The Canadian Investor - 9 companies on our watchlist, ESG and paid press releases

Episode Date: September 20, 2021

In this episode of the Canadian Investor Podcast, we discuss the following topics: How measuring the environmental impact of companies can be measurable by data How Some ETFs are branded as ESG when they really shouldn’t be Paid press releases by publicly listed companies and the fake announcement that Walmart will be accepting Litecoin What it means when a company gets added to a major index like the S&P 500 or the S&P TSX Secular trends that we like going forward Nine companies that we’ve been buying or that we are watching closely Tickets of stocks discussed: EQIX, DLR, AMT, PYPL, SQ, V, MA, ATVI, EA, TTWO, TCEHY, U, ADSK, DSY.PA, ANSS, FB, SHOP.TO, MELI, SE, CSU.TO, TOI.V, ROP, AMZN, GOOG, MSFT, LULU, PINS, SPOT, LVMH, ZM, LMT https://thecanadianinvestorpodcast.com/ Canadian Investor Podcast Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital See omnystudio.com/listener for privacy information.

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I'm Brayden Dennis, joined by Simon Belanger. Simon, we have a jam-packed episode today. And for the listeners at home, we're going to be throwing tons of different tickers and ideas at you today, similar to the last episode we did. But that's okay, because these brainstorming sessions and what we're looking at in our own portfolio gives you as a listener a good idea of the things that we're thinking about and the companies we're interested in. How are you doing, Simon? I'm doing well. Yeah, the GenPack episode, excited. We have quite a few different

topics to go ahead. Let's jump into that first topic. I don't really know what to call it. I have a bunch of slashes here. It's clean energy slash climate change slash decarbonization. So I bring this segment to you today as someone with a degree in environmental engineering. I worked in renewable energy for years. I've engineered and designed 70 plus panel rooftop solar systems. I've worked with millions of dollars in energy efficiency project. And the reason I bring this up currently today is because we have two crises. One, that climate change should be said climate changed with a D, because the facts are there. The planet has already warmed significantly, and it will continue to warm, but we have to do everything we can to slow down global carbon emissions and even look at serious large carbon capture ideas. And the second crisis relevant to this podcast is that the professional finance community has constructed this term ESG, which I

have serious disdain for, and I've mentioned on this podcast several times. ESG stands for environmental, social, and governance. Now, let me read you the top 10 holdings of BlackRock's ETF, the largest global money manager on assets under management and the ETF provider. This is their ESG ETF. It's the IS shares ESG advanced USA ETF. ETF. It's the ISGERS ESG Advanced USA ETF. These are the top 10 holdings, Simon. NVIDIA, Visa, Home Depot, PayPal, Adobe, MasterCard, Salesforce.com, Cisco, Coca-Cola, and Verizon. I see you shaking your head across the table. Do you notice a theme here? It looks like the Dow Jones Index to me. Yeah, pretty much. There's also a lot of tech in there.

The one where I was really shaking my head was Coca-Cola because they've been notorious for those empty bottles, those plastic bottles polluting the environment that way. So I kind of head-scratchered there. And some of these businesses, I mean, I know you're going to talk about that, but they put a lot of, I would say they put a lot of emphasis on the E and the S and the G tends to be forgotten quite a bit. A lot of people refer to ESG, but they always kind of think about environmental only. So those are my two takeaways. But yeah, a lot of these names are

Dow Jones and a few eyebrows raised with those names as well. Yeah, for sure. And I think that the reason why I'm in the camp of what you're saying is like, I'm focusing on the E and ESG. And there's a reason for that. So let me get to that. But for the most part, these businesses are not net beneficial in my mind. They don't are net beneficial to the planet and the S and the G. I can't really say that for certain. Now, the reason why I think that the E is so important and I focus on it so much is because it's the only one that's measurable. The social and governance is very qualitative and not measurable. While environmental impact is 100% measurable, you can measure carbon emissions

in your entire process. And I did it for my career. It's really not that hard to measure some of this stuff if you have a decent inventory of what you do as a business. Now, this is a business. Finance is an industry and BlackRock wants to make money and they want to sell these ETFs. So they're happy to hop on the ESG virtue signaling bandwagon. So if you're looking for ETFs that represent net benefits to the climate, So if you're looking for ETFs that represent net benefits to the climate, you got to look at the holdings. And every ETF has these to disclose, and they're easy to find. So I don't mean to pick on BlackRock.

