The Canadian Investor - Revealing our Entire Portfolios - Part 1

Episode Date: October 30, 2023

In this episode, Simon and Braden go over what Key Performance Indicators (KPI) they regularly track for each of their personal holdings. Ticker of stocks discussed: GOOG, ASML, ADSK, BAM.TO, BN.TO, DOO.TO, CASH.TO, EQIX, EQB.TO, BEPC.TO, BIPC.TO, CNQ.TO, CNR.TO, LULU Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital 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  Sign up to Stratosphere for free 🚀 our platform for self-directed stock investing research. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

Welcome back into the show. This is the Canadian Investor Podcast, made possible by our friends and show sponsor, EQ Bank, which helps Canadians make bank with high interest and no fees on everyday banking. We also love their savings and investment products like GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs, which offer some of the best rates on the market. I personally, and I know Simone as well, is using the GICs on a regular basis to set money aside for personal income taxes in April of every year. Their GICs are perfect because the interest rate is guaranteed, and I know I won't be able to touch that money until I need it for tax time. Whether you're looking to set some money aside for a rainy day or a big purchase is

coming through the pipeline or simply want to lower the risk of your overall investment portfolio, EQ Bank's GICs are a great option. The best thing about EQ Bank is that it is so easy to use. You can open an account and buy a GIC online in minutes. Take advantage of some of the best rates on the market today at eqbank.ca forward slash GIC. Again, eqbank.ca forward slash GIC. This is the Canadian Investor, where you take control of your own portfolio and gain the confidence you need to succeed in the markets. Hosted by Brayden Dennis and Simon Belanger. The Canadian Investor Podcast. Welcome in to the show. My name is Brayden Dennis, as always joined by the unequivocal Simon Belanger. We have maybe one of the most awaited, one of the most hyped up episodes that we've ever done. And I think it's going to

be really fun today, Simone. We are going through our entire portfolios and this is going to take a while. So we're going to split it up into two episodes. So it's going to be part one today and part two next week. Should be a good time. How many companies you got here on the dock today, Simone? Today, I think I've got eight, if I remember correctly. I kind of have two in one and then companies slash even Bitcoin. Positions. That I'll be talking about. Yeah, positions. So I think I've got eight. Okay. So we're around the same ballpark in total holding. So we'll do half today, half tomorrow, and we'll just go back and forth. And what we're going to do is we're going to talk

about something that we monitor for the business, something that we think is really important that moves the needle. It's been a bit of a theme over the past few episodes. It's been top of mind for us. It's been top of mind for listeners, especially when the market isn't going just up into the right like it did for many years there and the bull market there for basically over a decade. The investment thesis is easy to feel good about when the stock goes up every week, every month, every quarter, every year, and not so much when things are going down or even worse, do nothing for years. It's so hard for people to actually hold on to stocks when they trade flat for multiple, multiple years. And it sounds good to be like, oh,

I'm a long-term investor, all this stuff, but it's easier said than done. And it's a lot harder said than done if you're not focusing on what really matters. And so that's what's going to be today about today's episode on all the holdings that we have. If you do want to see, because we're going to be doing this like relatively alphabetical, so it's not by weighting. So for instance, my first one today is Alphabet, the owner of Google, but that's because it is alphabetical. No pun intended there. Funny how that works out. But if you want to see the exact weightings in a table in our monthly portfolio updates, you can do that on our Patreon at join tci.com. Supports the show. You see our monthly portfolio updates. You see this on video and it is $9

Canadian per month. That is at join tci.com. All right. Without further delay, Simone, That is at join tci.com. All right, without further delay, Simone, we'll go back and forth. We're going to go through today. I'm going to go through Alphabet, ASML, Autodesk, Bitcoin, Brookfield, BRP, what I do with cash, Constellation Software, Equinix, and Equitable Group. So I'm going to go through those names and then we'll go one by one. Which companies are you going to go over today? Yeah. So I'm going to do Brookfield Infrastructure Partners, Brookfield Renewable Partners, kind of those two in the same vein because the KPIs that I look at are very similar for both of them. Canadian Natural Resources, Allied Property, Resources, Allied Property, REIT, ASML, Bitcoin, Canadian National Railway, and Lululemon.

So obviously, I know I said those not necessarily all in the right order, but I'll try to replace them alphabetically when you're starting the first one. Yeah, no big deal. I guess the important part is that this is not by waiting. For instance, most people who listen to the show know my largest position is consolation software, but I'm not going to be talking about it right out of the gate. If you want to see that, go to jointtci.com. All right. Do you want to kick us off here with your first name?

And then I'll follow on after that. Yeah. So I'll start. Again, I'll try to go alphabetical. So Allied Property REIT, ticker AP-UN.TO. So it is a real estate investment trust. I've talked about it, you know, a decent amount because I started the position earlier this year. It has not had great returns for me, but I think the premise is still there.

