The Canadian Investor - 5 Canadian Stocks to Buy and Forget + Are CPP’s Returns Actually Bad?

Episode Date: June 1, 2026

In this episode, we break down the latest CPP Investments annual report and why comparing CPP’s returns directly to the S&P 500 or TSX misses the mark. We discuss CPP’s 7.8% fiscal-year return, its heavy exposure to private equity, real assets and credit, and whether the high fees and complexity are justified over the long run. We also look at five Canadian stocks that could fit a “buy it, lock it away, and don’t touch it for 10 years” mindset. From railways and waste collection to royalty companies, grocers, and energy producers, we discuss which businesses may have the durability, moats, and cash flow profiles to survive and compound through different market environments. Tickers of Stock discussed: WCN.TO, FNV.TO, WPM.TO, CP.TO, CNR.TO, L.TO, CNQ.TO, ENB.TO, DOL.TO, RY.TO, BNS.TO, BAM.TO, BN.TO, CSU.TO, TRI.TO, META, NVDA, GOOGL, AAPL, MSFT, AMZN, TSM, AVGO, TSLA Subscribe to our Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Our New Youtube Channel! Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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If there's uncertainty in the markets, there's going to be some great opportunities for investors. This has to be one of the biggest quarters I've seen from this company in quite some time. Welcome back to the Canadian Investor podcast. I'm back with Dan Kent. We have a fun episode coming up. So the first part of the episode will be talking about the CPP annual report from the CPP Investment Board. So the Canada Pension Plan. The main takeaways, some of the questions around it were their returns good.

How did they compare to other pension plans? So we'll be looking at that, looking at some of the fees, some of the assets and some questions that I think all Canadian. should be asking about that the CPP. And then you will go and talk about stocks that you'd like to buy and lock up in a key or stocks that you'd buy and not think about for 10 years or you wouldn't be able to touch for 10 years. So you have five Canadian stocks that would fit the bill. Yeah.

So we had, it was probably a week ago now. I made a comment on meta and voice connections. Like if you were to buy one and throw away the key, you couldn't look for it. Oh, yeah. You couldn't sell. And I think, then I put back. on meta. Yeah, well, I said, I said that like 95% of listeners would probably choose meta. And you kind of push back on that and said that, you know, meta could easily blow up. But there was a lot of,

I had a lot of people comment about how, you know, it's a different way of looking at things. So I thought it'd be good to come up with five companies that are kind of in the same situation. This was actually, I mean, I'll get to it in the segment, but it was actually a very hard list to only pick five. So it'll be a good one. Yeah, and I mean, I think it's good, and it's probably a reminder that sometimes simplicity in a portfolio is just better. And I think a lot of people who would probably end up doing better if they just had that mindset, right?

They pick five or ten stocks and they just leave it at that. They're companies that they'd be happy to own if they couldn't touch them for 10 years, maybe supplement that with an index fund or something like that. And oftentimes simpler. Yes. Is better, right? The kiss method that keep it simple, stupid. Not as of late because of how big the markets have ripped.

But again, it's, yeah, it's kind of a hypothetical scenario where you can't look. A lot of these, a lot of these AI names that a lot of people are buying, you certainly want to look because the situation is changing so much. So yeah, it'll be a good segment for some solid Canadian companies. Yeah, and things can change quickly, right? Let's go just go back to 20, 21. 2022, you could do no wrong owning real estate back then. Yeah. And now look at it today in a lot of regions in Canada, not every single region, but especially Ontario and BC, if you bought real estate during those peak time in 2021, 2022, a lot of people are in tough spot right now because

they paid at the peak. They took on a lot of debt. And now they're looking at almost no equity in their homes, sometimes being forced to sell. So I'm not comparing that specifically. with stocks. I'm just saying that you have to be careful, something that might look good in the moment or in the recent past might not be great longer term. So I think just important to keep in mind. Let's start off with the CPP annual report here. So CPP always makes the rounds on Twitter. I'm not sure if you've noticed that. Oh, yes. On X. People get very passionate about criticizing CPP. And I had a tweet or post that ended up getting a decent amount of traction. I mean, I wasn't defending CPP or anything, but I think some people were

just having some pretty bad takes here to stay the least. So CPP Investment Board came out with its annual report, which I just said. Now, their fiscal year ended March 31st, 2026. So just keep that in mind, especially if you're trying to compare, for example, returns of a certain index last year to CPP. You have to make sure you're comparing the right time frame here. Now, keep in mind, CPP investments mandate is not to be the S&BDNP 500. Its mandate is really to maximize long-term returns while minimizing the risk of loss without undue risk of loss, while considering the factors that affect the funding of the Canadian pension plan. For fiscal 2016, CPP achieved returns of 7.8%. And again, that was for the year ending March 31st,

2026. There were a lot of bad takes, like I said, on Twitter. Common one was to compare the returns to the SNP 500 or the SNP TSX, both of which absolutely would have crushed CPP during that time frame. I think SNP 500 around 17%, TSX 34%. Big part because of now. natural resources, precious metals were up. The problem is that all of those are all equity investment and they're simply not appropriate for benchmarking the performance of CPP, right? So when you look at CPP, the type of assets that they have, yes, they do have public equities, but it's really broken down into five big buckets.

and I'm just sharing here for our joint TCI subscribers. And you'll see. And you can find the document pretty easily. And what I'm referring to is just the key performance indicators. So you can go in the legend and click on that. It'll bring you to page 34 of the annual report where they break down the asset allocation. But it's 36% public equities, 22% private equities, 20% real asset, 13% government bonds, and then 9% credit.

