The Canadian Investor - Two Stocks We Added to Our Watchlist

Episode Date: June 3, 2024

In this episode of The Canadian Investor Podcast, we finish the list of sector-specific ETFs with 14 more ETFs for exposure in industrials, consumer staples, energy, materials, utilities and real estate. We then talk about two stocks that are on our watchlist. Braden goes over why Live Nation is currently on his watchlist amidst the lawsuit brought by the US Department of Justice. Simon then goes over why Savaria Corporation, a small cap Canadian company is currently on his watchlist Stats Canada - Age of Disability Study Stats Canada - Canadian population by age Ticker of stocks & ETF discussed: SIS.TO, LYV, ZIN.TO, EXI, VDC, STPL.TO, ST.TO, HXE.TO, ZEO.TO, VDE, XMA.TO, VAW, ZUT.TO, VPU, VRE.TO, USRT 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 Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Sign up for Finchat.io for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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 into the show. My name is Brayden Dennis, as always joined by the unequivocal Simon Belanger. You're going to round out the rest of your list of ETFs for sector-specific exposure.

And then we're getting right to the gold. The recurring segment brought to you by our friends at EQ Bank. Stocks on our watch list. We like to do this every couple weeks. Things that we're looking at, stones we're turning over. You have a smaller Canadian name, and I have a company that is in the news for the wrong reasons. So I think there's lots of good content there. Yeah, definitely.

I'm pretty excited. And I mean, the sector ETF, something it took me. It's funny because sometimes I'll have these ideas. I'm like, oh, this will be easy to do. And then it ends up being way longer than I expected. But I enjoy doing it. So it's still fun, too. As soon as you have a full-on spreadsheet i'm looking at what you made here like this is people people are asking for it on the patreon on join tci.com shout out plug to the to the patreon

i think you posted it there as well so people can just see the exact tickers what they cover what the holdings are all that stuff yeah exactly so for patreon so join tci.com we try to post the videos a day or two early it's just depending on when our editor is able to post them and upload them there and then people saw that this episode was coming out this last monday in advance so they asked me for if i could share the spreadsheet and said oh definitely let me finish it because we'll be doing the second part this week. And I've seen a lot of people go on it and have a look. So I think they're appreciating that for sure. So with that said, for those who are listening and didn't listen last week, make sure you catch the previous episode because I start off with the first five sectors and now the sectors we discussed last week

were information technology, financials, health care, consumer discretionary, and communication services. And now I'll start off with industrials. So industrial, the first one I have is a Canadian listed one, ZIN, that's the BMO Equal Weight Industrials ETF. This one has 0.62% fees. And the top holdings are Algoma, Badger Infrastructure, Stantec, Parkland Corporation, and Brookfield Business Corp. The top five holdings are 15.4%. This is an interesting one because it's actually a Canadian industrial ETF. So if you're really looking for something that has more Canadian take on it, that would be an interesting one. Again, the fees are not low, but these, like I

mentioned the last time, a lot of the time, depending if you're looking for diversification or not, what you'll find with these sectoral ETFs is that there's going to be trade-offs, right? A lot of these, you're going to have to trade off fees versus something else you're interested in, whether it's hedging or less concentration. The second one is EXI. So that's the iShare S&P Global Industrial ETF, 0.42%. And then you have more US, well, you have US names here. So GE, Aerospace, Caterpillar, Well, you have U.S. names here. So GE, Aerospace, Caterpillar, Siemens, Union Pacifics, and RTX Corp. And the top holdings are 11.24%. So pretty evenly weighted as well.

So I definitely like these a bit more in terms of weighting. Where last that we talked, remember, there were some that were like 50%, 60% in the top five holdings. Yeah, that's right. A little bit different here, a little top five holdings. Yeah, that's right. A little bit different here, a little bit more diversified. Yeah, exactly. And you're talking about names here. If you're thinking about the S&P 500, the sectors we're looking at that are underweight in the S&P 500,

a little different in Canada. Energy will be coming up soon here. Obviously, energy is pretty heavily weighted if you're investing in the Canadian market. But the next one here is consumer staples. The first one in the U.S. listed. So VDC, that's the Vanguard Consumer Staples ETF. 0.1% fees, so 10 basis points.