I'll definitely be listening to the earnings call that's coming up in a couple days here. Now, the two main KPIs are AFFO and FFO. So that's adjusted from operations and funds from operation. And those I kind of looked in the same vein because they're very similar. You know, it's different than what you'll hear me talk about for FFO for BIP and BEP, so the Brookfield names, but it is similar. And I think that's important to just mention to our listeners is that when you have these non-GAAP metric or non-IFRS, so these non-standard accounting metrics, always make sure to read what they mean because company A might have funds from operations, so FFO and company B as well, but they'll actually be calculated slightly different. So I think that's

important to just remind people. And the second thing here is the occupancy rate. So obviously with Allied Property REITs, it's a office REIT, so it's been hit pretty hard. Their occupancy rates have been pretty good compared to the rest of the office real estate market. So they've done quite well. Like I said, I will be keeping an eye when they come out with their earnings in a couple of days over here. And funds from operation and adjusted funds from operation.

Essentially, it's a way to take out depreciation amortization. So non-cash items and other items that are non-reoccurring, if you'd like. So it could be the proceeds from selling a building for example so this will typically be excluded so those are the ones that i'm keeping an eye on and making sure they're trending in the right direction or in the case of allied not getting worse afo also is adjusting for rent increases and stuff as well. It's kind of like the holy grail of real estate investment trust metrics. It's like, you know, financial nirvana for REITs.

Yeah, exactly. So, you know, they're really useful metrics and definitely, you know, if you invest in REITs, you should know about these. Yeah. Absolutely. Like, you know, I see people saying, look at this real estate investment trust that trades at a PE of four. It must be so cheap. It's like, that is not the right metric. No, exactly. I've had that comment so many times, like, oh, they have negative earnings and all that. I'm sure you have as well. It's just, you have to look at the right metrics. Not that gap metrics or IFRS are not good. They just don't really paint a good picture for these type of businesses. Because there's a lot of things for accounting that, you know, you can pass expenses to reduce your taxes and stuff like that.

So there are reasons why it's like that. But it's not necessarily a good idea to measure the health of certain companies. Did you ever see that meme where it's like adjusted EBITDA? It's like EBITDA is like the spinach and then adjusted EBITDA is like after you put the spinach on the pan for 20 minutes, like for five minutes and it shrinks to like absolutely nothing. Other way around, I guess adjusted EBITDA is the full spinach and then after the pan has been cooking it for a while, it's like you get actual EBITDA. So when you're mentioning there, just like, just check what the footnote has on these metrics for

each company, because some of them, and I've sold companies in the past because I can't wrap my head around how they came up with that number and why it feels misleading at times. So that, you know, that number and why it feels misleading at times. So that, you know, yellow flag sometimes. So just be aware of that. All right. For me, I'm going to go with Alphabet, the parent company of Google and everything else that's underneath the Alphabet umbrella. And for me, the thing that I track the most is the search revenue. So this is the search and other services line item on their quarterly updates. I think they do like 24 billion just on that one line item alone. And it is the segment that people are kind of, I wouldn't say like concerned, but it's just kind of like, what does this segment look like in a GPT

first world? You know, how does they have a bit of an innovator's dilemma with like the Bard product, because they make money off people clicking. They don't make money off of the results being served up in the SERP, which is the search engine results page. And so that can be a bit of an innovator's dilemma for this business. And so people are watching this. The good thing is that the business has been incredibly resilient. And if people want to be found on search, then you pay for ads. I spend thousands and thousands of dollars a month on this service for my businesses because it's super worth it. And you can quantify exactly conversions. You can quantify the exact amount that you are spending for a customer to come on and a customer who actually

then converts down the line and becomes a paid customer. This is so robust. And yeah, so what is it, Simone? You just pulled it up here on Stratosphere. 165 billion TTM in revenue. And I think it does about 24 billion in EBIT every single quarter. So the search revenue track their three-year CAGR to kind of get an idea of fairly recent. So it's over the last three years of growth. CAGR means compounded annual growth rate, but also smooths out like year over year. It's not like super useful if you're looking at like free cashflow per share, because it can be bumpy. So I look at operating cashflow per share and the search line item, and then also just monitoring the growth of YouTube and the growth of cloud. But these are kind of additional. I expect those businesses to be great and to continue to grow. The one that I'm not worried about, but monitoring is that core search

business because it is so important for Google. And they have all these other bets and like YouTube and cloud, those things are all working. G Suite, they have all these other bets and like YouTube and cloud, those things are all working. G Suite, they're all working. But when something is generating like 80% of your EBIT, it's so important. And if that moves at all, then you have a lot of multiple compression and you lose lots of money. So it's just the one I'm looking at. So far, so good. I mean, they've retained over 90 of their search the search market given all the gpt concerns and so so far so good yeah exactly and i mean obviously we'll we'll see where it goes in the next few years and i think the u.s there's like anti-trust lawsuits again google i

think the fact that they're i think one of the big things that the prosecutors are trying to show is that they're taking advantage of their position, but also by like, you know, that agreement with Apple, that is the default search engine. Yeah. So we'll see where that goes. I mean, it's a business I liked, I used to own it. And as I mentioned on the podcast, I just decided for my big tech to use the proceeds and just put that into index funds just because I want to have a manageable amount of positions. If I can't keep track to a, you know, a level that I think I should, then I feel like I need to reduce the amount of positions. And those were logical because I can still get that exposure. You're getting tons of big tech

exposure. Yeah. Through index funds. So that's So that's the reasoning behind it. Not much more to add. 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, 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. I'll go with big company in Europe here. I know one that you have as well. I think we have similar kind of KPIs that we look at. So ASML, this one is the company that produces tools to make semiconductors. One is the company that produces tools to make semiconductors. So they produce machines that do deep ultraviolet, DUV and EUV. So extreme ultraviolet.