So for me, if you want to view it a bit more into something that might be measurable compared to certain ETS, you might use something that's at least has a kind of breakdown that would be 58, 60% of equities, 22% fixed income. I included government bonds and credit in that. And then 20% real asset. But even that, it's really hard to find a good benchmark to compare it, especially when you start factoring the 20% real. asset. Before I go on, anything you want to add there, that? Well, yeah, I was just going to say

what I initially saw the returns, I kind of thought 7.8% was not all that good, but then I seen people benchmarking it to the S&P 500. And I thought that was, yeah, kind of a wildly bad take because, that's just a stupid thing. Yeah, like it's, what do you that? And there would be people who would criticize if, in theory, the CPP could just buy. an S&P 500 index fund with the entire pension, you'd have a lot of people criticizing it on that because obviously this is a very complex situation. You have people contributing, people drawing down.

Like, you can't just, it's not as simple as just buy the S&P 500 and hold it with something like this. So could I have thought, like, it potentially could have been better because of how well the TSX did and how well the S&P 500 did, yes, but I wouldn't have ever expected it to return, you know, 17 plus percent on a year. No, exactly. And just to reinforce that, just think about it a second, right?

If you're 21, 22, you're contributing to CPP, you won't be drawing that likely for another 40 plus years. So, and you have your parents, my parents, like, you know, people that are in their 60s and 70s that are actively drawing that right now and then anywhere in between, right? So you have to make sure that the plan is well-balanced and able to not only meet its near-term obligations, but also its longer-term obligations. And that's why they do need a different mix of asset. Whether the current mix is appropriate, I think that is definitely up for debate. I'm really thinking here in terms of the private equity side, the credits side, because that includes some private credits, some.

corporate credit, different type of credits. And the real assets, that one is, it's also a little bit tricky here. Now, CPP does acknowledge that they have underperformed their benchmark over their own benchmark over the last three years in the annual report due to the strong performance in U.S. large caps, clearly, I'm sure everyone listening that knows a little bit about stocks or have been listening to a podcast for a while, you can probably figure out which companies I've been pulling the SNP 500 up or the U.S. stock market in general. So the fair criticism to me is that it's not that CPP failed to match an all equity index.

It's whether, you know, the private market heavy strategy is really adding enough value after fees, complexity and liquidity. And we'll touch a little bit more on that on the fees side. So the fees is really, I think, where a lot. of the criticism is run to CPP. So one of the first one that I saw was CPP's expenses, especially if you look at the operating costs, which came in at 0.22% for the size of the plan. So it's not nothing in terms of operating costs. We're talking here about their employees and general and administrative costs associated

with the plan. You can't get those to zero, though. Let's be clear here because, you know, I haven't worked. in pension plans before, there's going to be some compliance involved, regulatory reports that you have to bring in and so on. So you're still going to have some expenses there. But that's probably a bit on the higher side. And if you take operating expenses, you add in management fees that they pay performance fees,

transaction related expenses, and you exclude taxes and financing expenses, then you get a roughly 91 basis point total kind of fee, all encompassing fee if you'd like, or about $7.2 billion that they paid in the last fiscal year. And that's pretty significant. That's a lot. Yeah, that's almost, you know, a percent that they're paying in fees here. And clearly, you can't get that to zero, but I think you can make a pretty good argument that you could easily slash that by at least half by using a bit of a different approach. And especially when you think that they are paying $2.8 billion, in performance fees alone. So performance fees tend to be associated with private equity, private credit, depending on the

different type of performance. Usually it'll be 20% if they exceed a certain return, they'll get an extra 20% in fees. So those fees are not small. And the problem with private equity is sometimes, you know, it's also kind of difficult to judge the performance in terms of the internal rates of return, how it's really. calculated. So those are some big questions. And unfortunately, they do have, and I do think personally, it's unfortunate that they do have that much exposure to private equity. And I think that's why we'll talk a bit more here. Having cash on hand is essential for any business.

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Sign up for your $1 per month trial today at Shopify.com. Go to Shopify.ca. That's Shopify.ca. Chechained. Anything you wanted to add before we go on? I guess it really depends, like, what you have exposure to. I don't know if they, like, lay that out or not? Or is it kind of, you know, not as equal level transparency as other private equity areas?

I don't know. Do they say what they're buying? I think it really depends. They don't, I don't think they drill down to. Yeah. in the nitty-ritty of like the private equity holdings. I mean, 150-page report,

you'd probably need a thousand pages if you want to write down all of the investments. So I think that's what's a bit hard to say. But I think one fair way to look at it. And the most common comparison I've seen is comparing it to the Norwegian or Norway sovereign wealth fund. So let's just call them the Norwegians for now. They achieved 15.11% returns last year,

although this was a financial here that ended on December 31st for them. So it's not exactly apples to apples here because it was March 31st for CPP. And the SNP 500 was up 18% last year and down 4.5% in Q1 of this year. And if you start looking at least at equity returns, CPP was a little bit of a victim, I guess, in that first quarter this year was not great. Like the markets really started ripping higher essentially as of the end of March. So the timing is not great. It probably impacted a little bit of the performance.

