a couple questions about hotel stocks and airline stocks. So just broadly, are you guys considering touching stocks in these travel and tourism sectors right now? Live Nation, tangentially related in the entertainment business. No contract right now, but the Saudi Public Investment fund clearly thinks that there’s-

Iain:

Saw that-

Speaker 2:

A future. They’re investing 500 million. So, just general thoughts on these are the sectors that are clearly most heavily impacted: travel, tourism, entertainment. Are you thinking about wading into these companies right now or does there still need to be more clarity on vaccine, go back to work, social distancing, or do you believe that these sectors will remain viable over the long term and feel comfortable putting money to work right now?

Jim:

I’ll say that I’m not a big fan of the airlines or any fan of the airlines at all. That’s in the too hard pile. If you insist on, I mean we already know what Boeing is doing or not doing I suppose is the better way to do it. Boeing’s in trouble of their own making, largely before this started. Airbus was out recently as well. A little bit of hyperbole maybe, but was saying we have to be careful or we could risk losing the company. What’s the third big aircraft maker? There isn’t one, so when both parties who are at the base of it are saying that, the airlines are a little problematic. If you want to play in the airline space, I would suggest the airplane lessors. The leasing companies are probably a better way to play it because they do have a lot more significant pricing power versus the airlines. Some of the big ones, the Air Cap Holdings and Air Lease. There’s other things to consider there, but that’s how I would choose to play it.

Jim:

Hospitality … When are we going to be comfortable going back to hotel? Probably not for a while, but I would-

Iain:

I want to go right now too many [crosstalk 00:46:36]

Bryan:

Too many children.

Jim:

Fair. No, I think hotels … Hey hotels have got to be a better business than Airbnb right now. Let’s look on the bright side I suppose, but-

Speaker 2:

My counterpoint to that would be I would be much more likely to stay in a single family home on vacation right now than I would be in a hotel with hundreds of staff and other guests, so maybe that recovers more quickly. But those companies that hold Airbnb [owns 00:47:04] probably aren’t as well capitalized in some instances as the hoteliers are.

Jim:

Yeah. I personally think the restaurants, if you want to include them as hospitality, I think the restaurants will actually come back faster because to Iain’s humorous point, I think we’re all so desperate to go and just be normal at some point that … You might not want to get a hotel or maybe people still on furlough lost their jobs might not want to take a weekend away in downtown Toronto or whatever. But you know what? You can go for a nice meal, and so I think those will come back first and then … But the problem with the airlines is that they have a long history of going bankrupt and the airlines keep flying. We just, the current equity is wiped out, the previous debt holders take on some form of new equity. They raise new capital, wipe out some obligations and keep flying. Air Canada will still keep flying, but this equity may not be the equity that you’re buying and selling in 10 years.

Iain:

I struggle to disagree with how the market’s treated any of those spaces. I can’t say definitively one way or the other, whether or not the market’s got the airlines, the hotels, any of them right. I find I struggle to … It’ll be very easy to look back and go aw man, was that ever an opportunity? But I think in the moment, certainly it’s not obvious to me.

Speaker 2:

Yeah. You look at casino stocks, every day they’re swinging pretty wildly. And then I think a lot of them have come back quite nicely. But when you look at a casino table, there’s about six people within six feet of each other, so you have to wonder how long that will take for that to come back to full capacity.

Speaker 2:

But we have some other questions on virtual gaming. You’ve got the Stars Group, DraftKings IPO’d recently, Score Media and a couple others. Of course those rely on sports for the most part, but sports might come back either fanless or with reduced fan capacity fairly soon so I think that those do have … Penn Gaming, another one. I think that those might have decent short term projections at least in terms of return to gaming. And another point, people are itching for sports so the moment that sports do come back you can probably imagine a huge focal point and people just diverting all their attention to sports once that does come back, so those stocks could potentially look good sooner than an airline or a big hotel company.

Bryan:

What a time for the DraftKings IPO.

Speaker 2:

I know, unbelievable. We have about 10 minutes left and maybe I just throw out some stocks rapid fire, some ones that I’ve seen on here that have been mentioned more than once or twice, and just anybody that wants to share quick thoughts on those. MercadoLibre has been mentioned a handful of times. I’m a shareholder and I believe in that longterm. Anybody else out there liking MercadoLibre where it’s at right now?

Jim:

Joey and I are both nodding, so that’s two more votes.

Joey:

Oh, heck yeah.

Speaker 2:

Okay. It’s well over. I think we’ve got at least 50% of our crew here-

Jim:

That’s a quorum.