The names here are Procter & Gamble, Costco, Walmart, Coca-Cola, Pepsi. 45% the top five holdings, so pretty heavily weighted. There's also a Blackrock listed one here with similar holdings, but the Vanguard is much lower fees, so to me that's kind of a no-brainer. The next two are Canadian listed, so the first one is BMO Global Consumer Staples, Canadian Hedge, 0.40% fees, and then similar names as the previous one, but just Canadian Hedge, 0.40% fees, and then similar names as the previous one, but just Canadian Hedge. So Procter Gamble, Nestle, Pepsi, Coca-Cola, Philip Morris, and then the top holdings here a bit more evenly distributed at 36%. And then there's XST, again listed in Canada, the iShares S&P TSX cap consumer stable. So if you're looking for Canadian names, this would be it.

However, the fees are pretty high at 0.61%. It's very heavily weighted. The top names are 81% or 82% if I round up. And the top five names are Loblaws, Alimentation Couchetard, Metro, George Weston, Saputo. So this one, I mean, I wanted to give a more Canadian flavor, but super concentrated. Yeah. As soon as, I mean, in the last one with the industrials and with the consumer staples,

as soon as you go into the Canadian only one, there just isn't that many companies that will fit the bill. Exactly. Yeah. If it's market cap weighted, you get something like Loblaws. Loblaws and Couchetard are massive companies. They just are compared to what are the other options that are publicly traded on the TSX. It's just not that many of them. But so far, one generic comment here, you've touched on industrials and consumer staples. This is when your spreadsheet and this segment

is actually really useful all of a sudden. Because I think I was pretty critical last week of just all of those, what I'll call sectors, air quotes here, are just replicas of the S&P 500 with higher fees. Yeah. Right? Because you have these companies

that are worth trillions of dollars, are so diversified now, they can just throw them into any bucket. But you can't really throw them into industrials and you can't really throw them into energy, at least in the way that they characterize them. So this is when these actually become really useful. No, exactly. So I think it was a fun exercise to do. know, I think it's a it was a fun exercise to do. And the one thing I'll add here for George, the Canadian one is I'm pretty sure George Weston owns like a controlling share into Loblaws, right? So it's correct. Yeah. So it's even more so concentrated. So I find it like

you said, it's a bit funny. But again, I think it's still a fun exercise to do. It's still an option for people to want to diversify, depending if you're looking more, you know, you're more heavily invested in Canada, then maybe last week's episode, we'll have more ideas because then it'll be probably that those sectors you want to diversify a bit more. And then the opposite is kind of true right now. If you're more heavily invested in the US or the S&P 500, the sectors we're talking about probably make a bit more sense because they're underweight or the S&P 500, the sectors we're talking about probably make a

bit more sense because they're underweight, the S&P 500. I'm surprised Empire isn't also high. I think it's just the next one. Yeah, I think it's number six. I think it just missed the cut, if I remember correctly. But no, they're pretty close behind. So the next one here, energy. So I'm looking at the first one listed in Toronto or in Canada, HXE, the Global XSNPTXX Capped Energy Index ETF. This one, 27 points basis point in fees. And then you have the top names. You have Canadian Natural Resources, Synovus Energy, Imperial Oil, Meg Energy, and Whitecap Resources. And the top five names are 47% in weighting. Obviously, Canada is pretty well served when it comes to that. So I think you can definitely, my view is that, you