I'm not trying to demonize them. They're just an asset manager, and they have these different funds that follow these different strategies. And they actually do have some funds that follow clean energy specifically. And in that type of ETF, you'll find legit companies and legit ideas that are making a net benefit. So the key here is, is not that all BlackRock should be demonized here. They have other products that do cover environmentally friendly companies. that do cover environmentally friendly companies. The takeaway is you have to look at the holdings when you're doing this generic research. Some ideas here with specific companies is obviously Brookfield Renewable deserves to be brought up or any pure play renewable utility. Be careful with the utilities that make it look like they're a renewable energy company when they have some renewable capacity, but over half the generation capacity in their fleet will be natural gas or

other fossil fuels. So just be careful of that. Vestas Wind Systems is an absolute beast, the wind manufacturer, the wind turbine manufacturer. Siemens as well, another big one. I think it's only traded in Europe, but still worth considering. We haven't talked about Tesla in a while, but Tesla and the other EV autos do present an important piece of this transition. Then the solar panel manufacturers may be worth a look, but I don't think they're particularly great investments. They're just really not that great of businesses. They have low margins, a lot of competition. In the grand scheme of things, they're not great businesses, so I'm not interested in picking some

out. The whole reason of me bringing this up is there are some good ETFs that focus on this, but look at the holdings and not just with renewable or environmentally friendly type thematic investing. It's just a general rule of thumb. If you're investing in a fund or there's a mutual fund, which I don't recommend, but if you are doing that or an ETF is look at the holdings, man. Yeah, yeah, really important. And just to add to what you're saying. So if people are looking to get some ideas on how to evaluate companies from not only an environmental standpoint, but also social and governance, and that would include ETFs as well, a good starting point would be the PRI. So principles of for responsible investment,

be the PRI, so Principles for Responsible Investment. It's a UN kind of organization. There are funds that are signatories and there is some principles that they have to follow. But again, like Brayden says, when it comes to social and governance, it's probably more about your personal values and beliefs. So it's definitely more subjective and not as objective. And I've seen funds that will follow a certain measure for a certain type of investment. I saw one recently where they said they would exclude nuclear, they would exclude pornography, they would exclude a few other things, but oil was still in there. Right. Meanwhile, like defense was still in there and stuff like that. Nuclear is such an important part of decarbonization.

Yeah. And apparently, and I contacted someone who knows that stuff pretty well. And I was like, what's going on here? And apparently that's an accepted approach in the investment field. So I was kind of confused to see that. But all that to say that if you really want to be investing in businesses that follow ESG principles and especially principles that are dear to you I'm not sure if an ETF is necessarily the best way it's probably picking your own companies to be honest because the ETFs they'll have their

guidelines right and yeah it's more work it's going to be a lot of work if you want to deal through that and making sure that they meet your personal requirements. The environmental, like you said, it's probably easier to get some quantitative figures, but the social and governance, that's probably going to be more subjective based on your beliefs. Yeah, that's a good point to bring up because you and I both do pick stocks for personal portfolios individually. And by doing that, we are selecting in the businesses we want to own and meet our principles. So I agree with that sentiment. As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online

broker by MoneySense. And with them, you can buy all North American ETFs, not just a few select ones, all commission free so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today and keep more of your money. Visit questrade.com for details. That is questrade.com.

Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host.

All right, let's move on. There was a big fake press release that was going around. All the major news outlets picked it up. I thought it was quite funny. Can you break that down, Simon? Yeah, I mean, I thought it was pretty funny as well. So what happened? So this comes down to pay for play news releases. So people may see these. Typically, you'll see in Canada like Sison or Newswire, Businesswire. Actually, Businesswire is owned by Berkshire Hathaway.

So you'll see that businesses will put out these news releases. But you have to keep in mind that those are paid by the companies. So always take those with a little bit of grain of salt. But what happened in this situation is on Monday morning, news came out that Walmart was partnering with Litecoin Foundation to start accepting Litecoin payment. For those who don't know, Litecoin is a cryptocurrency. It's a bit more of a legacy cryptocurrency. There's not much development going on on Litecoin. The problem with this is that it was actually a fake news release.