Of course, these things level out over time because it's going to be their consistent reporting year. But if you start looking at longer term results, CPP has returned 8.8% per year in the last 10 years. While Norway has been at 8.5% if I round up, Norway is definitely, it's using a predominantly heavy index investing approach, which allows them to have extremely low overall fees for the fund at right around 0.04%. So I don't know if that includes all of the fees that CPP kind of lays out. But even if you double that, I mean, it's still significantly lower. Yeah, Norway essentially is almost all index funds. So they have 71% equities, 26.5% fixed income, 1.7% unlisted real estate.

so that would be private real estate and 0.4% in private renewable infrastructure. So it's essentially just on the margins that they have private investment. And then again, CPP, like I mentioned, you have 22% private equity, 20% real assets, which are private assets, I would say, for the most part, to qualify them as that. And then 13% 9% in credits. So when you start looking at it here, you do, like the stated returns, like, yeah, Yes, CPP has done better over the last 10 years, but the issue is Norway's returns are much easier to measure because the returns from CPP, if you factor in that 42% is in real asset,

private equities, plus another 9% private credit, you have 40% of your portfolio in assets that are not very liquid, are not marked to market, at least on the public market, like public equities would be, or government bonds. and then it really gets tricky to analyze actual returns. And private equity is notorious for that, where they will use modeling. I think the example that comes back to mind that I've talked about quite a few times on the podcast is, you know, magically the markets were down when COVID started. I can't remember 30% in the span of a few weeks, something like that very quickly. But private equity wasn't down.

That's because clearly it was. would have been down during that same period of time if there was a liquid market for it. The fact that you're not publicly listed doesn't mean that your value magically stays up when the market goes down. It just means it's a liquid. It just means that you can kind of pick and choose what comp you're using. You have to use models, whether those are very reliable or not. Even if they're widely accepted, I don't really care.

If, I guess the last example here, if you go back. again to COVID, office real estate clearly was not in high demand. But yet you saw a lot of these office real estate firms, essentially these private firms were saying that their portfolio, the value of their assets was unchanged because there was first no transaction. So when they used transaction, oftentimes they were pre-COVID. So there was a lack of liquidity in the markets. So for them, the value remained unchanged.

But if anyone would have a brain would know at that point that the value of those assets was significantly lower, but that's not how they actually marked them. Because there was a lack of transaction, lack of comps, so they can kind of go and do their own type of valuation. Of course, they have to use models. But it really comes to a point where the lack of liquidity does bring into question the actual value of those investments. I think we had it with a lot of public reeds as well. I mean, the navs were, I think at one point Allied was trading at like a 40 plus percent discount to navs. So they don't necessarily mark those down all that accurate as well because like you said, it's all based on volume. And that's what happens in real estate.

I guess you use comparables. And if there's not that much liquidity in the market, you're going to get, you know, probably artificially inflated prices. I did not know that the C, I did not know that. that CPP had this much exposure to private equity and private credit. I would have figured maybe a bit, but 30, 31% of the fund. I didn't know it was that large. Yeah. Yeah.

It's definitely not nothing. And I think that's where it really comes down is, look, I think they're probably using best practices in terms of how they're valuing those. I'm not saying they're doing anything notorious or nefarious or anything like that. But I'm just saying it's very hard to mark those. I think during the pandemic, I don't know if you remember when Brookfield rolled in or essentially bought out all the units of Brookfield property partners. You remember that?

So I think it was what BPY at the time, the ticker? I think it was that, right? Yeah. BPI. Yeah. Yeah. So essentially what for those who weren't aware, but Brookfield saw that the market was just hammering BPI in terms of value.

And they thought the assets were worth a whole lot more than the market. So they ended up giving a premium to what the market was willing to pay at that time. And essentially they converted those to they bought all the remaining units, rolled it under Brookfield, and they paid a bit of a premium. But now in hindsight, I think that was like maybe five years ago at this point, it's hard to figure out because it is Brookfield. and it's a bit of a black box, but I have a hard time thinking that was a great deal, seeing now with hindsight 2020, what real estate has become and how much office real estate has struggled in some of the major cities that Brookfield would have assets in. Yeah, you'd probably have to dig

pretty deep to kind of figure out whether they came out on top or not on top for that. But I don't I know, 7.8% on the year doesn't look good, but I don't think it's like alarm bell mode. There were so many people that were talking about how big of a joke the CPP was and stuff on X after they reported those returns. And I think it's just a bit of oversight. I mean, a lot of people are probably sitting there managing a six-figure portfolio, maybe even a seven-figure portfolio. There's a lot more complexities to running a pension fund for the entire country. or for, sorry, for the entire country, then there is just an individual portfolio. So yeah, yeah, exactly.

But they did, to their credit, so they did state in their annual report that private equity has been facing a more challenging period on D.P front, it does appear that they are scaling back that a bit. So private equity was 27% of the portfolio back in 2023 and now is down 22%. So I don't know if this is a reflection of them just trying actively to reduce that or them figuring out that there's not as many good deals and the rest of the portfolio is growing quickly enough that it actually just naturally starts being becoming a smaller portion but it was as high as 27%. And it's probably like I said, a combination of both. I'm just a bit nervous

about their exposure in private market. It was essentially the golden years for private equities for a better part of a couple decades now. And CPP as a L. lot of exposure. And any time you start seeing Wall Street and Bay Street trying to push a lot of these products on retail investor, which we've seen in the last few years, this is where I think it always makes me nervous. And the fact that CPP has that much exposure there, I do wonder. And I'll just finish this one last thing is, so I worked, I worked about seven, eight years in the pension world. And the pension plan where I worked at, they tended to perform. And I've, one of the best in terms of private pension plans in Canada.

And that really took off when they started doing more of a indexed approach. So it wasn't a huge pension plan. I think a couple billion dollars in assets, but still not tiny. And they decided that the best approach was, yeah, having a diversified portfolio of index funds, some equities and some fixed income. And that was essentially the portfolio. obviously it had like broad exposure globally, not just in Canada and North America. But sometimes that might just be the best approach is you you maybe don't have to go all the way the way that the Norwegians do it.

