67 WALL STREET, New York - December 17, 2012 - The Wall Street Transcript has just published its Best Investment Strategy Interviews of 2012 Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Investment Strategies - Large Cap Investing - Investing in Emerging Markets - Investing in Energy - Value Investing - Downside Protection With Upside Participation - Macroeconomic Trends
Companies include: Duke Energy Corp. (DUK), Consolidated Edison Inc. (ED), General Mills Inc. (GIS), Johnson & Johnson (JNJ), Merck & Co. Inc. (MRK), Pepsico, Inc. (PEP), Vodafone Group plc (VOD)
In the following excerpt from the Best Investment Strategy Interviews of 2012 Report, an expert in Canadian equity investing discusses this sector for investors:
TWST: Dividends - is that a theme you've been emphasizing recently?
Mr. Majendie: Of the themes that we've been emphasizing really since 2000, the dividend income theme, that income will be king, has been very much a key theme for us. In addition, we have always said this, but I guess the 2008-2009 financial crisis really emphasized that quality is critical, meaning a quality balance sheet, strong free cash flow. That's why we spend so much time discussing free cash flow with the senior management of these companies.
The other final theme is, although we're Canadian managers, in the 1980s and 1990s we encouraged clients to diversify as much as they felt comfortable with outside of Canada, because we didn't like the Canadian currency and on the commodity side we had a poor outlook. We thought that, for example, the U.S. market would substantially outperform Canada, which it did. But we reversed in 2000.
And I would make this comment: the top Canadian companies, in say the TSX 60, have become globally extremely competitive - whether you talk about our banks; whether you talk about some of our other financial companies, like life insurance companies competing in China and India; whether you talk about Brookfield (BAM) and the assets it owns in South America, Australia, the U.S., the U.K.; whether you talk about investment in SNC Lavalin (SNC.TO), which is the global go-to engineering company in certain aspects of the mining business.
So if you look at that TSX 60, you can diversify internationally through globally competitive companies, and not just commodity-producing companies but service companies as well. And thereby you can reduce your currency risk, because your investments are still in Canadian dollars but you're getting nevertheless some pretty good leverage, particularly to the emerging economies.
I mentioned China and India for the life insurance companies; for example, Manulife (MFC) and Sun Life (SLF). And while we don't own either of these companies currently, Manulife is the largest foreign life insurance company in China, and the same applies to Sun Life in India, where it has 150,000 agents. So that's been a very definite theme for the last decade, and I think this will apply for the next five or 10 years. Certainly, the advanced or the developed economies won't be growing nearly as fast as the emerging economies, but you can lower risk and get access to those emerging economies through globally competitive Canadian companies.
For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.