know, if you're interested in just, you know, looking in Canada for these type of companies, you'll have some pretty interesting names. Obviously, there are some big ones in the U.S. too. The second one is ZEO, the BMO Equal Weight Oil and Gas ETF. 61 basis point in terms of fees. And the names are Suncor, Synovus, Termaline, Imperial Oil, Canadian Natural Resources. Again, it's relatively equal weighted. It's never exact. And the total here is 47% for the top names. There's not that many

names in it. So keep that in mind. That's why it's so heavily weighted here. But if you go down the list, I mean, the weightings are very similar. And then the next one is VDE, the Vanguard Energy ETF. 10 basis points for fee, so extremely low fee. So you have the big US companies here. So ExxonMobil, Chevron, ConocoPhillips, EOG Resources. And then the last one is Marathon Petroleum. And the percentage for the top five holding is 51% here. Anything you want to add before I go to

the next sector? No, everything looks pretty standard there. 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-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 not so long ago, self-directed investors caught wind of the power of low-cost index investing. Once just a secret for the personal finance gurus is now common knowledge for Canadians. And we are better for it. When BMO ETFs reached out to work with the podcast, I honestly was not prepared for what I was about to see. Because the lineup of ETFs has everything I was looking for. Low fees, an incredibly robust suite, and truly something for every investor. And here we are with this iconic Canadian brand in the asset management world, while folks online are regularly discussing and buying ETF tickers from asset managers in the US.

Let's just look at ZEQT, for example, the BMO All Equity ETF. One single ETF, you get globally diversified equities. So easy way for Canadians to get global stock exposure with one ticker. Keeps it simple yet incredibly low cost and effective. Very impressed with what BMO has built in their ETF business. And if you are an index investor and haven't checked out their listings, I highly recommend it. I bet you'll be as pleasantly surprised as I was that BMO, the Canadian bank is delivering these amazing ETF products. Please check out the link in the description of today's episode for full disclaimers and more information.

So the next one here is materials. This one was really interesting. So there's two names. The first one is XME. I'll explain why it was interesting. So the iShare S&P TSX cap materials ETF, 60, 0.61 fees or 61 basis point. And you have some pretty well-known companies if people are investing in kind of more mining companies. So Agnico eagle mines

barra gold nutrient wheaton precious metals and franco nevada the last two are actually metal are mining streaming companies and the top holdings here represent 50 well 49 percent higher fees but it does have uh definitely the can exposure component. The next one is VAW, so the Vanguard Materials ETF. And this one is interesting when you compare it to the previous one. So it's 10 basis point fee, so very low fee. But this is where it comes in to look at the actual names to figure out what kind of exposure you're looking for, because you have the names here that are Lind, Sherwin-Williams, Freeport-McMoran, Ecolab, Air Products and Chemicals. And the top names are 36.5%. And the different type, it's definitely a different type of material exposure versus the XMA,

the previous one. The previous one obviously was more focus, where this one is more of a material, but kind of process materials, industrial material focus. So that's I think that's just an interesting thing for people to keep in mind is these are two like air quotes material ETFs. But the type of companies that they have are very different. Yeah, it's like, do you want a gold miner or sherwin williams paint exactly so you you kind of have the base material versus the more processed material if that's kind of a way to to put it i actually really like the companies in that the vanguard one yeah yeah i yeah i mean it's it's just yeah it's just funny, that they're both materials ETF. Yeah, and I'm not a big pure play commodities guy, but something like Sherwin-Williams,

Lindy, Ecolab, Air Products and Chemicals, those are really high quality, pretty high moat, well-established brands, really good businesses. And they've been terrific stocks through the years as well. Yeah, definitely. Now, the next one, next sector on the list, second to last one. So utilities. So, you know, income investors, that's definitely probably your playground here. The first one is ZUT. So the BMO Equal Weight Utilities Index, 0.61% in fees. So pretty well-known name. So so BEP so Brookfield Renewable Partners Boralex Atco Alta Gas Algonquin the top five old things are 37.5 percent higher fees but the fact that it's equal weighted plus Canadian exposure may be enticing to some people again to me it all comes

down with trade-offs a lot of the time for fees versus what else you're putting more emphasis on. The second one is VPU, so the Vanguard Utilities ETF listed in the U.S. Again, pretty consistent with Vanguard, 0.10% fees, so 10 basis point. You have NextEra, Southern Co., Duke Energy, Consolation Energy, American Electric Power, and the top five names are 35%. So XLU is another solid option with almost identical fees, but slightly different weightings and names. So something people could be checking out here. And then the last one is the real estate sector.