But maybe you do 80, 90% of the portfolio that's just, yeah, strictly an index approach for both equities and fixed income. And then you give yourself a 10% where, yeah, you can invest a bit more in private type. of assets or real assets and maybe that would be better over the long run. At least you'd be lowering your fees significantly. Yeah, because it's not a small amount of money. You're talking billions and billions of dollars in fees. If those can be reduced, I mean, why not reduce them? But if most of the fees are coming from the private credit, private equity front, I don't really know how they do that besides just reducing exposure overall. Yeah, and they won't be able to do it. it. So it's something they'd have to do gradually. Yeah. So it won't happen overnight. But I guess I

didn't mention that, but the net asset under management is $793 billion. Yeah. And they're paying what? Yeah, about 5.8 bill in fees. So yeah, 0.9% around there. Yeah. Yeah. So, no, I think it's, overall, it was interesting just seeing the takes and trying to dig a little deeper into that. I wanted to be as fair as I could in doing that assessment because just comparing to equities is just not the right way to do it. But again, just because of their asset makes, it's not easy to find a benchmark. But we'll keep talking about it like every year when it comes out. It'll be interesting to see how they do next year, especially as the mega caps and the AI hype. If that continues, I'm sure they will be underperforming a little bit because they probably

don't have enough exposure there, which is probably not a bad thing. No. Having cash on hand is essential for any business. Traditional business accounts hit you with high fees while paying little to no interest on the cash you need for day-to-day operations. That was our experience too, until we switched to the new EQBank business account. Now, every dollar earns high interest with no monthly fees and no minimum balance. You also get free everyday transactions like EFTs, bill payments,

mobile check deposits, and 50 outgoing and 100 incoming free interackey transfers. And to sign up, quick and fully online, no branch visits because, let's be honest, no business owner has time for that. We use it for our own business and it's the first account that actually helps our money work harder while keeping operations simple. Check it out today at eCubank.ca slash business. There is an old saying in investing. It's not about timing the market, but time in the market.

The most successful investors aren't usually the ones trying to catch every top and bottom. They're the ones who spend the most time in the market. I've been a quest trade user for over five years, and the reason I stick with them is that they remove the friction of regular investing. With no commissions on stock and ETF trades, you don't have to wait until you have thousands of dollars saved up to me. make a move. You can contribute small amounts regularly and keep your portfolio growing consistently, removing the stress of trying to time the market. And they keep making it easier to build a well-rounded

portfolio. Soon, you'll be able to trade precious metals through Questrade, giving you even more ways to diversify. Questrade makes the whole process seamless, allow you to focus on what really matters your investment strategy, not trying to avoid fees. Ready to invest, head over to Questray.com, open and fund your account with code TCI and receive $50. Conditions apply. You know that moment when you're on the couch, shopping online, ready to checkout, and then you realize you don't have your credit card nearby, and you have no idea where it is. And then you see that purple button. That's ShopPay from Shopify.

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matters. Less friction means fewer abandoned carts and higher conversion. But Shopify isn't just about checkout. You can build your store with customizable templates, manage inventory and payments all in one place, and even use

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Cheching. Anything else you want to add? or move on to five stocks that you'd be happy owning for a long period of time and not touching. Yeah, so I'll go back to the initial cut thing because we kind of were messy explaining at the start. But a few weeks ago, I made a comment on what investor would rather own if they had to simply buy it and not look at it again for a decade. So yet, you couldn't sell, you couldn't see the price, nothing. Pretty much buy it, lock away the key. So at that point, I was comparing waste connections to meta and how the majority of the listeners might choose meta over waste connections because of the potential growth.

And I think in this context, the potential growth is kind of irrelevant. When you're put into a situation where you cannot sell, obviously in reality, this would never happen. It's a hypothetical situation. But it does, the question turns from what can potentially compound the most to what will still be around. in 10 years generating cash. And I do think it kind of teaches a better mentality when it comes to making investments, especially if you're somebody who invest in individual stocks. If you're an index investor, this is largely irrelevant, maybe a bit more relevant now

that AI is making up so much of the S&P 500. Like we are talking about massive levels of concentration. So I think on that front, it needs to start being taken into consideration as well. But this is more so going to be on the individual. individual stock front and just the idea that not every piece of one's portfolio needs to chase the highest potential growth at all costs. And it is also a situation when I came up with these companies that I'm still kind of aiming for a reasonable level of return.

Like plenty of bad businesses are pretty much guaranteed to exist in a decade. It doesn't mean you should buy them. And there's also the added element here that management does come into play. Bad management can blow up completely good companies. It happens quite often. So I'll go through them quickly and then after each one if you have any comments. So I'll stop and let you talk. I might do mine on the fly right after, do rapid fire, which one I'd choose.

So yeah, you go for it. I'll probably comment it along the way. This one is kind of going to be from last week. It is waste connections. So trash collections is such a simple business structure that it has effectively endless tailwinds behind it due to growing populations. It's also one of the rare industries that at least in my opinion has virtually zero levels of disruption from AI.

Pretty much every possibility I can think of for a company like waste connections would be to utilize AI to increase operating leverage. So you're talking about autonomous vehicles, automated trash sorting, all that type of stuff. Obviously it would come... Robots. Yeah, robots. There you go. And I mean, on the flip side there, it kind of hurts because it would come at the cost

of human capital, but obviously these are publicly traded companies. Their aim is to increase. profits, but I would not doubt in the next 10 years, we do, we no longer have trash collection people. We have probably, you know, somewhat automated trucks. They already have automated sorting facilities. And I can't remember the exact numbers, but I went over it previously. This would have been a while ago. But they're seeing like AI related robot arms that can sort trash at like, it's something like three times a pace of humans. So you build these robots. you don't have to pay the robots.