Speaker 2:

Yeah, we do have a quorum. Trade Desk, people talking about dropping in online advertising. But then you see Facebook come out and say that theirs was flat versus last year, so some impact because you’re expecting growth for Facebook. But still, to remain flat for online advertising and Google and Alphabet didn’t really say too much to the negative on online advertising. Granted, you do see huge budgets drying up, but Trade Desk longterm, you guys a buyer right now? Maybe not talking about the specific price, but just the prospects remaining for that company.

Iain:

Certainly on this end, yeah. And it sort of sits in the middle of the world of advertising, so I think what’s been fluctuating are the rates or the prices being paid. So, as long as activity remains at a high level, I think … I don’t know how impacted they are. I’ll also say, it’s a mind boggling industry. Any time I read about The Trade Desk I’m like gosh, this is happening. Every microsecond billions of decisions are being made about what we’re seeing on our screens. It’s mind-bending.

Speaker 2:

100% agree. It’s a complicated business, but obviously it’s a rapidly growing one COVID aside. Let’s see, we’ve got Lightspeed, another company that has been mentioned a number of times. I think Joey, you’ve said you like the stock, but maybe a little conservative on buying decisions right now. Does that still remain?

Joey:

Yeah, I haven’t checked over there. Oh yes, they’re well off their lows. Yeah, this is one where the bulk of their client base is all shut down right now, so probably very limited payment volume going into the physical brick and mortar locations of these restaurants or retailers. They might be getting a good amount of the e-commerce side, but I would still take the wait and see approach with it. If you already own it, keep holding it, but I’d be hesitant to put new capital to work right here.

Speaker 2:

Thank you. Alimentation Couche-Tarde, the local gas stations floating around Canada. What about that Iain? I know it’s treated our scorecard pretty well in stock advisor Canada.

Iain:

Yeah, I put it certainly in the upper tier of quality companies in Canada. Again, they are going to be short term impacted here by just gas volumes. People aren’t driving, people aren’t filling up, so there’s certainly a short term impact that seems clear. But that’s one that’s pretty darn easy to look through and it’s going to be absolutely fine on the other side.

Speaker 2:

Jim, Chorus aviation has had some questions and MTY if you want to do a one two punch on stocks that I know that I’ve heard you talk about quite a lot.

Jim:

Sure. Like MTY obviously a lot, like Chorus from what I’d heard about it, but I’m not as educated as some on the name. The problem with both of them is we talked about things are shut down, so Chorus has really run into some troubles with they had to cut their dividend. I wasn’t surprised by that, but I think some other people may have been and when they will be a survivor … The lower tier airlines versus the flag carriers I think might be the ones that are really in trouble. So, Chorus unfortunately is the lower tier or the discount airline.

Iain:

Well, they’ve got the regional airlines of Air Canada, so I think-

Jim:

Yeah.

Iain:

In our last discussion, again, we talked about this at the same meeting at Starbucks that we alluded to. The risks that we saw was

PART 3 OF 4 ENDS [00:54:04]

Iain:

The meeting is Starbucks that we alluded to. The risk that we saw was dilution on course, that they’re going to have to raise equity at these…

Jim:

Dilution or does Air Canada buy them in for a song because Air Canada’s done that before now.

Iain:

Yean.

Jim:

Is Air Canada too impaired that they even tried to do that?

Iain:

Which is another, yeah.

Jim:

We saw Air Canada, in better times, we saw Air Canada basically kneecap Aeroplan and then go buy it for a song. They’re not above pulling that little maneuver.

Iain:

Yeah. If they can afford it.

Jim:

If they can afford it. MTY, like the company like the story, like the management, like the insider ownership. The problem is when other restaurants open again because they are taking things, they’ve been taking the steps that they need to do, so they’ve temporarily [inaudible 00:54:52] dividend they say. They have foregone rent payments and royalty payments for April. I suspect they’re going to have to do that for May as well. What they don’t want to have is 50% of their franchisees toss the keys on the table on the other side of this, so they’re going to hurt for a while. In turn they’re going to have to get their lenders are going to have to cut them some slack or they can turn around and toss the keys on the table. I don’t think the lenders, they owe about half a billion dollars. I don’t think they want to take Goodwill in 75-80 restaurant chains when they have no expertise in that area.

Jim:

It’s very much in everyone’s interest to keep operating, but that’s why the stock is down by two thirds. Until we have some semblance of normalcy, which is what, six to 12 months out at least, I don’t think you’re going to see MTY. If you’re looking to add to a position at MTY I think you’re going to have more opportunity in the months and months ahead. I’ll put it that way.