They're, I guess, in a duopoly. I don't know. We'll have to see for EUV now with the news of Canon. But I guess I think that's more of a couple of years down the line because I feel like it's going to even if Canon has a good product it's gonna take a few years to really see a dent in the market share but yeah booking so booking essentially just the amount of backlogs that they have for their systems because they're so complex that you know they'll have orders but it takes a pretty significant amount of time to build these

machines and ship them and I'm not sure if we talked about this before on the podcast, but they also make pretty decent money on the maintenance of these machines. Because one of the things is, you know, you sell these machines, but it's like anything else, stuff breaks. And there is maintenance required. And because it's an expertise, even with deep ultraviolet you know it would be very difficult for companies to get other companies to serve as that other than asml so it makes a whole lot of sense for asml to offer those contracts and or you know their clients like a tsmc so taiwan semiconductor but we'll subscribe to that and you'll also see that for the UV. And the other thing that I keep

track of, and this is one that you'll hear me say more than once for companies, but it's free cash flow per share. So free cash flow, I've talked about it quite a bit in the past. I mean, I think it's a great metric for a lot of businesses because it's really hard to fudge. It really shows the amount of cash coming in and out of the business. And it also accounts for share dilution. So it's something that encompasses both of them. And, you know, a metric. That's why I do like it. The one note I will say about free cash flow per share is it can be quite volatile on a quarter to quarter basis. So it's a much better indicator when you look at yearly or multi-year. It makes a whole lot more sense. I just posted and share my screen on the services

revenue item that you're talking about. So this is that maintenance and service field revenue. It's compounded at over 18% since 2012 and does trailing 12-month almost 6 billion euros in sales. And that is high margin type of stuff. Look on gross profit. It's done nearly 3 billion in gross profit on trailing 12 months on just the services maintenance line item. So I think that that's certainly worth bringing up as well. Yeah. It makes sense because the installed base grows, right? So that grows over time. Yeah. Yeah. Just like an intuitive surgical, which I'll talk about as well on my holdings. It's like you get that installed base up and you just increase your recurring revenue over time. And so that's why the easiest thing for me to track is the

installed base. I know the thesis will work if the installed base is there. And that's why for me with ASML, I'll talk about it here now as well, since both of us own it, I basically just track bookings. For me, this is a one KPI business. And of course, it's a very complex business. For me, this is a one KPI business. And of course, it's a very complex business. But as an investor, it is my job to simplify my investment thesis. ASML to me is a one KPI business. Bookings are so important. Are they booking sales of EUV? Are they taking on how many 120 million euro machines have they booked this quarter that's going to turn into revenue in the future? And since it's a forward looking metric, it tells you a lot about the business moving forward as well. And so that's CAGR at 17, almost 18% over the last three years. And of course, it's going

to be cyclical. But if you graph that out, the trend is certainly there. It's been wonderful. There was a huge increase in pulled forward demand in 2020, 2021, as all the foundries were just rushing to get capacity online and making sure that they have EUV booked. They're making sure that they are in ASML's backlog so that once they are built, they can claim it. Just the same way we saw NVIDIA have insane demand for people kind of like FOMOing into getting the latest tech from them for their data centers. Because you don't want to be in a situation as a business, it's too risky being in a situation in the business where you didn't pony up on the cash so that when push comes to shove that you're getting your machine when you need it in the future.

And so just like the same with NVIDIA and same with ASML, we saw that happen with pulled forward demand. These are cyclical businesses, long-term. I mean, you look at the trend, you look at how important this technology is for us moving forward. Its importance is getting only more pronounced, not the other way around. And I think that that secular trend is like, you know, kind of a key part of the investment thesis as well. Yeah, that's been my big, you know, I've talked about on the podcast, but we've, you know, people that are probably more my age, but older they've and even you right like it's people are used to this uni polar world with the u.s being dominant and you know the world kind of

revolving around the u.s in some way and we're really starting to see this shifting i think you know i think it's just a reality you're're seeing kind of multi-polar world, so different powers around the world. I think in a lot of cases, like in these regional powers that have, you know, that want their say in what's happening in global affairs. And I think that's the reason why ASML is so important is that, you know, relations with other countries could be strained at times. The geopolitics of it, what countries have seen during COVID is they want to ensure that the supply chains are where it's really strategic, like semiconductors. They're not affected by anything that's kind of out of their control. So for example, a pandemic where a lot of these semiconductors were coming from Taiwan TSMC and it created some issues for a lot of countries, a lot of companies.