They sort the trash much faster, make zero mistakes. So the other element here is you can't use AI to create effectively regulated monopolies. A lot of these companies, landfills are regular like the regulatory monopolies. Landfills just don't get approved anymore. Nobody wants them. So the ones that are there are often, you know, they get approvals to expand, but you just do not see new landfills around. So trash, commodity recycling, waste disposal, in general is just kind of an

it's a occurrence in life undeniable it will never go away the main case wouldn't be AI disruption I do think it would more so be the acquisition pipeline drying up because waste connections does make a lot of small ball acquisitions rural haulers things like that

even the one around our area got purchased up by them so they buy them kind of merge them into the fold increase the efficiency but because this would be a 10 year scenario I would think there is next to zero chance it dries up by then. The industry is just too fragmented.

And these trash collectors have outperformed the market for decades. And that is kind of a zero meaningful way to drive margin growth. So I think AI does bring that opportunity in. I guess on the flip side, this hypothetical scenario, like an acquisition would obviously make the company so that they don't exist anymore. But I'm kind of factoring in just the fact that the overall business operations will, will exist. I feel like one day we'll just have like, we'll just ship our.

Garbage into space. I feel like that's where it's going. Like 50 years from now? Yeah. Like just take SpaceX and send it out. Like, but isn't it logical? Like if you, people don't want it here for obvious reasons at some point, I mean.

Launch it. Yeah, just launch it. I mean, there's plenty of space and space. The universe is a giant landfill. What is the, they sent that, I can't remember what that thing was. They sent to space like 50 years ago.

That has like the record on it and stuff to see if anybody finds it. Oh yeah, yeah, I can. Oh, yeah. So maybe they'll find it. Maybe they'll find it. That's when aliens will start invading. Maybe they'll find a giant trash pile instead of that thing. But I could see that being a viable thing.

That's not even a joke either. Like it just, it makes sense rather than stuffing it into the earth. Once it becomes economically feasible to do so, I don't know, you pick a planet, then you just launcher. You just send them there one of those. I don't know. Like, I know it sounds a bit stupid. then yeah. I don't think it is.

Yeah. They've done a lot worse. Yeah. And no, waste connection, definitely I think it's a really good name to hold for a long time, kind of hold and not worry about it. So definitely would be high up there for me as well.

So I'll let you continue for the next name here while I refill my energy drink to make sure I have brain power to continue. So the next one is Franco Nevada. And I did refrain from putting a gold miner on here because we've had, plenty of instances of even the most top-tier gold mining companies providing horrendous returns over a decade-long time frame. So they will exist. I don't think the Barracks or the Agniko's will go away.

But there is a chance that over a 10-year time period, and it's been done just recently, actually, from 2011 to probably 2020 during the last gold bear market. Barrick, it lost money over that 10-year time period. even if you were to reinvest the dividends, things like that. So Franco is kind of that streaming and royalty company. They lend miners money for a potential cut of future metal royalties, or they can loan money for the right to purchase these metals at discounted prices. And a lot less can go wrong if you have effectively zero operating expenses.

Obviously, they have some, but they do have 80 plus percent operating margins. All you're doing is financing and collecting the royalty checks. and most people will mention the Colbray situation as kind of a contrary to this and how a streamer could eventually blow up as well. And they'd be absolutely correct if there was a ton of concentration. If you had a royalty company that had 50, 60% exposure to a single mine and that mine got shut down, you would be in a lot of trouble. But Franco is very diversified across a ton of different assets. Even then, Colbray did represent about 20% of the company's EBITA when it got shut down, but it's been able to navigate it relatively, easily and we're actually potentially looking at a restart over the next few years here,

maybe. It's definitely progressing. Well, even when that kind of stuff might happen, even if they have 30, 40% of exposure to one project, that's the beauty of this model is they just shoot darts all over the place. Some will work out. Some won't. Even if you get a 30, 40% hit, for the most part, it might not, sure, it won't be great for the business for a few years. But even if that mine or that project never reopens, you'll have other ones that will start coming online. And probably after four, five, six years, you'll be back to where you're at, if not even higher revenues coming in and profits. So yes, shorter term, you can have some headwinds because of political reasons.

You know, you have governments that come into power that don't want to mine a little bit like what's happening with the Cobrae Panama mine. But I think long term, I mean, it's more of a blip on the radar. you're thinking like decades to hold, it's definitely not too much of a concern because of the actual business model versus miners have those operating costs that have the risk of getting higher. Cobre has those low low, not Cobre, but Franco has those low low cost. So they keep being profitable even when prices are not that high, but they also have more

diversification. The miners, they have higher costs. And yes, the biggest miners will have diversification, but never as much. much as a company like Franco or Wheaton precious metals. No, you'll get a gold miner that often has, what, four or five mines? Whereas Franco has operations, probably, I don't even know how many they have, probably thousand deals maybe, tinier deals, maybe not that much, but. They have a lot.

I mean, obviously some are pre-exploration or a pre-you know what I mean, like pre-production, but yeah, they have lots of deals. Yeah, and I think, one of the prime situations that makes this one a strong potential candidate to, again, buy, throw away the key, can't look at it for a decade, would have been performance through the gold bear market that started in probably 2011, 2012. So Franco Nevada, over that time frame, despite gold going effectively nowhere, tripled in price, whereas many of the miners returned next to nothing. I know Barrick was one of the very poor ones to hold, and it would have been a premier minor

back then. So streaming model, but the gold miners, like, Barrick and Agniko, very good chance that they are around in a decade. It's just if you, like if you were to take that hit on a business with a lot of operating expenses like Franco did with Kobe, that would hit earnings way harder than something like Franco that has just very little operating expenses so it can kind of get through it a lot easier. Yeah, they're still profitable but just less, right? And I'm just showing here for joint TCI subscribers. So over the last decade, last 10 years, Franco Nevada is up 323% versus 320 for the SNP 500 and 229, let's just say 230 for the SNPTSX here. So it has outperformed. Even despite the crazy