Clearly, real estate has been reeling quite a bit with higher rates. The first one is VRE listed in Canada. So that's the Vanguard FTSE Canadian Cap Reit ETF, 0.39% fees. So you have first service Canadian apartment properties, Rio Can, Colliers International and Granite Real Estate or Granite Reit and 49% for the top five names. And then the US one, I think to me makes a whole lot more sense because there's more name, it's better diversified. So it's USRT, the iShares Core US REIT ETF, eight basis point for fees, so extremely low. So you have Prologis, Equinix, Welltower, Simon Property Group, and Digital Realty.

And the top names are 31%. So that wraps up all these sectoral ETF. Anything you wanted to have for the last two utilities and real estate? No, just that some of the fees on these Canadian ones are far too high. I couldn't imagine myself paying 61 basis points to own a collection of Canadian utilities. I don't know how that... I could never justify such a thing. Yeah. And the problem, there's not that many Canadian kind of focus ones when you get into sectoral ETF. You also have the fact that oftentimes you're looking at just a handful

of companies or not that many companies. But again, for the Canadian Investor Podcast, I wanted to provide at least a Canadian option. And one of the things that I've noticed is that there seems to be an offering or there must be demand for it. But there's a lot of hedging, right? A lot of CAD hedge ETFs. And whenever you see that, which is fine, if you want something that's hedge, that's completely fine, but you pay for that. So those come with higher fees. And based on what we've talked about before on the podcast,

they tend to underperform as well compared to the non-hedge version. Yeah. The more niche you get, the more it turns into a product. And the more niche you get and the thinner the market, there's going to be less ETF providers, aka less competition, aka higher fees. This is the same as any other type of product that exists in the world. And this is a financial product. And some of them are fantastic. It's the ability for you to own hundreds of high quality businesses for next to no fees with some of these really, really broad index ETFs is an amazing creation for the everyday person. I'm very grateful that they exist.

Yeah, exactly. And I think this also highlights the US market being so big, right? The US stock market, whereas even the sectorial ETFs tend to have relatively lower fees because there's more competition, but there's also so many more names, even in those sectors where in Canada, you know, it's definitely more limited. Let's move on to stocks on our watch list presented by our friends at EQ Bank. We have two names here. I will kick us off. I just learned that you and Dan talked about this company recently on...

We just did, yeah. You're like, yeah, it was 20 minutes ago. So I'll be tuning into that segment as well. And that company in the news and the stock on my watch list today is Live Nation. Just to recap the whole idea of stocks on our watch list, it is not stocks that we own. It is not stocks that we necessarily are even pitching we might like them we might find them interesting we might find them to be a trap but they are on our watch list for one way or another whether there's a new development the company has gotten better

or worse so the valuation has increased or decreased So none of it is meant to be advice and meant to just highlight our process on thinking of new ideas and turning over new rocks. So the interesting news that has developed on Live Nation, it will get into, and it's not a business I'm jumping to get a piece of, but I'm really interested in tracking to see how this shakes out. So Live Nation is a company that not every single person, if you ask a hundred people on the street will know, but all 100 of them I can say with confidence will probably know their subsidiary Ticketmaster. And Ticketmaster has become, Simone, the easiest company to hate. Oh, yeah. I can think of very few companies that consumers have had such a sour taste in their mouth. Very few companies have reached that level like Ticketmaster. And I have personally found concert tickets to be in a