It was picked up by quite a few mainstream media outlets, including CNBC, MSNBC, Reuters, and I think even Coindesk picked it up. That's what I had read somewhere. And Walmart obviously soon put out a press release to say that they had not partnered with Litecoin to accept the cryptocurrency payment. The reason why this happened was clearly that someone was trying to pump and dump the price of Litecoin. So they bought litecoin the news release came out they dumped it and they made probably a pretty penny in this case it would

have been pretty easy to spot for anyone who did like some basic level of due diligence uh big news like this would normally come out simultaneously on the company's website so the company's media relation website which did not happen so it was only that press release it was not on walmart's website litecoin is also a smaller cryptocurrency like i mentioned with little to no development going on so there are better alternatives out there including stable coins or bitcoin via the lightning network for a company who would like to accept cryptocurrency payments. And the wording was definitely odd at times.

It looked like it may have been someone whose first language may not have been English. Have a look on my Twitter account. I actually posted, I tweeted like what it looked like. In terms of what, you know, what should you do when you see a pay-for-play release so those those news releases happen all the time for the most part they are legitimate they are accurate but make sure that it's a release by the company always check their media relations website or their investor relations site to make sure that they actually issued that understand that it was paid by the company so they do have a vested interest in this information going out.

Take it with a grain of salt. It may be useful information, but you should understand that if it's actually material for the company and not just a PR stunt, it may also be available in the filings for this type of information if it's something that they have to file for the regulator. for this type of information if it's something that they have to file for the regulator. And be wary of company that sent out these news releases extremely frequently for things that really don't matter for the business. I don't want to repeat myself, but Phase Drive was a prime example of this. They would send out these new releases for things that had little to no material impact on the business. And that would be a big red flag right there. Yeah, we'll put pay to play news releases are a huge red flag.

And this goes down to what we've been talking about, which is if a company is paying to get their company, their stock ticker in front of retail investors. Ding, ding, ding, ding, red flag. A company should be investing in their business to grow sales, to grow profits, to grow their market share. That is what a real company does. So be very skeptical and have your guard up when you see a company very interested in promoting their investor relations. That right there scares me quite a bit. And it should, right? That's not the kind of businesses we want to invest in with our capital. We're looking for high quality companies that can compound over the long term. We're looking for high quality companies that can compound over the long term.

Moving on, I have a section here on secular trends. So these are secular trends that I'm interested in from a long-term perspective and utilizing in my portfolio. If we look at the stock market performance over the last 10 years, you just simply underperformed if you're missing out on some key trends or opportunities for the most part. Obviously, there are some exceptions. You could have beaten the index by owning less known stocks that have had tremendous success and stock performance. However, just missing a few key themes really hurt your chances of succeeding. With the S&P, the FAMG, Facebook, Apple, Amazon, Microsoft, Netflix, Google, for instance, drove a huge portion of returns. Companies we knew well,

companies we knew we interacted with on a daily basis, just hanging out right in front of us, drove stellar returns and drove the S&P. Now, you could have beat the index without owning them over the last 10 years. And if you did, congrats, you are a phenomenal investor. But for the most part, your chances were lower, simply put. So with the TSX, here's a prime example. From some research I found from Brompton Friends, which is a Toronto Bay Street firm. Never heard of them before. Shopify contributed 4.1% of the total TSX index return in 2020. Without Shopify, they said the TSX index return would have been only 1.4% for the year.

Simon, before I keep going, is that shocking to you? No, I mean, it's not shocking. Is it the largest in terms of market cap? Yeah, I'm pretty sure, right? Oh, yeah, by like $100 billion on Royal Bank. Yeah, no, I'm not surprised. I mean, obviously, Shopify have been huge for returns and not only Shopify, but other tech plays in Canada.

