Morguard Corporation (MRC.TO)

A real estate holding company. The value of the assets is well over $200 a share. But the stock is very illiquid. You can get in and get trapped, not being able to get out. He thinks they have a terrific portfolio of real estate. He likes it very much.

(A Top Pick Feb 20/15. Down 4.16%.) A real estate play, and management owns the majority of the shares. Doesn’t trade very much and they continue to buy back a lot of stock. When you do the math and add up all the value in the public entities it owns, plus the real estate, he comes up with a valuation of at least $200 a share. They are re-leasing a lot of their Target stores, and are using it free cash flow to keep buying and developing more assets.

A hard stock to buy, simply because there is very little trading in the stock. Insiders and management are owners. There is minimal trading on the stock, therefore do not put in a Market Order, put in a Limit Order, because you could have a bad surprise. Has a BV of $220, and you can buy it at $140. Dividend yield of 0.42%.

(A Top Pick March 27/14. Up 22.02%.) This company is really thoughtful when it comes to adding on real estate and paying reasonable prices. They take a very long term approach. They have a number of publicly listed companies. He could see them spinning off more assets over time. Feels it is worth $200. Still adding to his holdings.

Has fallen a little recently, and he doesn’t know why because there is enormous value. If you look at all the parts that it has and add it up, it is worth over $200 a share. Thinks the market is missing what is going on with the company. It has recently diversified into investment management, and he thinks there is potential for this to follow the Brookfield Asset Management model, which is to drop-down more assets into the publicly listed REITs and maybe at some point start an investment management publicly traded company and collect the fees as it goes up higher.. Yield of 0.41%.

Morguard (MRC-T) versus Brookfield Asset Mgmt (BAM.A-T)? A 3 year chart was used. This ended up higher, but what convinced him more towards this was that the spread in 2013-2014 is getting wider, which indicates the company is an outperform. He would be more inclined to pick this one.

Which Canadian REIT would benefit from appreciation of real estate prices in major Canadian cities? This is the one that you would possibly be looking at. Otherwise you are looking at one of the Brookfield companies. He exited this area because he felt it was getting a little bit late.

A deep value pick. Continues to trade at a huge discount to BV. If it sold all its real estate, it would probably get over $200 a share before tax. It is arguably worth $150-$175 a share. It continues to grow. They keep buying back stock. Anything to do with real estate right now is reasonably priced in Canada, because he does not see interest rates going up for years.

Feels the NAV for this company might be as much as $200-$210 a share this year. At $150, it would only be trading at 75% of NAV. This was a great undiscovered real estate play in Canada. Good operators. There is more to come.

Chart shows an uptrend that has been around for a few years, but the chart is breaking down. There is some potential as the chart shows a formation of a rounded bottom and could get back to the top of the trend line. He is trying to avoid stocks that have broken the big long trend lines. Has some potential for a short-term rally and could be worth a trade, but not good for a long-term trade. One of the factors that you should be looking for in a change of trends is the highs and lows, peaks and troughs.

Sees good value. Feels the NAV is somewhere around $175 as share. The risks, as with all real estate companies, are what happens when interest rates go up. Do they have to refinance their debt at higher rates and does it put a bit of a hole in cash flow? Feels those fears are vastly overstated because, when interest rates go up, that means inflation is going up which means rents can be raised.

(A Top Pick July 31/12. Up 16.35%.) This one was doing better up until it got nailed by rising interest rates. A pure play on real estate. Owns a number of publicly traded REITs as well. Very smart management. A screaming buy at $105.

This is a difficult stock to analyze because essentially they are in the REIT management business but they don’t pay a great dividend. So even though the company is making lots of money, you are not seeing it come in the form of dividends so the stock is strictly for capital gains. The REIT sector is in a bit of a transition period, going from one of the favourite investments to some questions being asked.

He continues to buy for new clients. There was a little dipsy doodle in June and he was aggressively buying it. The CEO, who owns 45% of the company, bought a significant amount of shares also. The company also bought back stock. Feels the sum of the parts is well worth more than $150 a share.

Morgard Corp is a big entity that has a bunch of pieces. He doesn’t own it. He owns the REIT. It has not recovered like some of the others. It is a little bit too big. A fine company but probably going to lag a little bit because of size.