run up we've seen in the last month and a half roughly for the, uh, kind of AI plays the SNP 500, those like large mega cap that you're seeing. Even despite that, even the pullback with old prices since the start of the year, Franco Nevada is still on par with the SNP 500. And you can probably make a case that it's a lot less frothy right now, even though I always trades out the premium than a lot of the names in the SNP 500, or at least the name's pulling the SNP 500 right now. There's not too many companies in the SNP 500 with 80s. percent operating margins too, which makes a big difference. But yet I would say just a final point on this, you probably interchange Wheaton with

this as well. Like either one of these would be solid. I think Wheaton has done better than Franco just because Franco does have that oil and gas exposure and that hasn't really done all that well as of late. I mean, we're probably getting into a quarter now where it is going to do well, but interchangeable, in my opinion on these two. On the next one, I would say, you should see the result. for Wheaton over the last decade.

What are they? 7662%. Absolutely wow. You could do worse than just owning both and just kind of as a basket approach. You just equal weight both of them. And then you get a bit more silver exposure with Wheaton and a bit more you get oil exposure, energy exposure with Franco. Yeah, they're genius business models.

So the next one, which again, I think is interchangeable, but I chose CPRAL. If you wanted to choose CN rail, that would be perfectly fine as well. And I would argue that railways have the strongest moat on the planet. Obviously, they're priced accordingly to this. I don't think you're not gaining any sort of advantage by knowing they have this moat. The market reflects that. But it's an irreplaceable asset. We're talking tens of thousands of kilometers of steel track laid across an entire continent, land, bridges, whatever it may be.

To build it today, it would not be economically. feasible. I don't think you would ever make money having to build out a lot of this infrastructure today because many of the assets were built ages ago and the economic value today is enormous. So I think the physical right away. Just think about pipelines, right? Like it's not the same thing, but similar, right? In terms of just think how much it costs to just finish the, what is it, the TMX line from Alberta to the west coast. And, now the federal government had to step in and how much it would cost to build a pipeline from west to east. I mean, just think of that as a bit of proxy in terms of how difficult it would

be if we did not have a railway and have to build it right now. Yeah, and it's, I think I took quick, this was a long time ago, I took these estimates, but it was about one and a half million dollars to lay a flat mile of railway track. So you times this by 30,000, whatever they have, it'd be 30,000 K probably, but you're talking, I don't know. I don't even want to know what the network would cost because that's a flat mile of track. As soon as you need to build a tunnel, a bridge, whatever, maybe you're talking probably 10x that price. And I think just the physical right away of a lot of these railways gets more valuable every single year because the cost to ship anything else goes up even more. So you can't really see an instance in the future where you're shipping commodities, automobiles.

Well, you can ship them, but they're never going. to be cheaper via truck. It just can't happen. Just because of the efficiency of these railways, it's just not nearly efficient enough now, and I don't think it ever will be, to send these types of products outside of railways. So it creates a long-term tailwind in terms of pricing

because there is very few of them, so they kind of command the price multiple. You have to pay to ship this stuff. And the stock will be cyclical, no doubt. But again, we're buying for a decade and chucking away the key. You won't notice the economic. cycles anyway. And there is a lot of potential disruption in the trucking industry and other forms

of transportation when it comes to autonomous vehicles and the logistics networks, because a lot of these companies, trucking companies operate logistics firms that, you know, handle a lot of stuff that could arguably be replaced by AI. I mean, you just can't slap a six mile long train on the highway and kind of, it just, and I don't think you'll ever find a way to ship containers of oil grain, you know, automobiles, large amounts of automobiles cheaper than rail. So for that reason, CP would be one of them as well, or CN, again, interchangeable in my opinion. Yeah, and I was just as you were talking, I was asking Chad GPD to see how much it thought it would cost if we had no existing railway for railway from the west coast to the east coast. Obviously it depends on if you want

something more bare bones, something single double track or even something high speed incorporated into that. But it said pretty much would be like baseline $300 billion. Yes. That's kind of what I would have benchmarked $200 billion. So nobody's ever building that. Like nobody is ever going to build that unless you can get costs materially lower. Because I mean, even the railways, they're only generating free cash flow. I don't know how much they generate a year.

Probably $5 billion, maybe a little more. I might be way up, but I mean, what are you going to do? Pay $300 billion to build the infrastructure to generate that much. It just doesn't make sense and I don't think it will ever make sense. So that's kind of why they're on the list. And the railways have had very good returns over the last while. They've had a rough few years here. They're kind of coming out of it now, though, but I wouldn't get bent up on, you know,

how poorly they performed over the last two. I'd probably look to the last, you know, 10, 15, 20, because it's more so the macro environment and not anything they're doing operationally. CN Rail to a certain degree, I don't really like a lot of the stuff they've done. But the next one would be Loblaw.

And this one, I'll explain why at the end, but this one was very close to not making the list. So people eat every day, they take prescription meds every day when demand is kind of based on biological survival. It's pretty safe to say that the business will be around in a decade. And there's been a multitude of blowout

in many blue chip Canadian sectors. Like I would say, I would call telecoms a blowup. I mean, their share prices for blue chip companies like that, for their share prices to fall as far as they have, I would, I would definitely say that was a blowup,

but we have never really, unless I'm missing something, we've never seen a major grocer blow up and have horrendous returns. Pretty much because competition is scarce and demand is never ending. Like what, there's probably what three major grocers here in Canada and law block

commands. Well, no, I think you, no, You could, I would say probably five if you're being perfectly honest. So you have Loblaws, you have Empire, you have Metro, but that's not for Bigga at Walmart. And I think Costco is probably number five, right? Like I know we don't associate them with grocers, but Walmart does.