Taylor:

Appreciate that, Jim. I’ll throw out N Wave now and then Roku, I think Joey’s got that flag. After we talk about N Wave, Joey can hit on some Roku.

Jim:

Yeah, I’m not a fan of N Wave. I’ll leave it at that.

Iain:

Okay.

Joey:

Oh man. Roku, Scott Elliott from C Limited to Roku, we are going to be very good friends. Roku, I didn’t fully understand it at the time the IPO. I thought it was just the people that sell like the hardware and I hated it. Once I got to know the company and I actually got one in March during this whole quarantine and we needed something else for my kids to watch and I couldn’t access Disney Plus on my TV, so I went to Target, grabbed the Roku, came home, and then you see this vast, vast library of content. Then when we subscribe to Disney Plus how Roku would take a cut and they get the billing through there.

Joey:

I finally saw how this product works, and I got to say during that meltdown in March, I quadrupled my position, bought it for all three of my kids. It was the second position in my newborn son’s portfolio. It’s just one of those where you can see how everything’s going the way of streaming and you see how this business, anybody that wants to start basically selling content online, they’re like, “Okay, yeah. Post this here, and they’re, they’re just going to have their ads roll in there.” It makes it so much easier where on our TV upstairs we’ll have to basically switch from Netflix to Amazon to anything else. With Roku, I mean, you’re just pressing a button on a remote and you got to think like those buttons on the bottom of the remote is almost like real estate. They could start selling to these companies like, “Hey, if you want to be the Netflix button or the Amazon button,” for some reason they got sling TV, which is just trash. They should remove that and put something valuable there.

Joey:

You could see how all these different streaming services could just basically have their button on the remote and everything. I’m absolutely in love with Roku. Like I said, I beefed up my position big time and all my kids own it. I was actually talking to Iain about it, this is something we need to look deeper into because I absolutely love it.

Jim:

I think I have a Sling box downstairs somewhere. It hasn’t been running for a decade, at least. I agree with Joey though, the the Roku service is pretty slick.

Taylor:

My buddy who was just talking about sadly selling his Sling box on eBay just like to get rid of it.

Jim:

Was he able to?

Taylor:

12 bucks or something like that.

Joey:

That’s not even the shipping.

Taylor:

I don’t know what he sold it for, but that’s where the auction ended. Shawcore or any thoughts on Shawcore, an energy company that’s probably one of our first recommendations in stock advisor Canada, but hasn’t turned out so well just given the industry, not necessarily the stock itself.

Iain:

Yeah. The first and it had done well for a little bit and then not so much.

Taylor:

Yeah.

Iain:

It’s one of these, there’s a huge, huge return on the table if it survives. The question is if it survives, and that comes down to whether or not orders that are in their backlog come through, come to fruition and whether or not new orders keep coming through the door for their services. That’s the unknowable. Short term, they’re going to survive but who knows how that industry plays out over the next say year. That’ll be a huge determinant. If things find their footing in a year, and the industry is such that, as I’ve said, it’s a depleting resource that we’re dealing with and new infrastructure is required to take that resource out of the ground. The resource is required by the global economy to fuel it. Natural gas and oil and Shawcore is more natural gasoline leaning.

Iain:

There’s been zero capital, very little capital investment in the industry over the past few years. These resources are going to start running out and infrastructure has to be created. The question is, when does that start and Shawcore’s probably fine for a bit, but not for three years, not for two years, but over the course of the next year. As long as there’s some indication that capital spending is going to come back into the energy industry, it’s a potentially huge, huge return because it’s still a good business.

Jim:

I have one rebuttal I just want to throw it, not for what Iain has said, but I just saw this question pop up. I have an overwhelming urge to answer.

Jim:

A person on the questioning says the government will let Air Canada go bankrupt, it’s the nation’s airline. I think the question is actually the government will not let Air Canada bankrupt because it’s the nation’s airline. Two points. One, no. It’s a private company. It is not a crown corporation. Two, you better believe they’ll let it go bankrupt because they let it go bankrupt before. Again, airlines can go into bankruptcy protection, they keep flying, the current equity is wiped out. The present debt holders become the new equity holders in some form. The flights, you never miss a flight, but if you think that the government won’t let it go bankrupt, there’s a book I would recommend that you buy called Air Monopoly. It’s about the last time Air Canada went bankrupt.