So I think we're going to see more and more demand for these kind of systems because countries will try to build that technology either, you know, in their own country or at least closer to home. Yeah, absolutely. It's like that kind of on-shoring geopolitical risk, like, you know. On-shoring, friend-shoring, whatever you want to call it. Yeah, absolutely. It's like that kind of on-shoring geopolitical risk. Like, you know. On-shoring, friend-shoring, whatever you want to call it. Yeah. Yeah. The way to think about it is the same way that I just talked about, like with the NVIDIA

ASML thing with the businesses. Countries are the same, where it's like the risks far outweigh the capital outlay of the chance of not getting it, right? The chances of being left behind or not getting it is far too high for both these companies and in this case, these empires, these countries. And so that's a really nice secular trend if you're the business that benefits from that, right? Where it's like, it's too risky for people to not buy your stuff. It's just like the best business to be in. And so it's probably going to be tough sledding. There's no catalyst for this business to all of a sudden do great. Earnings comes out. It wasn't great. Bookings were down. There's tough consumer demand for electronic devices. And I said, perfect. If that happens, I'm a net buyer of stocks and I'm certainly a net buyer of ASML. And so if that happens, perfect. I don't want stocks to go up as in the accumulation phase. You got to flip that

mindset on its head and be okay with, okay, I enter a position and there's no catalyst for this thing to do well over the next 12 months in terms of the share price, if anything, to the downside. But I'm not going to wait on the sidelines and try to time it. I'm just going to DCA it over time and be thinking in decades and not in quarters. Well put. So now I'll go on to the next name that I guess we share to some extent. I think the next few. Yeah, the next few. At least the Bs.

The Bs. So Brookfield Infrastructure Partner, take care of B partner take your bip bipc there's a couple different ways to own it and same thing for brookfield renewable partners so bep i included both of them here obviously they're part of the brookfield family but they're just kind of asset heavy businesses and for these kind of businesses i think it's important because they're not, I guess BEP could qualify as utility. BIP is like maybe part utility slash obviously infrastructure play. But they're both, when I look at them, I'm looking at funds from operations. So FFO. And the other thing, which is you'll have to dig into the financial statements for that.

But that is capital recycling. So essentially, capital recycling is just a fancy word that means selling existing assets and using proceeds to buy new assets. So that's really at the core of Brookfield's overall strategy. So what they tend to do is they buy assets that are they perceive as being undervalued. And then they, and then they bring some efficiencies in. And when they believe they've extracted maximum value out of them and they do not want to own these for the long term, then they go ahead and sell them and then buy undervalued asset and repeat over and over again. They do, however, some of their assets they will buy and hold so it's not like they do that for every single asset but a big part of their strategy is capital recycling

so i do i keep an eye on what's going there what's being bought what's being sold kind of the time frame as well and then funds from operation without going over like I just did for Allied Property Read, but that's the main metric they look at. They base their payout ratio for their distribution or dividend based on that. So these are the two main things I'll look at for these BP and BIP. Yep. I'll also continue on the Brookfield train with Brookfield Corp, ticker BN, the mothership and Brookfield Asset Management, which I got the spin out shares, which is 75% owned by the corp. And all of these are owned by the corp,

the ones that you mentioned as well, but they are publicly listed as subsidiaries. And so for the corp, the easiest and I think most relevant metric is tracking total assets under management. And the reason for that is it encompasses all of the things that Simone was just talking about, but it also includes there a lot of the fee bearing capital that the asset management business generates management fees from. So if you've just owned the asset management business, they also break out fee bearing capital, which is super important, right? If that number grows and then they generate more management fees on the capital that they manage for investors, that's included under AUM. But AUM is also going to include all those hard assets that they manage.

And it's a really unique company as both the asset manager and the operator, which is a very unique company structure. It gives them some competitive advantages, some downsides as well, but a lot of competitive advantages to actually being the operator and having that expertise. It's over 200,000 people work for Brookfield. It's unbelievable if you include everyone that works for all the subsidiaries and all those assets that they own and manage. So we're talking about ports, highways, pipelines, real infrastructure that moves the world. Just how things work, things that you just take for granted. That's what Brookfield's in the business of. So the corp and the asset management businesses, and then funds from operations,

just like super easy way to track profitability over time. Hard assets don't use earnings. It's not that useful. So FFO, and then back to what Simone was talking about for REITs, AFFO, which I'll talk about for Equinix as well. 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. 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. All right. Let's get onto a non-stock here. You and I both own some Bitcoin, but I'm going to shut up because you're the Bitcoin guy. Okay. And you should go first. Yeah. So there's a couple of things that I look at and people might be surprised that it's not the price of Bitcoin. So there are on chain metrics that I look at for Bitcoin that I think are quite useful. The first one is a total hash rate. So if you're not familiar with Bitcoin,

that's essentially just the computing power behind the mining of Bitcoin. And i think that's really useful to see you know how it's going and i do have here a graphic for a joint tci listeners if you look at the line in blue it shows the hash rate over time and it increases which is normal because you know the you know computing power over time gets more and more powerful and we saw saw, too, in July, June of 2021, China banned Bitcoin mining. So there was a sharp drop in computing power, so ashrate power, during that time. But then within a month or so, it really rebounded quite nicely. And I think that's important because it just shows how resilient this is, And I think that's important because it just shows how resilient this is where a country,

a totalitarian country like China, tried to effectively ban Bitcoin. And it did a little impact in the short term. So transaction took a bit more time to be processed. But in the longer term, it honestly just was a blip on the radar. So I think that's really interesting. It shows how resilient it is. Immutable. Yeah, exactly. So, I mean, no one can control it.

