Art Of Boring

This episode, we discuss our seven-point management assessment framework (with examples), our risk management approach, and overall thoughts on energy.   Highlights: Why it’s difficult to find energy companies with sustainable competitive advantages—and where we see some opportunities—e.g., Parex Resources and International Petroleum Corporation Another way to look at geographic diversification? Revenue profiles in the portfolio (e.g., Jamieson Wellness Inc.) Diving into our Management Assessment Framework (MAF) and how we use it to determine if a management team is effective—E.g., Uni-Select and Element Fleet Visiting each floor of “The Mawer Risk Elevator”—and why the decision-making environment is the foundational level How rising interest rates can impact wealth creation

Digging into last year’s performance drivers, the current opportunity set, and benefits of resuming boots-on-the-ground research.   Highlights: A review of the market and our strategy’s performance in 2022 and three key learnings Why we exited Kakao, and some of the new additions to the portfolio: Salik, Vesta Risks we’re monitoring—and managing: China-U.S. tensions over Taiwan and geographic exposure in the portfolio The power of pricing power (see: TSMC) and types of ESG considerations that we look for in our investments (Petro Rio) How a shared investment philosophy and process makes for better decision making—e.g., Lonza, Hikma

The nuanced impacts of inflation to companies’ balance sheets that investors might be missing.   Highlights: How inflation can present major challenges to businesses Why investors need to look more closely at maintenance capital expenditures and depreciation expenditures—e.g., Dollar General A return to accounting basics and monitoring inventory balances—e.g., Johnson & Johnson

Chief Investment Officer Paul Moroz shares takeaways from the Research team's annual post-mortem discussions.   Highlights: The cyclical—and long-term—aspect to investment learnings Why interest rake hikes were a big factor and topic of conversation “Fishtailing” and the difficulties of trying to right-size information How emotional intelligence makes for better decision making “Simplify, clarify, focus” and offsetting the toll of complexity in processes

Portfolio Manager Crista Caughlin walks listeners through the tumultuous bond market experiences of 2022 and outlines three main economic scenarios the team is monitoring for 2023.   Highlights: Are reports of the 60/40 portfolio’s death greatly exaggerated? 2022 recap: What happened in bond markets? How can the yield curve un-invert? Key takeaways from researching Canadian household debt levels Adjustments to the portfolio: What changes have we made?

Some of the main challenges facing the continent, what we gleaned from visiting over 45 companies, and ESG considerations that are front of mind for major European investment firms. Highlights: Our thoughts on the prevailing macro concerns—e.g., inflation energy crisis “Collective corporate memory” and why the history of Europe is an important and unique context—particularly seen from a bottom-up perspective (e.g., Kuehne+Nagel, Lonza, Givaudan, SGS, Reckitt, Anglo American, Roche) Differentiation and operational effectiveness—what makes our European holdings competitive (e.g., Anglo American, Kuehne+Nagel) Germany’s longer-term energy outlook and potential implications for energy transition and infrastructure in Europe (e.g., Iberdrola, Shell, Equinor) ESG conference takeaways—the importance (and difficulty) of parsing and aggregating unstructured data, particularly for social considerations, and how we incorporate this into our investment process

A review of last quarter, the major themes and takeaways from 2022, and what’s on the horizon for the new year. Highlights: How we did—and what factors impacted relative performance Why 2022 was difficult for Balanced investors Discount rates have gone up…where are valuations at? Inflation expectations, interest rates, labour markets, earnings, and economic growth—what’s being monitored in 2023 Asset mix update

What investors can learn from the s-curves of technologies both old and new. Highlights How S-curves relate to TAM (total addressable market)—and what piqued our interest about them in the first place Types of S-curves Where different technologies fall into an S-curve: E.g., cars, refrigerators, landlines, TVs, Kindles, USB ports, and biologic drugs Are S-curves getting steeper?

What we think about the newly proposed tax on share buybacks in Canada, a balanced take on the energy theme, and where we’ve trimmed, exited, and added in the portfolio.   Highlights: Which sectors may be most affected by the buyback tax Holdings that showed strong fundamentals throughout this year’s volatility—e.g., Canadian Natural Resources, Suncor, Loblaws, Dollarama, and more Canadian real estate recap—e.g., Choice Properties and Granite REIT How we approach assessing big C-suite changes (CN Rail, Suncor, Bank of Nova Scotia) Major themes the team is thinking about for 2023

How do investors figure out what a company is worth? (Especially in a higher inflationary and interest rate environment?)   Highlights Why doing a qualitative assessment of each company is our first filter How we try to determine valuations without missing the actual fundamentals (e.g., Trisura and Kinsale) and why valuation is only one input in the investment decision-making process When DCF modelling can actually help us better understand the drivers of the business—e.g., Colliers—and also some of its pitfalls Choosing the right discount rate—why it’s more art than science and how we try to ensure consistency across the platform

A deep dive—right to the atomic level—of how semiconductors work and the potential implications for the industry when Moore’s Law comes to an end.   Highlights The transistor—a brief history What is a semiconductor? Why are they special? (Hint: atomic-level, laser precision manufacturing) HSMC, ASML, Amazon, KLA, Samsung—what the end of Moore’s Law might mean for various businesses in the semiconductor value chain Potential impacts to global productivity Will Rob continue to be underwhelmed by iPhone upgrades?

The deglobalization shift, long-term opportunities we’re seeing in utilities, and what’s interesting about gravel. Highlights: Impacts of currency swings and a strong U.S. dollar at the portfolio and company level Why we’re shifting to more domestic companies: E.g., Texas Instruments, Martin Marietta, Paychex The long-term runway potential for utilities—and renewables: E.g., Southern Company, AEP, Amphenol, and Linde How we’re adding resiliency to prepare for any scenario: E.g., AmerisourceBergen, Hershey, Intuit, Verisk

The “Swiss cheese” mental model for risk management, why we initiated in Moderna, and how to test if you have a variant perception from the broader market.

Market swings, central bank moves, and rising interest rates. A look at Q3.

What makes the U.S. mid cap investable universe unique, some key learnings since the strategy’s launch, and how inflation can be a “positive” for wealth-creating companies.

Why small caps may zig while large caps zag, the advantage of businesses that sell scarce skills (CBIZ, Insperity, RS Group), and why eyewear retail is harder than it…looks.

The impacts of inflation, interest rates, and sharp currency movements on the portfolio, and the importance of leaning in to process and keeping a long-term perspective.

The team debates the thesis that renewables are becoming “cheaper” than traditional energy sources, unpacks why the ultimate cost to the end consumer shouldn’t be missing from the conversation, and delves into the investment implications.

Inflation, interest rates, the valuation correction, bias creep, and “sticking to our knitting.” A full dive into Q2.

CIO Paul Moroz unpacks the foundational components to better decision making for investing, business, and life.