completely absurd market as of late. Generally, the ticketing business is broken. I've been saying that for a long time. I think the ticketing business is broken. I think it's a bad deal for artists. I think it's a bad deal for consumers. And it's not even that good of a deal for Ticketmaster. And I'm going to go into why that is and how we've got here. But it's not working really for anyone is my general sense of the ticketing market. And I think Ticketmaster deserves some of the blame, but not all of it. And I'm going to discuss the situation, also the counter argument and general solution that I think might make sense to move forward. So if you're buying a ticket to any mediums or large stadium sized event,

major venues, major sports leagues, huge record label type tours, they're going to be using Ticketmaster. Through ownership or exclusive Live Nation agreements, Ticketmaster's real edge is their relationship with venues and leagues, like the MLB, for example, Major League Baseball. You go to a Blue Jays game, you're buying on Ticketmaster. And for some context, estimated number of fans from Live Nation's filings, which we compiled directly on FinChat, which I've pulled up here. The number of fans has gone from around 50 million gone to events under the Live Nation portfolio up to the last 12 months at 150 million. They ended 2023 at 146 million, trailing 12 months at 150 million.

I think they saw like 20% top line growth quarter of a quarter, sorry, year over year on their latest quarter. And this translates to in revenue across their concerts segment, the ticketing segment and the sponsorship and advertising segment to around five and a half billion to around 23 and a half billion during that same timeframe from 2012 to the trailing 12 months as of the last four quarters. And so the largest segment of the business by far is that concerts revenue. So that did around almost $19 billion on the top line in 2023. So that's the business, right? And there are very complex ties to the venues, the artists, the sports leagues, Ticketmaster themselves, and then of course, the Holden Co. Live Nation. So Simon, before I get into an overview of the lawsuit,

any quick thoughts on the ticket, the ticketing business, the world of tickets today and maybe Live Nation? Yeah, I mean, I've used Ticketmaster services like probably most people listening to this episode. And if there's one area where you make purchase and you feel like you're getting slightly ripped off, it's like people and people may not fully know why or understand why, but you see these additional fees or you check out and you think you're going to pay $200 and then your final bill is what, like $350 with all the additional fees. And I think that's especially right now, right, with high inflation, I think right now is probably where it's coming up to light, where people want to still enjoy these kind of concert or going in person, these experiences.

But, you know, the fees are just so high and it's definitely coming in the spotlight. And, you know, I went over in the previous episode what the Department of Justice is alleging, but I feel like a lot of people will be sympathetic to the lawsuit. I'll just say that. Oh, yeah, totally. And this segment is not for me to be a live nation apologist, but to look at the business in its current state, look at the raw facts about the business, and potentially some solutions here that I can armchair quarterback here.

I won't go too much into the details because it looks like you guys discussed that next episode on the actual lawsuit, but I'll break down here just a really quick summary of it so far, which is the quote here from the Department of Justice website, Live Nation, Ticketmaster, exclusionary conduct and dominance across the live concert ecosystem harms fans, innovation, artists, and venues. The DOJ, along with 30 state and district attorney, filed a lawsuit against Live Nation and its wholly owned subsidiary, Ticketmaster. The complaint filed today, quote, ticket master. The complaint filed today, quote, alleges that Live Nation ticket master unlawfully exercises his monopoly power in violation of section two of the Sherman Act. As a result of this conduct, music fans in the United States are deprived of ticketing innovation and forced to use

outdated technology while paying more for tickets than fans in other countries. Now, there's a lot to unpack there, right? And they've basically gone and said, you know, the fees are no good. Fans are getting harmed. Their technology sucks. And maybe it does. I mean, this is legacy tech now. Ticketmaster has been around for a long, long time. And all these startups have been trying to innovate and build ticketing solutions, but it's just like so antiquated at this point, right? And they do have those competitive advantages. And people building tech today in the ticketing business probably are saying these exact things like their tech is garbage. You know, it was built 30 years ago