Yeah, it's wild. So that's that long tail distribution driving investment returns and just general life outcomes. So I think about this quite a lot. So I want to be owning companies that are riding secular trends, not fighting them and try to pay a reasonable half decent price while doing so. Some of those trends I have high confidence in, I have one, two, three, four, five, six, seven ideas here. Now there are more, but these are ones that just came to top of mind that I have high confidence in betting on. Now over the, this is like a 10 year type period. The increase in data consumption globally, I have very high confidence in. Companies that are going to benefit from per capita,

humans using more data, Equinix, Digital Realty Trust, and American Tower are some good ideas here. Now, any of the towers are probably a pretty good idea here, but this is people using more data. Digital payments. Okay, look, cash and checks are dead in my mind. Yet globally, there is a primarily cash and check society globally. Even though it might not seem like it in North America, cash and check still makes up 80% of transactions around the world. Now, if you think about that, the runway for growth is still massive, even though right now it seems like potentially some of them have reached a saturation point, not when you look globally. So some ideas here are PayPal, Square, Aiden, Visa, MasterCard, and Stripe when it comes public.

I'm going to talk more about this in a bit, but Visa and MasterCard, even though there is so much negative sentiment around some of the other innovators, most of the business they are driving, these innovators like PayPal and Square, are riding the rails of visa and mastercard and i'm going to talk more about that later another name just to add a canadian flavor to that noive oh yeah yeah yeah good point now again with nuve it's important to recognize the business it is a huge play on the growth of online gambling. That's where their customers are, which is a secular trend and worth noting on its own probably. Video games. Now, Activision Blizzard, EA,

Take-Two Interactive, Tencent, and then you could go with the Unity with a game engine as well. These companies, all four of these publishers are down, like not Unity, but the other four publishers are down quite a bit. Activision Blizzard has tons of negative news around it for other reasons, but all of these video game publishers are seeing some pretty drastic drawdowns right now. Moving on, 3D modeling and immersive environments. This is what I'm particularly interested in. So Autodesk here for sure. Unity, once again, I mean, the gaming engine is going to be important there. The Salt Systems, Ansys, which are both engineering modeling companies. And then Facebook as well with their efforts into the metaverse. And I saw Zuck just came out with their partnership

with Ray-Ban as well. They're doing that Ray-Ban glasses. I don't know. Did you see the commercial that they put out with Zuck trying them on? Oh, you got to see it. Oh, boy. Yeah, I'll have to watch that. Yeah. You know what? It even makes Mark Zuckerberg look pretty cool in these Ray-Bans. I mean, that's got to mean something. Yeah, that has to mean something because he's the least cool person I can think of. Totally. All right. eCommerce, Shopify, Mercado Libre, C-Limited. And then look, second level thinking, look logistics. Who's going to benefit from that?

It's like trucking and delivery companies. So there's some second level thinking on some of these other secular trends that you have to think about as well. Niche critical software roll-ups. I own all three, Roper, Constellation Software, and Topicus. Look, there are tons. There's like an infinite amount of small software companies that do very niche applications, whether it's a company that manages yachts and they need software to manage their yachts at the marina, or it's a golf course and they need this booking system. There are so many software companies and startups that are ready to be acquired by some of these big giants. And then cloud computing, last one on the list. And Amazon with Amazon Web Services,

and Amazon with Amazon Web Services, Google with Google Cloud, GCP, and Microsoft with Azure. I mean, these things are just killing it and it's still very ground level. All right, last part here. Is this tech heavy? Yes, it's very tech heavy. Do the valuations on all of these make sense? Some do, some maybe not. The point of this is to understand that secular trends and major investment themes are very important to pay attention to. And another important thing to note here, this has nothing to do with investment trends and themes in this form of stock price performance. I'm not talking about trends and themes in stock charts. I'm talking about real business fundamentals and the company's driving change becoming more important in the future than they are today.

Yeah, there's two I would probably add that you didn't put in there that are not tech heavy. So the two for me, the first one we talked about it earlier. So renewable energy, I would stay kind of a way of like solar panel producers because that's very material based and the prices and the margins can vary quite a bit. There's a lot of competition, but we're seeing it right now. There's a lot of push around the world for cleaner energy. So I think there's a big tailwinds there for probably decades to come. And the other one, we've seen it in the US infrastructure businesses. I think there's going to be huge tailwinds and huge amounts of monies that are

put into infrastructure across the globe. So those would probably be the two that I would add to the ones that you said. Yeah. And they kind of go hand in hand too. And absolutely. And that's why I own Brookfield Asset Management because they are the company to execute on infrastructure projects and renewable projects at scale. And look around with bond rates so low, yields are so low, where do endowments and pensions get yield from? They need to look to alternative investments because bonds just won't get them there. Who benefits from that? Who manages these alternative real asset managements? It's Brookfield. They are the company in town. And I think that that's a very long-term thesis that you could play out as well. So thanks for mentioning that.