And I think that's one of the biggest advantages of Bitcoin, whether you want to, you know, for people who want to compare it to fiat, so Canadian dollar, US dollar. At the end of the day, currencies you know it is what it is but it's controlled by a handful of people like the amount of you know power in the hand of some central bankers and very few government individuals who make on the one hand for government spending decisions that impact the currencies and then the money supply that expands via the central banks usually. That has a real life impact on people and I think it's great for Bitcoin to know what you're dealing with. It's not going to change and I think that's important.

The second metric I look at is the number of active addresses in the span of one month. So an active address is just you either send or receive Bitcoin. And we've seen, of course, around 2020, around the bull market, it went way, way high, but it never dipped that low. You know, for our for those who are watching, you'll be able to see the chart. I mean, in terms of right now, the active addresses for month that we're looking at, it's around 18 million. That's not the total amount of people that have Bitcoin. It's just people who transacted in the last month. And it's been between, I would say, at the peak 22 during the bull market, 23 million.

And then the lowest about 15 million but it's been going up over time so if you look since bitcoin inception clearly the trend is to go up so that's always interesting because it does show that there is increased adoption and i think that's important and then the last one is the Bitcoin nodes. So Bitcoin nodes are essentially people can have that on their home computer and it validates Bitcoin transactions. So the miners, the ashing power, those actually process the transactions. But the Bitcoin nodes make sure that the ledger is intact. There is no funny business, if you'd like.

And these nodes have been increasing over time. So you'll see in the graphic here, you'll see different colors. There's just different versions of the different software, but they all act in a very similar fashion and they validate the Bitcoin protocol. So these are the three main things that I look at. Clearly, you know, like anyone else, I like to see the price of bitcoin going up you know it's nice but it's actually a nice counterbalance right now in my portfolio especially with dividends togs being hit pretty hard you know mostly on the rumors that younger could be a spot bitcoin etf

approved by the scc in the near future i think that's probably what's been driving all that and some people that have cover to cover their short position. I think that's really important to just double click on that. One of the big reasons why Bitcoin and crypto while Bitcoin specifically is very volatile is because of people using leverage either shorting or being long on the price of Bitcoin. But that was just a side note. But these are the three metrics I look at on a regular basis just to see how it's trending. Now, what Simon said for all the above. No, you know what? For me, I don't have any fancy thing to track. I just learned some things just from those websites you're sharing. fancy thing to track. I just learned some things just from those websites you were sharing.

And I definitely, one question on the active account, like if last month I didn't buy or sell any Bitcoin, am I an active account or no? Like am I an active address? No, no. So you would have, if you bought some, you would have received some Bitcoin. So you would show up on there. But if you did not, then you're just not an active address. I don't know the total amount of address. I know it's in the hundreds of millions. But I think the active address is just a good reflection of the usage, I think, and the overall adoption. Because it is one thing to just buy and hold. But it's interesting to see people actually transacting and having some transactions with it.

Interesting. Yeah. For me, look, my thesis is quite simple. It's not paying attention to it is like burying your head in the sand for no reason, for just absolutely no reason. You know, it's like get off my lawn energy to just not look at it. And, and, and you never want to be that get off my lawn guy. You know, it makes no sense. You have no upside by just shutting it down and having, you know, just a closed mind to it. I don't, I don't think you get anything from that.

And look, those people have all been wrong. So, uh, you know, so it's fine, right? Like let, let, it's fine, right? Let the score settle itself. For me, it is a tiny position. I typically keep it at about 1%. I don't add to it if it's above 1%. For me, it's chump insurance. If the thesis doesn't end up playing out in the next 15, 20, If the thesis doesn't end up playing out in the next 15, 20, then okay, whatever. But it's so asymmetric. That's my thesis. It's one of the most asymmetric assets you can possibly purchase.

And that has been true for now, basically since its inception. And if you think, so what? It has no utility. So what? It's all smoke and mirrors. Tell that to people in Argentina. Tell that to people in Turkey. See what they say.

It's funny how people are more receptive when they've seen, not necessarily even hyperinflation, just like double consistent, double digit inflation over years and decades, they tend to be quite receptive to something that's not controlled by their central bank or government. And especially in countries where there's not as much independence with the central bank, where the government can basically fire the central banker and tell them what to do. Those are the countries that tend to have even more trouble with their currency. Yeah. So in the last just five years, just five years, the Argentine peso has lost 90, 89.9. So a clean 90% against the world's currency, the US dollar. And Bitcoin compared to the Argentine peso

is absurd in terms of performance. So, you know, if you don't, if you don't think it matters, that's a very, you know, North American centric, or maybe Europe, you know, developed world view. And it's certainly, I'll leave it at this. There's no upside to shutting it down. There is a lot of upside to being open-minded to it and at least thinking about it. All right, let's move on to, do I have any more Bs? No, I got the Brookfield. I can go with BRP here. Okay, so BRP is-