Groceries a big, big part. Yeah, that's true. Yeah. In terms of Canadian companies, there's those big three. But I mean, like Walmart and Costco were definitely competition for these guys. So costs are pretty easy to pass on to the consumer. They're often done so with ease. I mean, Loblaw is such a commanding market share.

It can also do consumers a favor in some regard. And I know a lot of people are not going to like me saying this because they absolutely hate these. We always get a lot of flak any time. We mention Loblaws. So just say what do you need to say? But they went and I think it was Folgers. We had talked about this earlier. But Folgers went and they wanted to raise prices.

And Loblaws pretty much said, If you raise your prices, we're just going to rip you off the shelf and put somebody else. And they did. Didn't they do? I'm pretty sure they did. Yeah. Yeah, they did. They just replaced a product, give cheaper products.

So I think one of the more interesting elements here that could potentially be a bare case and is why I almost left this off the list is, are we headed towards some sort of government intervention when it comes to food and groceries? So I didn't end up taking it off because I don't. think it will happen, but it definitely is an issue. I think it could happen. I don't know if it will. I think it's definitely a probability. Yeah. And I mean, you have to always say you have to be careful, right?

Because as the sometimes people think, the alternative will be better. It may or may not be. Yeah. You're always going to have to deal with tradeoffs. But I do fear, especially what we're seeing right now, I know we've talked a lot about what's happening in the Middle East with a straight of Hormuz, but something that's not being talked about is fertilizer prices and how there's a big portion of fertilizers, but also inputs that go into the production of fertilizers that are stuck in the Middle East right now. And this will eventually

flow through food prices, especially as now, like we're starting to enter like planting season for big parts of the world. At some point, this will flow into food prices. and then you add in the higher cost for transport energy. And then you have households that are struggling, that will be struggling even more to put food on the table. And I think that's dangerous where we're going there. Yeah. And I think, you know, regardless of how capitalistic, I guess you are now,

like everybody needs. Maybe not dangerous, but concerning. Yeah. Everybody needs to eat. It should kind of be, you know, especially if you're employed. Like, I don't think there should ever be a situation where if you are employed, you cannot afford food. And it's getting to the point where the inflation is so high.

It's definitely a struggle. So the reason I kept it on the list is I don't necessarily think that this would cause these grocers to not exist. But I mean, I don't even know what the government could do, cap profits, something like that. I don't really think it's an outrageous thing to suggest. I would say I don't think it will happen, but the odds of it happening are. a lot, you know, they're not zero, I'd say that, because it's been hotly debated for years now.

Over the last election, food prices were a big deal. But yeah, La Blah made the list. It was a close to leave off, though, and I'll kind of explain who I would have put on after. But I'll get through the next one quickly here. Canadian natural oil demands set to eventually peak and drop off over the next while here. But despite what many people say, I just don't see it happening in the next decade, it's been talked about for a very long time that it's I was going to say, wasn't it supposed to peak and drop off 10 years ago? So if you call the bluff on the peak and drop off again for the next 10 years,

Canadian Natural, I think is one of the best ones to own. It's probably one of the lowest cost for barrel producers on the planet. And even if oil demand does drop, they're still printing money. This, this, they'd likely be one of the last Canadian producers to be squeezed out because of their cost profile and because of their diversification. They're probably the most diverse. out of all the majors. Like they don't have, they don't have like the midstream or the vertically integrated like Suncor, but they also do have a ton of different commodity exposures that kind of help them. In addition to this, I think the free cash flow policy is another huge factor here

for the throw the key away investment. So plenty of oil producers over the oil boom in the early 2010s spent money horrendously. I would say they destroyed balance sheets, expanded at all costs, cost of them dearly. Many of those, you know, mid-tier level producers just got wrecked after, what would it be, 2014, when oil collapsed, Canadian Natural was really not in this situation, but if you got to the point where they were ill spending, it might happen in the future, but because they're returning all that free cash flow back to shareholders, you're kind of getting, it's obviously not a guaranteed return, but it's guaranteed in the fact that they're going to pay you that portion rather than invested into some unknown projects. So,

if you were to buy Canadian Natural for a decade, but though looking at it, it's likely a massive amount of shareholder returns via dividends and buybacks would be in your pocket to a degree. That doesn't guarantee the share price would do well, but the bare case here is obviously oil is cyclical, very boom and bust. Unlike the railways, which tend to have shorter cycles,

like oil is a bit more volatile. You could, in theory, get an oil producer who does nothing for 10 years. I mean, the oil producers post 2014 did nothing for a very long time. So, yeah, that's the last one. I don't know if you have any comments on Canadian Natural. No, I mean, not too much ad. It is a company that, you know, I own myself, so I definitely like it. In terms of the ones I would put in my top five, I'd pick three out of there for sure.

So Franco Nevada, Waste Connection, CP. And I think Canadian natural. So the only one I would not pick is Loblaws. And I'm looking here at the list of the largest Canadian companies to try and get an alternative here. I'm not quite sure which one I would have for the next 10 years. Like there's some good companies, but I just don't know if I'd have them for 10 years. Like Shopify, I, oh, that would be. Things could be very different in 10 years.

Like, I really don't know. So I'm looking at that. Yeah. I mean, loblahs may be the, uh, the last one there. I don't really. So the one may be like a royal bank. It's hard to not see one of like, even banks are so tough. I mean, obviously it's not going to blow up.