As do-it-yourself investors, we want to keep our fees low. That's why Simone and I have been using Questrade as our online broker for so many years now. Questrade is Canada's number one rated online broker by MoneySense. and with them, you can buy all North American ETFs, not just a few select ones, all commission-free, so that you can choose the ETFs that you want. And they charge no annual RRSP or TFSA account fees. They have an award winning customer service team with real people that are ready to help if you have questions along the way. As a customer myself, I've been impressed with Questrade's customer service. Whenever I call or email, every support rep is very knowledgeable and they get exactly what I need done quickly. Switch for free today

and keep more of your money. Visit questrade.com for details. That is questrade.com. That is questtrade.com. Here on the show, we talk about companies with strong two-sided networks make for the best products. I'm going to spend this coming February and March in an Airbnb in South Florida for a combination of work and vacation and realized, hey, my place could be a great Airbnb while I'm away. Since it's just going to be sitting empty, it could make some extra income. But there are still so many people who don't even think about hosting on Airbnb or think it's a lot of work to get started. But now it is easier than ever with Airbnb's new co-host network. You can hire a local quality co-host to take care of your home and guests. It's a win-win since you make some

extra money hosting on Airbnb, but can still focus on enjoying your time away. Find a co-host at airbnb.ca forward slash host. That is airbnb.ca forward slash host. So now on to the next subject. What should you think when a company you own gets added to an index? So in this case could be the S&P TSX Composite or it could be the S&P 500, not the TSX 500. So for the S&P TSX Composite, there's a couple of requirements that companies need to meet in order to be added to the index. The share price must remain above $1. The market cap must be at least 0.04% of the index. As a side note, the maximum weighting of a single stock for the index cannot be more than 10%. And according to the S&P Global website, the smallest constituents of the S&P TSX right now has around $800 million in market cap. They must maintain some pretty strict liquidity requirements. So meaning that the stock or the amount of chairs that are tradable has to be

pretty big. So, you know, in other words, you don't have to worry about putting a limit order for the most part if there's enough liquidity. And they must qualify as a Canadian company, which means they must have been incorporated, formed or established in Canada and have a substantial presence in the country. So what does it mean if it gets added? And I did get this question from someone who was referencing Wellheld that was recently added to the S&P TSX. And my apologies, I don't remember your name, but just shout out. I'm sure you'll know who you are. It will probably mean a boost for the company in terms of share price, since all the funds that track the index will need to buy the company.

So that will obviously create more demand for the company in a short period of time. For the TSX, it's probably not going to be a big boost because there's just not that many index funds or ETFs that follow the TSX compared to the S&P 500 500 which has probably trillions of dollars of assets under management in terms of the total amount of funds that track the index. So you can definitely see a benefit in terms of share price. I know when Tesla was added, was it last year? I know they got a boost from being added to the S&P 500. Especially because it came in at such a huge market cap too. Yeah, yeah, exactly. It provides some recognition for the company as these groups tend to be viewed as a bit more exclusive.

I would say even more so for the S&P 500. And it should be easier for these companies to do secondary stock offerings. So their IPO, which is their initial public offering, but later on companies can do for whatever reason, secondary offering. So if you're added to an index in theory, it should make that easier. Yeah. And just as a side note here, how good of a company is S&P that they're able to have this effect on the global stock market, not just in the US, but also on the TSX with the S&P TSX Composite Index. They call the shots. And if you want to be in that exclusive club, you're going to have better issuances. You're probably going to get better bond ratings.