Yeah, at this rate, we'll have to do three episodes. Yeah, maybe it'll be a part one, two, and three. BRP is the owner and manufacturer, distributor. Well, they use distributors, but the manufacturer of large, well-known recreational vehicle products and brands like Skidoo, Seadoo, Lynx, and Can-Am, I think as well. And so we're talking about ATVs, jet skis, snowmobiles. And their market share has gone from high teens to mid 30s, low 40s of the entire market of recreational vehicles. And they have tremendous brand power. And they've done exceptionally well. The metrics that I track are the power sports gross profit, which is CAGR at 16%, and shares outstanding, which has been

high single digits that they reduce the share count every single year. And so the stock's incredibly cheap. It's pretty much always cheap because it's a consumer discretionary stock. It doesn't get more consumer discretionary than this. Think of a more consumer discretionary stock. Hard well, it is, and they can buy back a lot of stock at like less, you know, single digits, low double digits next year's earnings, next year's free cash. And, you know, as a result, free cash flow per share, earnings per share has been wonderful for the business. And it's not a company that's shrinking, you know, it's actually been growing very effectively and growing their market share. And here's my hot take. I think for every mega winner, which this has been a nice winner for me, for every mega winner, you have to have some sort of differentiated opinion from the market. My opinion is that it's not that discretionary for

people who are in the top 2% of wealth globally who want to buy these regardless of the account like there's no recession for these people like you know well-off blue-collar workers and well-off well white-collar workers who are like their target market are doing great uh despite what you see online yeah that's fair don't have too much to add there. I'll go on to my next name, Canadian Natural Resources. This one is a bit trickier because obviously it's a commodity play. So it's going to be pretty reliant on that. So whether you're looking at free cash flow, it's going to depend a lot on the price of oil and natural gas. But the one thing I do like to look at is the return on invested capital.

But even that, I think when I look at it, I definitely have to compare it to its peers. And the reason for that is return on invested capital, it's dependent on your earnings. I think it's operating earnings, if I remember correctly, operating income, i that's uh looked at um and toll invested capital so it's very dependent on earnings and clearly their earnings will be dependent on the price of oil so i think about the formula yeah the formula no pat you're talking about for roic yeah yeah it's net net operating profit after tax okay yeah so i very similar yeah it was just the acronym but hear me out like yes they're they're similar it's similar to ebit an operating income but don't tell that to a cfa because no okay they you know all right roic the roic gods and no pat they don't mess around so

okay i'm gonna take this very seriously. Yeah. So the ROIC, the reason why I think it's really interesting to compare it is just because you'll see the ups and downs with the price of oil. So clearly they're going to get a better return on investment if they can get a higher margin because the prices of oil are higher and so on. But comparing it to another company, one of its peers like a Suncor I think is really interesting and not only them but you can compare it to a couple of their peers and just you know making sure that Canadian natural resources is still a tick above them and if they constantly have a better return on invested capital they're going to perform better than their peers. So that

is the metric that I focus on. Obviously, I keep an eye on free cash flow per share. But again, at the end of the day, it's going to be so dependent on the commodities prize that I think ROIC is a better KPI to look at here. Yeah, I love it. I will move us on. We're in C's right now, right? Okay, so I'll quickly go with there's nothing for me to track here, maybe other than interest rates with my cash position. I started tracking it for joint TCI subscribers because before, to be honest, if I had less than like 5,000 cash, I literally just would just leave it as cash in my brokerage account. Now I try to be a little bit more thoughtful when you can actually buy a money market ETF and get more than 5% on your money. And so it's worth the time now. It's worth tracking now. But as before, I couldn't say that and I wouldn't even include it as part of my portfolio.

It would just basically be like a float of cash that would either be moved into a position next month or something else. Whereas now I get it to work right away away even if it's just a few thousand bucks because why not got tired of uh of me talking about it and be like okay i'll shut him up i'll just uh you know put some money in there well for i mean for so long there was no point right like you know pareto principle it's like why even spend time on no out no outcome um but now there's an actual outcome um but moving on to Constellation Software, you know, I've talked about this bazillions of times, but then the metric that I'm tracking the most is acquisitions, you know, money that they're spending on acquiring companies.

This has caggered, comparing the growth rate over the last three years of 73%. So they are buying more companies. They bought like close to 150 on a trading 12 months. So they're buying more companies and they're deploying more capital because they've had a couple acquisitions in the last two years that are approaching the 1 billion mark, which are massive for them, massive acquisitions for them for a company that typically does small vertical market software acquisitions. So when they do like that empower Black Knight carve out with the ice deal, when ice was being bought by bought by Black Knight, they bought those mortgage origination software companies from that from Black Knight for close to a billion dollars. So that is like needle moving stuff for them. And they bought it on pennies on the dollar. And so just tracking that capital

outlay that they have for buying more companies, and they're doing it all with free cash flow, and some debt, some very low cost debt, but mostly with reinvesting cash, they are permanent owners of these companies. And so just tracking that is the most important because the bear case for this company over the last, since their existence, as the stock's 150 bagged, since their existence has been, how can they keep this up? And so it's a, it's a one graph, one metric business. It is a one, it is, how can they keep this up? Here is them keeping it up with proof with no signs of, of, of slowing. And so for me, it's a one chart business and it's a wonderful one to own that I have. I break every textbook in terms of, uh, you know, diversification, portfolio allocation, recommendations.