and it's it's not robust and i think that a lot of that came to light when you have like millions of of fans of taylor swift last year trying to buy tickets of the eras tour and ticket masters couldn't handle the volume um and so is it perfect no No, absolutely not. Is the technology outdated? I don't know, but probably. Do fans feel like they're getting ripped off? Yes, absolutely yes. And so the stock only fell 8% on the news, which might sound like a lot, but for a DOJ breakup, an antitrust lawsuit filed in my view, that doesn't seem like much. Because it says, quote, at the end of this statement from the DOJ, quote, it is time to break up Live Nation Ticketmaster. So they're pretty clear with their words there,

right? To me, this is the market saying, yeah, one, we already knew about this. Two, what are you going to do about it? And three, they already mentioned that they're going to open up this investigation in 2023. So it's not necessarily shocking news. So that's the lawsuit as of today. There's a lot to unpack. Live Nation has responded with a public press release. You can go read the entire complaint filed by the doj by just googling it real quick and you

know it's it's actually fairly easy to understand it's not using too much legalese so you can you can dig more into it they have like point form and that's what i went over with dan so kind of the point form and the one thing i'll add to is i mean they say the u.s compared to other countries i'm not sure if they looked at canada because i don't think it's that much better than the U.S. compared to other countries. I'm not sure if they looked at Canada because I don't think it's that much better than the U.S. when it comes to that. So I think they're probably picking and choosing. And the last thing I'll say is it does feel like this is politically motivated because it's a way for the administration, the Biden administration, to show that they're trying to, you know, target corporations that are taking advantage of consumers. So and that's one point I made is I think we might see more actions like this leading up to

the election so that they can say, look, we're doing something about this, whether you agree or not with, you know, what they're doing. That's fine. That's what I'm saying. But, you know, when there's where there's smoke, there's fire. Right. So and that's what I'm saying, but, you know, where there's smoke, there's fire, right? So, and that's what I mentioned. I would not be surprised to see a few more actions similar to this targeting other kinds of corporation before the November election. Yeah, it's like in Canada, you know, picking a villain. Those have been, you know, Galen Weston and the grocery store company, like the grocery conglomerate chains,

like easy targets, consumers generally are upset. Consumers know that something's not right and needs to be broken. And it's an opportunity, as you mentioned, yeah, to show that, hey, we're doing something. And so easy targets. So the rest of my segment here is to establish two things here. One is Live Nation an opportunity here? And two, are they a regulatory scapegoat? Those are the two things I want to try to unpack here in the segment. So let's look at the counter argument. The financial, I look at a lot of monopolies. It's one of my favorite investing styles is to look at monopolies and try to own pieces of them. It's no secret that that's one of my investing philosophies here with public markets because they exist. Let's not kid ourselves. The margin profile of Live Nation sure does not look monopolistic. I have here on the screen, Siwon, the gross margins, the EBITDA margins, operating

margins, pre-tax margins, net margins, and free cashflow margins from FinChat of Live Nation. Does this look like a monopoly to you? Because to me, it sure does not. It looks like Walmart's margins, actually, almost identically. Yeah, you could probably make a case that they're not great margins. They could potentially be better, though, if they innovated more, right? And they may be complacent because they have this monopoly in place and there's not that competition pushing them to be better. So that's definitely a counter argument that could be said here saying, well, yeah, they're not that great, but they're good enough and they probably

don't want to change anything because it's working pretty well for them. On the bottom line, I think for sure. I do wonder on the gross margin though, at 23%, like the fees that are coming, the management team has come out and said, we take the blame a lot for the fee structure because in our fee comes everyone else's fee. So they're saying our take rate on the fee is way lower than almost every other marketplace that exists out there that people are using today in terms of digital marketplaces. And so to that point, I say, okay, sure. I also say you guys are idiots for hiding all that fee under your own name while every other person just goes in there.