You want to be in this club. Recently, Match Group, ticker MTCH, the owner of all the dating apps, whether it's Tinder or Hinge, or there's a million of them under the brand now at this point. They were just recently added to the S&P 500. And what happens in that scenario? Why do stocks go up, Simon? They go up when there are more buyers than sellers. It sounds very elementary, but that's how it happens. When you have an index like the S&P 500 with so many index funds and ETFs tracking it, they have to buy shares. They are forced, if they're tracking the index, to buy shares of said company. Now, there is a huge inflow of capital into that company. I'm pretty sure Match Group was up like 12% that day on its introduction into the index. So that's what happens. And it's an exclusive club and the S&P 500 means a lot. Yeah. And it probably,

I hadn't thought about that, but also when a company gets removed from the index, it probably has the opposite effect. Usually when they're removed to the company is not doing that well, because they're not meeting the requirements for the most part, that would be one of the main reason. Also, it could just be a rebalancing of the index where they need a bit more exposure to a certain type of stock. But I would assume without any specific data that it has the opposite effect because then you have all these funds that are just offloading the shares. That's right. And with the S&P 500, it's not always necessarily like, oh, you're the smallest in market cap, you get booted. There is a selection process done by S&P.

There is a committee that says, hey, we're going to put this one in and take this one out because the company leaving the index is in structural decline. We don't think that it's going to be here in the next 10 years and it's the one that's going to get booted. Not necessarily the smallest company, even though in some cases it may be the smallest company. Yeah, or if they don't meet the requirements anymore. That's right. I think they have a period of time, right? I think it's not like just one day they don't meet the minimum share price. I think it has to be-

A certain amount of consecutive quarters. Yeah. Okay. Yeah. That's right. Yeah. All right. Let's go to the last segment on our show, a fan favorite, which is what is on your watch list? And today we're doing a what is on your watch list slash what have we been buying as well? Our watch list indicating stock that we don't necessarily own today, but sits on our watch list, but then also including a couple of names I have included here, which are, hey, you know what? Even though the stock market may look expensive in some cases, there are still opportunities, you know what? Even though the stock market may look expensive in some cases,

there are still opportunities if you are looking. Yeah, definitely. So I have two companies for me that I'm really seriously considering starting a position. I've talked about these before, but the first one is Pinterest. Just as a refresher, Q2 was a bit of a mixed bag when it came to their earning release. The overall monthly active users or MEU increased but decreased 5% in the US and Canada, which tends to be of higher value because they can monetize those users more than elsewhere in the world. However, revenue more than doubled year over year.

They're just starting to monetize their platform. And I think it's the perfect platform for advertisers where users will be very receptive to those ads. Should be a high conversion rate for advertisers as well, which is something that's really important for advertisers. And there's been a pullback since that Q2 earnings release, although the shares are still not cheap. that Q2 earnings release, although the shares are still not cheap. There's still $35 billion market cap trading at about 15 times this year's sell, depending how they finished a year. But I really think the market overreacted on that Q2 earnings because, yes, the MAU dipped a little bit, but it was also during the reopening in the US. So you can imagine that a lot of people were just doing activities, not necessarily needing to use Pinterest for whatever they would have used it before. And they're really just scratching the surface of monetizing their users compared to

other social media networks like Facebook, for example. I'm not saying that they'll be able to monetize it at the same level, but even if they only get halfway to where Facebook is, example, I'm not saying that they'll be able to monetize it at the same level. But even if they only get halfway to where Facebook is, yeah, I think there's a lot of good prospects. And I'm seriously thinking of just starting doing a starter position, get some skin in the game, see where it goes for Pinterest. So take notes here, because Simon has now talked about Pinterest on his watch list for how many quarters now and tracking the story and didn't FOMO into it when that thing was on fire last year, right? Like the stock was going bananas last year and now there's this huge pullback. So he's been

tracking it, getting his thesis right and seeing it potentially pay off when it comes to his research. So take note of that, that he has now looked at it for quite a while and still doing his due diligence. So I think that's an important takeaway here. All right. I will move on to a segment here, which is before Simon talks about his last, what's on his watch list. These are companies that are all right now in over 10% drawdowns from their all-time highs, but they are high quality companies with some currently negative sentiment. And this is when you add to companies, right? When the fundamentals are solid and the long-term story remains, but there is short-term volatility based on some negative sentiment. These are the drawdowns that you add to positions, from my opinion.

