A quick update on three purchases in our portfolios. It is getting harder and harder to find good value plays as the market seems be pushing the boundaries on the valuation front. With a lot of stocks trading close to 52-week highs, pickings have been pretty slim. However, due to an oversized cash position, I decided to pay up and put some capital to work.
- First purchase: I added to my position in Brookfield Asset Management Inc (BAM.A.TO). I bought 50 shares @ CAD$64.00, which adds US$32 (dividends are declared & paid in US$) in annual dividends going forward.
- Brookfield is one of the best capital allocators in the market and with slim pickings in the overall market, I will let Bruce Flatt & his team handle the investments/capital allocation for me.
- BAM also recently completed acquiring Howard Marks’ Oaktree Capital Management (OAK), which will be accretive to BAM’s cash flow for years to come. OAK acquisition should also benefit if there is a downturn in economic cycle, thanks to the counter cyclical investment approach taken.
- This is my first tranche after a long pause & I expect to add more to this position in coming days/weeks if there is weakness.
- Second purchase: I added to my position in BCE Inc (BCE.TO). I bought 50 shares @ CAD$59.50, which adds CAD$158.50 in annual dividends going forward.
- Third purchase: I initiated a new position in my portfolio with EVI Industries (EVI) (previously known as EnviroStar). I initiated with 50 shares @ US$37.50. While the company does not issue regular dividends, there are annual special dividends at 0.35% yield rate.
- This little known company name is very thinly traded and is out of view from majority of the market.
- The company focuses on buy-and-build approach in laundry & dry cleaning equipment space; the business model popularized by Wastco (WSO). In fact, the CEO of EVI is Henry Nahmad, nephew of Albert Nahmad (CEO of Watsco). Henry trained and learned the methodology by working at Watsco over the course of past few years and decided to venture into the laundry equipment business.
- Chart decks from ADW Capital and Greenhaven Capital summarize the bull case much better than I can, so will just link to them.
- Of course there are plenty of risks on this one, but can also provide a very good long term capital appreciation if executed well (akin to picking up WSO 20 years ago).
Full Disclosure: Long BAM.A.TO, BCE.TO & EVI. Our full list of holdings is available here.