A portfolio manager's picks

A portfolio manager's picks

A portfolio manager Wolfgang Klein, a portfolio manager with Canaccord Genuity Wealth Management, gives WP his latest investment tips.

“My most recent portfolio addition was with West Fraser Timber for growth accounts,” Klein says. “I like the trade for the following reasons; 1. The pro-cyclical trade is on. 2. The U.S. housing industry continues to improve and is not expected to peak until 2020 at about two million units. 3. INK magazine recently published strong insider buying at Western Forest Products. 4. Jim Pattison, one of Canada’s most successful western entrepreneurs, has been increasing his stake in Canfor, now staking 46% of the entire company. 5. When the softwood lumber agreement is renewed, West Fraser’s larger mill capacity in Southeastern U.S. will reduce its exposure to export taxes. 6. West Fraser has a diverse set of lumber, panel and pulp operations providing some resiliency to EBITDA margins during times of weak housing demand.”

 “I have been raising cash in all three model portfolios and have been a seller of the Canadian Index, XIU, as I fear U.S. institutions do not want to own most things Canadian. Our banks are nearing twice the valuation of U.S. banks, trading almost at two times book. Our oils remain locked in and the differentials remain firmly in place. America is more focused on its own resources now, thanks to technology and Trump’s pro harvest approach, and cares less and less about Canadian energy. With markets up 30% from the lows put in last winter and up 15% since Trump became president, a solid cash weighting provides for some sleep factor and of course fatter for when the bears take a temporary hold. We hope to have the strength to buy some weakness, be it in March or May or whenever it comes, and come it shall, I just don’t know when.”

“I have been adding to fixed income in my conservative mandate through Pimco Monthly Income, Manulife Strategic Income and Lysander Corporate Value. All three fixed income managers are stellar. They are tactical, have access to product and ideas unavailable to retail investors, and in a low yield world have demonstrated a fantastic ability to generate relative and absolute value.”

The views expressed do not necessarily reflect the opinion of Canaccord Genuity Wealth Management. This does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors.


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