Ones that I am actively adding to during this drawdown, and I know this is now sitting on your watch list, Simon, because the drawdown's close to 20% now. Autodesk, ticker ADSK, both Visa and MasterCard. I talk about them equally because I equal weight them. And Spotify. Spotify has actually done horrendously lately, which I find surprising, and especially with some of this news about the Apple App Store. I mean, the long-term story for Spotify seems to be better than ever, but the stock price is heading in the other direction. Now, others of noteworthy, I mentioned this before, Activision Blizzard, Take-Two, EA,

Lockheed Martin, LVMH, and a very interesting one, Zoom. I saw a post today, and you can check it out on Stratosphere. If you go to the company search and you can check it out on stratosphere if you go to the company search and you you can look up multiple company stock charts at once you go on there you put on zoom and you put on disney at the same time you go to the top and you press five years and see the stock performance now if you take the day that everyone was sent home and covid1919 was announced as a pandemic. Zoom went crazy. Like if 5X'd real quick, today, Zoom and Disney have had the same performance since that day. During that time, Zoom's business has gone parabolic. As a company, Zoom has one, become the verb for communicating video calls. I use the word even if I'm going to go on another service, whether it's Teams or Google's product, I still say hop on a Zoom. They have gained so much market share, not only in the

consumer, but in the enterprise space. Now, was the valuation absurd for a bit there? Yes. Is this a company here to stay for the long term? I think so. I think they've carved out them being the name in town. Don't get me wrong. There's lots of competition. Perhaps their market share shrinks over time. I don't own the stock. I can say for sure. But this is when you start looking at some of these ideas that you may have ruled out previously. Yeah. No, those are good businesses. I mean, the one I'm not a great fan of is Lockheed Martin because I'm not- You're an ESG guy. Yeah, exactly. I don't love invest. I don't invest in defense stocks.

Fair enough. But to use your own. For me, my other name, it won't surprise anyone, but it is Lululemon. So Lululemon, I mean, they've just they blew out their earnings quarter, as we talked about, they're trading at about 10 times sales right now. So they're not cheap, but they are showing that they have tremendous pricing power great margins their men's segment is increasing despite years of nike's competition and other clothing companies that we're trying to get into the at leisure space i love their clothes myself i think they're very good quality there seems like they're never running out of style or whether they are they're always coming

up with new trends that seem to be picking up i think it's probably yeah it's one company that i wish i owned although i kind of own it indirectly i my spouse's has it in her portfolio my fiance so i manage her portfolio so i guess i i do own it indirectly and i bought it for her at the beginning of the pandemic so it's it's done quite well but i mean it's not cheap if there's a pull back a little bit i think i'm just gonna pull the trigger even if the valuation's still high and and just start to position my own portfolio for lulu i mean come on yeah you gotta give it to this company simon look look i'm wearing the shirt right now. I got the button down, nice collar shirt, Lululemon. The pants, and I won't show you this as well, but the boxers as

well. I'm all in. I mean, I don't own it either, but if you looked at me right now, you'd think I'm an ambassador. It is so comfy. I'm all in. All right, Simon, that does it for this episode. Thank you all for listening so much. We have a jam-packed recording schedule over the next two weeks. We are doing tons of interviews. We're going on other people's podcasts. You might see us on some of your other favorite podcasts. We're going crazy with the interviews right now because we're trying to stock up. We have some time off in the first two weeks of October and we're going to plop these in and congratulate at home. But Simon is getting married. So congratulations, Simon. Thank you. Thank you. And I won a golf trip to Cabot Cliffs in Nova Scotia. So we have some good weeks lined up, Simon.

Yeah, I think it's back to back too, right? One week you're going to Nova Scotia and one week and getting married and then going for honeymoon in Quebec City. So yeah, we're gonna have to put double effort before then so we still have some content while we're away. Yeah, because we won't miss a single episode. We're gonna be there for you

on the Canadian Investor Podcast. Thanks so much for listening. If you haven't checked out Stratosphere yet, it is my company. It is the research that me, myself, and my analysts put together. It is software to help you invest. It is research to help you invest. We rank our models on Canadian and US stocks, which not many people are doing. A lot of people are doing US stocks, but we got you here for those in Canada. So that is stratosphereinvesting.com or you can type in get, G-E-T, getstockmarket.com and it'll redirect you there as well. We will see you in a few days. Peace. The Canadian investor is not to be taken as investment advice. Braden or Simone may own securities mentioned on this podcast.

Always make sure to do your own research and due diligence before making investment decisions.