Taylor:

Sorry. I’m just typing an answer to a question here. Let’s see. We’re running out of time. It’s 2:01 right now. Any parting thoughts?

Jim:

We can do another 10-15 minutes. I can at least.

Taylor:

Another 10 minutes?

Jim:

I can go 10 minutes if anyone else or if it’s just me and Joey shooting the breeze. I don’t know.

Taylor:

I got 10 more minutes. Square. Sq.

Jim:

I own it, Joey owns it.

Joey:

Oh, sorry. I’m answering the ticker symbol for Roku is Roku.

Jim:

Is Roku.

Joey:

Yeah. Square. Yeah. They’ve bounced back from their lows quite significantly. I think they’re double. I was trying to add to that position, but I apparently we were locked out. I guess a US service was recommending it at the time. Square, I mean digital payments, they’re helping distribute the PPP loans in the United States. They’ve got the power e-commerce, payments, it’s just again, much like a C Limited in the digital payment side or PayPal. I mean, no one wants to touch money right now and no one wants to be handing over their cards, so they’re going to want to use like their Square Pay, Apple Pay, all the contactless payments. Again, it’s just one of those businesses in the sweet spots, the death of cash, the rise of square.

Jim:

Jason Moser, one of our US friends, he has what he calls the death of cash basket and that’s MasterCard, Visa, Square and PayPal. I own three of the four. I imagine those four are probably fairly well-represented among everyone else on this call here.

Taylor:

Yeah, absolutely. Yeah. I have PayPal and Square in my portfolio. Let’s see, what else do we have here?

Jim:

There’s a lot of questions about Bitcoin and Ethereum and other cryptocurrencies.

Taylor:

Yeah.

Jim:

Just to speak as what Joey’s literally said, people don’t want to touch cash. What do you think about these things? I think if you buy them, you’re going to learn a lesson you can learn no other way. You guys might have different opinions. I think that they are terrible. They are terrible. They’re terrible at what they purport to do, which has replaced money and replace via currency.

Taylor:

I used to, when it first came out, I did a little bit of research and it’s fallen way by the wayside. Yeah. No opinions here other than, yeah. You’re going to want to understand what’s going on before you wade into that. It’s not something you’re just going to throw a cash app and expect it to replace the US dollar and the Canadian dollar or the Yen or whatever currency you want to talk about. I agree.

Taylor:

Disney, I know it’s a company that’s heavily exposed to COVID and its implications with all the parks closing, movie theaters closing. They do have Disney Plus, but it’s a small part of the business. I have heard people say that, “Yes, but Netflix is currently valued at more than Disney and so Disney plus could one day be the same size as Netflix.” Thoughts on that company? It’s one of our 10 starter stocks, but maybe one of those 10 that’s been most impacted outside of just the broad market downtown.

Jim:

If you’re not buying Disney now, when do you buy it?

Joey:

That actually, yeah. I’m in the same mind. There’s a few questions on car companies, not excluding Tesla there. I saw Ford in there, but even bigger picture, I’m of the same mind on a lot of… Disney’s not cyclical, so that’s a different situation. I keep coming back to that same answer for the cyclical industrial companies and even resources. This is when to buy a cyclical company and if you’re not doing it now, then you’re probably not ever going to buy them, which is fine. They’re in play now more than they’ve been in the past five years or so that we’ve been paying attention to them. Yeah. The car, the parts producers. I know when Linamar is one that we’ve discussed, Magna has been a recommendation. I think Magna now is as attractive, not quite as attractive as it was in the financial crisis, but it’s certainly close and certainly attractive long term. Yeah. I think cyclical companies are more attractive now than they’ve been a long time.

Taylor:

We’ll just forget you said Tesla because we only have five more minutes left and Jim’s on the call.

Jim:

I’m not saying a word.

Taylor:

Anybody come across any other tickers on here that we haven’t covered that you might want to?

Jim:

A few people asking about Curl, which is a fairly recent hidden gems wreck. I still like it now. It’s it’s been a wild ride. It’s doubled in the last week and now it’s given back about 15% today. I wrote in hidden gems about some in the forums, some thoughts about the latest information. Which is still publicly available for at least a week before the stock doubled in five days. They report after hours today. It wouldn’t shock me to see the stock move 20% in either direction tomorrow. I’m looking down two and three years. Look, I’ll flat out say we’ll hold it for two or three years and we’ll sell it probably well in the low 30s assuming that the valuation is where I think it will be if it does go in the low 30. High 20s, low 30s, that’s what I’m looking for in two to three years from where we bought it at 10. There’s your stocking horse. Iain’s like I’m going to evaluate you in two years when this happen.

