Gluskin Sheff and Associates (GS.TO)

(Market Call Minute) He likes the investment managers. They are leveraged well to the strong market that he thinks we will have for the next 12 to 18 months.

(Market Call Minute.) Thinks they are going to have a rough patch with CRM2.

This has been hurt lately for a couple of reasons. In the fund industry it has been hard bringing in new assets. Money has actually been flowing out of equities and equity funds. Secondly, they are having a fight between the company and its founding partners. With that uncertainty hanging over it, you don’t know where this is going to be. Once that is out of the way, the stock should do better. Also, they charge high fees compared to other money managers.

This is an asset management business that is doing the right things. The strife will sort itself out. It may not take off right away, but it will take off. Write some puts about $16.50.

(Market Call Minute.) Investment management, and would be leveraged to higher markets. Thinks markets are higher, but not inordinately so.

Has created its great nation of high net worth business in Canada, and are one of the premier names for wealthy individuals. They have a number of different strategies. Traditionally have done very well and have excellent portfolio managers. Some of their funds are performance fees, where depending on how well they do, would generate extra income and a special dividend. This is on his radar screen.

Competition for him, but a firm that he has always admired. The question in the market is with the departure of the founders and some of the people that have been there a long time. There is risk in these changes, but it is hard to judge how much. A quality firm, but is in different hands which have created some turbulence. Also, banks are making a more determined effort to gather assets, and some of that is coming at the expense of the non-bank managers.

A well management company, they are very profitable. They have management fees and performance fees. The stock got tremendously overpriced. He prefers GCG-T. GS-T is expensive.

Would prefer an IGM-T. It looks okay here and is trading at a trough valuation.

The asset management industry as a whole is a difficult industry to be invested in. It is sort of a high beta version of the market. When the market is doing well and the asset managers have strategies that are doing well, they can subscribe to pretty nice valuation, but the opposite is true on the downside. It is a little more stable to get that exposure through the banks. All the banks have large wealth management divisions, especially Royal (RY-T) and Toronto Dominion (TD-T). With this kind of company, you are sort of living and dying with the performance of the market and the performance of their managers. This is doing well and will probably continue to do well as long as the cycle goes, but the downside is also great and he tries to limit the downside for his clients.

Has made a lot of money on the stock and really likes it. This is an asset manager that caters to high net worth individuals and institutions. Valuation is very compelling compared to other asset managers. Given the regulatory changes that are happening within the asset management industry, you want to own a business or stock that caters to high net worth clients and less fee sensitive, and this one really does fit the bill. Great entry point. You have the potential of a special dividend at the end of the year, especially if the market cooperates, along with capital appreciation. 3.5% dividend yield.

Likes the money management business. They continue to build up the business. There was a big overhang because it was known that the owners wanted to sell the company, but it didn’t happen.

Probably Canada's best private client wealth manager. There are a couple of advantages with respect to what they do. There is a lot of CRM legislation coming down the road, which is going to adversely affect a lot of the big mutual fund companies. This will require a full disclosure of fees and a possible ban on trailer fees. This is not the model that this company works with. They took a more conservative approach in the last couple of months, and have done a pretty good job. The stock has declined about 20% in this recent decline. He would still be interested in owning this.

(Top Pick Aug 30/13, Up 56.48%) They completed an acquisition that increased their fixed income exposure. They are performance, fee based products that should do very well over time.

They’ve done a good job of managing money. The only thing he would point out is that 2-3 years ago, they were probably trading at 6-7 times EBITDA, which is a reasonable number to buy a public money management company. This is now trading at around 13-14 times EBITDA. Pretty rich valuations.