But it's soon to be 1,000 businesses inside of it. And so that's a lot different than owning one company with one thesis versus a conglomerate. I think that those cannot be looked at equally. Yeah. And honestly, you don't need to justify yourself. Like at the end of the day, you're, you know, you're confident in your position. You had conviction and that's all that matters. I mean, obviously my Bitcoin position is bigger than what a lot of people would have, but

I have conviction in it. And I think that's an important note for people who invest is just having conviction in your position. an important note for people who invest is just having conviction in your position. Obviously, the higher allocation, the more that you'll have risks tied to that just because it's one position if something does go wrong. But at the end of the day, you don't have any rules, you make your own rules as long as you're aware of the risk associated with that and you're comfortable with it. And you're not going to get wrecked if it doesn't go as planned yeah and like you know you can't think look at things in like a complete vacuum right like say you say someone say you're

mark leonard and we'll say that they own a thousand companies because we're getting pretty close to that now i'm working on the beard but it's not yeah it's not there yeah yeah it needs to be wider i think it's just salt and pepper apparently he's an absolute i've never met him in person apparently he's an absolute mammoth of a man people are saying like six six oh wow big south african i need a few more inches yeah he's just platforms yeah like tom cruise i think wears those sometimes in movies i need to i need to you know if someone knows tom cruise where he gets those i'll get them and go see mark leonard he is a short king but he's uh he's a legend say you're Mark Leonard, okay? You will say a thousand businesses for all intents and purposes. And say you own 100% of the business.

You own 100%. Would you go to sleep at night saying, I'm too concentrated? Right? Like that would be, it would be a ridiculous thing to say. Going to Mark Leonard and saying, dude, don't you think you need to diversify a little bit? He'd be like, you're right. I need to buy another a thousand probably is what he'd say but do you know do you know what i mean like that it's so ridiculous so you can't look at things in a vacuum like uh you know yeah it's like owning a berkshire right i think yeah it would be completely reasonable for someone in my view to just own berkshire that's 100 that's their whole portfolio

just because there's so much diversification obviously you're more concentrated in certain sectors but it's a bet on america basically it's like berkshire exactly yeah okay so now we'll move on because we're uh running a bit short on time here so canadian national railway which should have come before canadian national resources if i know, I remember my elementary school in terms of... But that's on the third word. So we'll let you get away with it. Yeah, yeah, exactly. So this one, pretty simple.

So freight revenues, you know, because they do get revenues, for example, from like gas surcharges. Total car loads. So this is a measure that shows how much volume is transported during a time period. So a quarter, for example. Ideally, you want to see these numbers increase. Car velocity, which is the average number of miles traveled by train during a day.

Ideally, again, you want this number to be steady or slightly increasing. There's just so much car velocity you can do, right? You can increase it, but there are kind of speed limitations at the end of the day. And then the last one, free cash flow per share, which has been just, it's been phenomenal. Like that's, I think this is the perfect company to show free cash flow per share because they just buy back a lot of shares. So share count goes down, they produce tons of cash flow, and you know, they won't be growing at a crazy pace, but the amount of capital returned to shareholders via dividends and share buybacks is just astounding. Obviously, you're not measuring the dividends here, but I think it does a good indication at least to show the amount of share buybacks that's being done and the amount of free cash flow per share. Just show that. That is a nice graph to look at. That is a really nice graph to look at. Up and to the right. All right, I will move on. I got two more. You got one more. I got Equinix

here. This is a real estate investment trust. Equinix is the largest owner and operator of data centers. So their customers is a wide range of technology companies, large fortune. They're NVIDIA buyers. Those are their customers. Exactly. Yeah, exactly. And so people are all hyped up on the data centers in terms of the chip designers. What about the companies that have to actually hold them in the data centers and own that real estate? Now, a lot of the hyperscalers will also use a combination of Equinox plus Equinox has hundreds of thousands of interconnections between their customers so that they can do business with each other faster. And that is a gigantic competitive advantage. So the two, the KPI that's like non-financial that I track is interconnections, which has a CAGR of the last three years at 10%, a little over 10%. And then

adjusted funds from operations has been over 6%. They have 74 consecutive quarters of revenue growth, which is the largest 74 or is it 70? It might be more now. It might be 76. Now I'd have to check, but mid seventies of sequential quarterly revenue growth. uh maybe not probably not sequential but year over year and that is the largest streak the longest streak of any s&p 500 company so uh fun fact yeah yeah i mean i i own it as well i forgot to add it to my alphabetical order i kind of was picking and choosing but that's that's all right i mean the same thing as you. I think it's a great way to play the AI hype without getting into it, I would say, kind of indirectly getting into the AI space. A lot of companies like NVIDIA, like we talked about, just have crazy valuations, but an indirect benefactor from that will undoubtedly be a company like Equinix.

