Michael Smedley, executive vice president and chief investment officer at Morgan Meighen & Associates

Focus: Canadian equities
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MARKET OUTLOOK
This is a tough one today. There is no traction in small caps. Talk has stopped on interest rates and also on the obscure case against Russia. I guess global warming has been and will continue to be the main surviving topic. The market is at peace in the U.S. after the fabulous run-up of the Internet giants and despite the frenzy of politicians and their goatish minions. The Canadian market is on a gentle slide and the loonie has flipped over and down for a breather. Long in the tooth, I have from time to time invented rules, one being “monopause,” whereupon if a stock has done very well for half a year it will almost certainly not do as well in the second half and either collapse or revert towards the mean of performance. This pattern is almost an inevitability, but not necessarily a disaster. Latest example of the big tumble is Kinaxis, which I might just pick for resurgence. Now that is a very long market rule and I am not recommending it, but I’m advising a cautious stance if a stock has had super performance. Just stay diversified, probably with patience, earning income in a low interest rates environment. Stay patient also with a few speculative growers if you like them.

TOP PICKS

Michael Smedley's Top Picks

Michael Smedley, executive vice president and chief investment officer at Morgan Meighen & Associates, shares his top picks: Spin Master, The Stars Group and Kinaxis.

SPIN MASTER (TOY.TO)
Continuing its great growth and outperformance of the older major toy companies. I have recommended it before, but watch out in case it falls foul of my “monopause” rule. Taking profit is good. It is owned by me and clients.

THE STARS GROUP (TSGI.TO)
Formerly Amaya. One of the world’s most powerful Internet gambling companies, enjoying huge cash flows that have paid down huge debts under refreshed, skilled management with squabbles apparently ended. It is not owned by me or clients.

KINAXIS (KXS.TO)
Victim of that personal rule about super stocks pulling back. I note analysts are keeping their targets despite a contract problem, which they appear to be trying to work out. Risk is of course increased but I am in hold mode.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
TOY Y N Y
TSGI N N N
KXS Y N Y


PAST PICKS: AUGUST 19, 2016

Michael Smedley's Past Picks

Michael Smedley, executive vice president and chief investment officer at Morgan Meighen & Associates, reviews his past picks: Spin Master, Jackpotjoy and Nintendo.

SPIN MASTER (TOY.TO)

  • Then: $28.15
  • Now: $46.30
  • Return: 64.47%
  • Total Return: 64.47%

JACKPOTJOY (JPJ.LN) – Formerly known as Intertain Group

  • Then: £616.50
  • Now: £685.00
  • Return: 11.11%
  • Total Return: 11.11%

NINTENDO (NTDOY.PK)

  • Then: ¥22,200
  • Now: ¥36,640
  • Return: 65.04%
  • Total Return: 67.70%

TOTAL RETURN AVERAGE: 47.76%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
TOY Y N Y
JPJ Y N Y
NTDOY N N Y


WEBSITE: www.mmainvestments.com