Iain:

Oh I’m actually chuckling cause I’m just scrolling through the questions in one. Jim and I had an exchange yesterday, poking around for small cap ideas. Facedrive.

Jim:

Go ahead, Iain. Go ahead.

Iain:

Yeah. it is mind boggling. It’s a green, a ride sharing company.

Jim:

It’s not green.

Iain:

What did you found?

Joey:

I remember I sent this to you guys.

Jim:

Joey found it first, and we were laughing about it three or four months ago or whatever.

Joey:

It’s like 200 times sales, over 2000 times sales.

Jim:

Oh, Joey. Joey, they might [inaudible 01:07:22] child. It’s no longer 200 times sales.

Iain:

They had revenues of $600,000 last year. It’s a $444 million market cap.

Jim:

It’s an app on a phone. They built an app.

Iain:

Where did this company even come from?

Joey:

We are in the wrong business guys.

Jim:

No kidding. Joey, I actually said to Iain yesterday, “How are your app development skills because we need to do this?”

Joey:

I just checked the market, $380 million company and I see it had $234,000 in sales last quarter.

Jim:

For a competitor to Uber, who’s getting in an Uber? They call themselves a green driving company. What’s green about them?

Joey:

Clean. They’re going to make sure it’s really clean.

Jim:

Their criteria is your car needs to be 2013 or newer. Okay. Here’s my Hemi. I know a little bit about green vehicles and green technology and there’s nothing green about this company. They’re just looking for idiots to invest. Sorry. I’m going to shut up now.

Iain:

I knew that one to get a rise.

Jim:

Well we said we weren’t going to do Tesla, so I got to go off on something.

Taylor:

Yeah, that’s fair. [crosstalk 00:01:08:40].

Joey:

talking Tesla, I saw one pop up saying if you like Tesla, should you buy Neo to ride the wave? If you like Tesla, I would say buy Tesla. I trust about as much as I trusted luck in coffee.

Jim:

Yeah. Neo has been skirting right on the edge of bankruptcy. Their balance sheet is, I’m not too sure. I mean, what’s the stage passed on fire because they’re bouncing, they’re dead. Zombie companies are being propped up everywhere. That’s, they’re no. No. They are, I’m obviously the Tesla bear, but even the Tesla’s got…

Joey:

I’d rather Tesla than Neo.

Jim:

If you’re going to force me into a false dichotomy, yeah. I’m buying Tesla way before I’m buying Neo. Neo’s dead company walking.

Taylor:

All right guys, that about does it unless you have any parting…

Jim:

I got one more.

Taylor:

Wise words. Fire away.

Jim:

Lucy asks should beginner investors get into options. No. I was the front along with Jeff Fischer of Motley Fool Options for 10 years. I would suggest if you are interested in options and you are beginning investor, take a subscription in the Motley Fool Options. It’s now run by our good friend Jim Mueller who is fantastic, and he can bring you along slowly. The point is there, go in, take the subscription fee as tuition, go in and learn and do very, very minimal options use in trading because options are a great way to lose a lot of money very quickly.

Taylor:

I was going to say, it sounds like you think people could blow themselves up.

Jim:

How long do we got? I got a long list of people who I’ve seen blow themselves up.

Taylor:

Yeah. Well, that’s a good cautionary tale.

Jim:

The whole point of Motley Fool Options. We’re going to help you so you don’t do that and we still saw some people who went into business for themselves or didn’t understand risks or position sizing. We still saw some, or did the very opposite of what we recommended and then blamed us for them doing the very opposite of what we recommend. You can make very good money with options if they’re tremendous tool to enhance your investing and it can also kill you faster than anything else.

Taylor:

Appreciate that. Thanks guys. I think that’s about all the time we have, but as we’ve said previously, this is recorded so it’ll put the video and transcript back up for you to review along with the fact that this will probably happen again in the next couple of weeks. Keep those questions, write them down. We’ve answered a lot about the same stocks over the week, so if you have something else that you want to bring forward, just think about it over the next couple weeks because I can almost guarantee you that we’ll have another one of these. We’d like to just get into some longer discussions about things that we don’t mention on a week-to-week basis. We want to thank everybody for tuning in and of course our analysts and advisors for giving the time today.

Iain:

So long.

Jim:

Cheers.

Joey:

Everyone.

PART 4 OF 4 ENDS [01:11:51]