But in the situation of royal bank, like if you look to something like Scotia, they made some very bad decisions and they underperform for probably. Yeah. It had to be nearly a decade. It wasn't quite a decade because they're doing a little bit better now. But I left the banks off for that reason, obviously the last. leverage all that type of stuff. If I were to replace law blah, I probably would replace it with dollarama.

But even then dollarama is a little bit tough too because they outsource a ton of product. So the tariff issue is obviously making, making its waves around there. I don't think that situation exists 10 years ago or 10 years from now, but who knows what exists 10 years? I think I know Enbridge. Yeah. And bridge would be there. Yeah.

Kind of. I think Enbridge, yeah. Toll booth pipeline. Pipelines, I don't think they're going anytime soon and they might actually see some tailwinds with infrastructure spending. And who knows, maybe they'd be part of a deal to build a pipeline. What I've been saying that I think we should have is a pipeline from west to east. So the Albertans are probably loving me as someone from Ottawa kind advocating for that kind of pipeline. But I feel like if that were ever to happen, I think conglomerate would probably be part of it.

And I think Enbridge would be a logical choice to be part of that too. Yeah, the main reason I kept Enbridge off was just regulatory issues that they've had forever with pipelines. I mean, look at TC Energy. They got bit pretty hard with, uh, what was that? What was the one that had south? Keystone. Keystone pipeline. Yeah.

So I left them off for that reason. But Enbridge would be on there as well. But what I will say is, you go through the entire TSX60 and you will, not find much more than like seven or eight companies that you would be fully confident would, you know, buy them, throw away the key. You could say a lot with, say, banks, things like that, but if you actually really take the situation and analyze it, you can't look at them for 10 years and you almost want to guarantee the business will be there 10 years from now, it makes banks a little more difficult, although you could put them on this list. It wouldn't be an issue.

Yeah. No, I mean, I think it all comes down. to the TSX being pretty concentrated to a lot of financials, a lot of energy companies. So once you get out of that, not that many to pick from. And then for the few tech names, if there is one thing I would not invest for for 10 years, it is tech. Yeah. Just because especially right now, the rate of change that we're seeing, those mega cap companies. Like, I'm going to go and say that of the probably 10 largest companies in the world,

most of them are probably tech, I would assume, or related to tech in some way. Yeah. I think, yeah, if not all of them. I'm going to say that probably at least half of them are no longer in the top 10 in the next 10 years. Yeah. It's possible. So the top 10, you have, yeah, Nvidia, Alphabet, Apple, Microsoft, Amazon, TSMC, Broadcom, Saudi Ramco, Tesla, meta. Yeah.

I'm going to say that I would bet anyone that at least five of those are not in the top 10 years. It's possible because I know it might be tough to see right now, but things, especially in that space, they change too quickly. There might be a startup or two right now that's just worth a few billion dollars that will surpass them in 10 years from now. It's just so hard to know. Like even looking at the dot com bubble, right? Like it's, uh, there's just so few of those big winners that are still around today.

Some are and they are just, uh, you know, slowly recovering 20 years later. Well, and look at even the smartphone era like Blackberry. Yeah. Yeah. Blackberry. Yeah.

Tech is the thing about tech is it's fast growing, but there is constant, constant innovation in the space that makes it very difficult to judge. So. because I mean before AI you would have constellation on this list you'd for sure have it on the list I think you might even have a Thompson Reuters on the list and now they would be nowhere near this list so yeah things change in that space very fast things do not change very fast in the trash business the railway business you know the oil business things like that yeah just real

world stuff right like AI you can't really bring AI to do that. Sure, AI might enhance it, but it just, it's real world stuff. You just can't just replicate it. It's, it just requires a lot of kind of real resources. Yep, definitely. So, hopefully everybody liked the segment. I got a lot of feedback on that. I thought I did. No, this was a good one. Interesting listening. And the more you talked about and the more it was thinking, I'm like, no, you're right. It's kind of hard to, yeah. And some people, I guess the last name maybe some people might choose Brookfield here. See, I, I don't know, I never would. Yeah. And I own Brookfield. I would not either just because I would, I would just, it's hard to know exactly what's going on in that business.

And having that for 10 years. Yeah. I just don't know without the ability to sell. I'd be pretty uncomfortable right there. Yeah, like I own Brookfield. It's a fairly reasonable size, but I would be lying if I understood probably even half of, the structure that they operate on. So for that reason, it didn't make the list. It's not to say it's a bad company. Again, I own it, but if you were to actually just narrow it down to this hypothetical situation where you had to buy, chuck the key away, and you couldn't look for 10 years, I don't think it makes the list. Very few companies. I thought I would have 20 to choose from, and I had a hard time finding like seven or eight. Yeah, I have trouble with Brookfield. Like, sure, they invest in real assets and they manage private capital.

but where I do have trouble is there's a lot of financial engineering too happening with Brookfield and I mean it's not just them like it's not like other similar businesses do the same thing you can make a case that even the banks will do that so it's just that kind of stuff where I'm like yeah well is that something I could just set and forget it for 10 years

I'm not so sure I probably own the subsidiaries before the corp like if you had to actually not look for 10 years because they're a little bit simpler of a business. But yeah, yeah, that's all I got for this. Okay, well, I think that's a good spot to wrap it up. I hope everyone enjoyed this episode. Again, we do appreciate all the support we get. If you like more content from us, you can go on Join TCI. As always, our YouTube, we're trying to pose at least one video per week. Dan Fosha and I have the YouTube live. It should be back. Should be back now. We just had a little bit of login issues with the streaming service, but it should be all fixed and good to go. But if not, if you can take a minute to give us a rating on the

platform that you listen to us, it does help other people find us, share it with friends and family, and we will be back for another episode this upcoming Friday. And thanks again for listening. The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.