So I think that's why I like it. Anything to add before I move on to my last one? Back where we were going to with the demand for ASML, for instance. The demand for data, they're actually really connected to the similar type of demand with tech. This is not a trend, you know, the cloud hyperscalers, interconnections, the demand need for data, the need for localized data centers in each of the regions that these companies operate in. That is not a trend that has, and like that train is just getting going. Like it, in the, like it already has so much legs it's already gone so far

but that that is not a train that is you know season end anytime soon and if things change then you you know you adjust and react but it is a it is a secular trend that will likely exist for our entire lifetimes which is not you can't say that about many things. Like it's very difficult to say that about many things. So these are the types of secular trends I want to be a part of. Yeah, no, well put. Now my last name here, one that I am actually wearing right now, two pieces, I'll let you guess the last piece. Hey brother, look, I got this. Yeah. Yeah. To make me take my pants the shirt i got the underwear going too there you go they're actually you know not to plug in lululemon or anything like that but

they make pretty nice men's underwear so lululemon so there's actually three main thing that i look at that's really interesting in my view first of all i I want to see like I look at the geographical revenue growth. So two things here, US revenue growth, and then outside of North America revenue growth, which includes, big breakthroughs in China. So that's increasing pretty rapidly, but also obviously, the rest of the world minus US and Canada. And you know, what people are seeing here is that that's growing very quickly. And then the other one is men's product revenue growth. So they've made a big push in the last, I would say, six, seven years for men's product. Like obviously, we're good examples because we're both wearing it. I think their products are fantastic quality.

They last a long time. Yes, they're not cheap, but I'm ready to I don't mind paying more if something is very comfortable, looks good and will last a long time. That's the way I approach things because I think I actually get better value on my clothes by doing that. So that's what I'm looking at. Then the last thing is free cash flow per share. That one has been a little less steady. I mean, mostly because they've had to build up their inventory because of the high demand for their products. So it's been a bit more of a roller coaster, but it is trending overall in the right direction. So, again, because it accounts for share dilution.

So I really it's a metric that I tend to look at pretty closely for those reasons yeah really well put i mean it's i was in the store the other day as as i do and i think you talked about this before but they're they're officially nike in terms of there is every type of brand fashion and then there's Nike, right? Like they're in a completely different category of brand value and stickiness. Like fashion is impossible to bet on. We've talked about this time and time again. And then there's Nike, which is not even in the same, like it's not even in the same discussion category and i think lululemon is there and if it's not yet it will be soon like in terms of staying power yeah they've stood the

test of time i mean i completely agree i think there's just maybe a handful of companies in fashion that are like that some luxury ones that have staying power but again the luxury ones it's always tricky because they tend to have less volume and you know Louis Vuitton probably owns like 85% of them anyways yeah so I think you know Lulu and Nike they're not cheap brands but they're not like I don't think they would be considered necessarily luxury they're kind of more in the middle they're kind of quality at a maybe you maybe a bit higher price point, but reachable for most people. That's kind of where I personally see them. But yeah, I mean, those are the main metrics I look at.

One to throw for those at home, one to throw on your watch list radar is Tokyo listed Fast Retailing Co., which has been a 10 bagger since the last 10 years. They are the owner of Uniqlo, which is a very popular fashion brand as well. It's basically like trying to look like Lulu clothes, at least the North American brands, North American stores are with respectable quality and a fraction of the price. So I actually really like Uniqlo. So one to watch there that is, what's the ticker? It is 9983 on. Yeah, Japanese listed. Yeah, the Japanese listed. 9983 Fast Retailing Co. Or is it Korean? Korean or Japanese? No, Japanese. Not Korean, add those weird numbers. Okay. Yeah. No,? Korean or Japanese? No, Japanese. How Korean add those weird numbers? Okay.

Yeah. No, the Tokyo does too. Okay. Okay. Yeah. 9983. Fast Retailing Co. What's your last one here?

My last one. You're like, dude, I got to go. Yeah. I have to go daycare pickups. Daycare. Okay. Let me just drag this off for another five. No, I'm just kidding.

I'm going to throw in Lumine Group and Topicus Output Constellation. Same thing, same story. They're the spinoffs. Last one is Equitable Group, the Canadian financial company, which also owns our beautiful friends, EQ Bank. And I was a shareholder long before they knocked on our door to sponsor the podcast. Shout out EQ Bank. They break out EQ Bank customers, which is awesome. EQ Bank or Equitable Group stock has been the best performing North American bank in the last 10 years. Fun fact. EQ Bank customers has caggered by 40% and total assets under management of all of Equitable Group, which does a lot of mortgages and stuff as well, has total assets under management has grown 25% companion annual growth rate over the last three years. So very well done, very innovative. I like companies that make something out of nothing.

And I think that that's kind of like entrepreneurship inside of these large companies. That's what I think of with EQ Bank. And it has, like I said, it's been the number one best performing bank in North America. So I own that stock as well. Thank you for listening. We have gone through half. This is part one. Next week, you and I are going to record. We're going to sit down. We're going to do this all over again. We have the same amount of companies basically each to go through and what we're thinking about. So make sure you tune in. Not only, I guess it'd just be one more.

We don't need a third one. Do we smell? Probably not. No, I think we, yeah, we'll, we should be okay.

So part two will be out a week from now. As long as I'm done for daycare. As long as you make it for daycare, we are a okay. So again, if you want to see this broken out by weightings, our beautiful faces and support the show, go to join DCI.com and you'll see it all there. We'll see in a few days.

Take care. Bye-bye. The Canadian Investor Podcast should not be taken as investment or financial advice. Brayden and Simone may own securities or assets mentioned on this podcast. Always make sure to do your own research and due diligence before making investment or financial decisions.