I mean, if I was them, I would have broken those fees out by each vendor a long, long time ago so that you don't look like a bad guy. But hey, that's just what I would do. So the margins certainly don't look like a monopoly. Okay, sure, there's points to be made both sides there. Okay. Live Nation wrote a press piece and I highlighted one segment here of it. Quote,

the complaint and even more so the press conference announcing it, attempt to portray Live Nation and Ticketmaster as the cause of fan frustration with the live entertainment industry. Despite admitting that the face values of tickets are typically set or approved by artists, it blames concert promoters and ticketing companies, neither of which control prices for high ticket prices. It ignores everything that is actually responsible for higher ticket prices, from rising production costs, artist popularity, to the 24-7 online ticket scalping that reveals the public's willingness to pay far more than primary ticket prices. It blames Live Nation and Ticketmaster for high service charges and just the fact that there are fees, but ignores that Ticketmaster retains only a modest portion of those fees. In fact, primary ticketing is one of the least expensive digital distributions in the economy. And they went on to show a bunch of different marketplaces from Airbnb to ride sharing with Uber to Amazon's Twitch, the video game streaming company.

So it showed other things in the space there. So to me, this person's at fault, that person's at fault. He said, she said, it's broken and it's not working. Tickets for large venues, regardless of who the distributors are, is completely broken. And the same has happened with other competitors of Live Nation. They have a lot of market share and they might be monopolistic in some of their practices, but they do have competition. SeatGeek won a big deal with the Barclays Center and they showed that after the fees actually went up on primary and reseller after switching services. So, okay, that shows one little argument for them.

I despise the ticket game. I mean, you always feel bad, right? Like you highlighted this. When do you buy a ticket and think, that felt great? You know, you're like, very rarely does that happen because you thought you were paying X amount and you ended up paying 10X of the amount. You went to go buy $40 tickets for your favorite band and they ended up at 350 at checkout. Or you know that they were bought for $40 by the scalper or someone who was on the site right on

the first second to midnight and you paid $350 after paying the reseller upcharge. And so you end up paying some of those fees, especially post-pandemic. You go, I haven't seen any concerts or artists in my favorite bands coming to town you're like okay i'm gonna i can justify the cost a large artist the taylor swifts the bad bunnies the in-demand hockey game the toronto maple leafs the tickets are immediately scooped up and sold back on the platform that they were purchased on it's completely goofy So I think the DOJ has the right direction, but the wrong target in terms of they are certainly part of the blame, but they need to fix the rules in which they operate, in my mind. If it's them or someone else who operates them, generally, whoever distributes

tickets, you have a 24-7 scalper market that needs addressing immediately, in my view. Now, they've had their issues, especially with the Taylor Swift Erez Tour. Bad publicity didn't help. So, to round this out, I am not a Live Nation apologist. I have no horse in this race, no shares in the company. Really, as a consumer, I just want to see some change here. But this doesn't feel like the right angle. If they're going to break apart Live Nation and Ticketmaster and break their venue agreements, another distributor will come in and do the same thing.

Right? The incentives are built where I sell 100 tickets, 50 scalpers come on, all 100 tickets, 50 scalpers come on, and I'm pretending to try to hold them out from the door, but it's really good for me if they do, because then they're going to give me more transactions on there. There's no incentive for anyone, whether it's Live Nation or a competitor who comes down the road to do anything different. So I'm watching this via my watch list. I think the business is very high quality. They obviously have competitive advantages with the venues, leagues, and artists. You just have to wonder if the current regime is going to make an example out of them or just continue to tell everyone what they already know, which is it's broken. Yeah. Yeah. I mean, I don't know which way it's going to go. I think, like I said with Dan,

I think it's just going to be interesting to follow where it leads up to and just the consequences it could have, not only on this industry, but other industries, right? in the crosshair of DOJ is definitely big tech. Like, I don't think it's any secret. And I think we've been hearing some rumblings for years now that, you know, big tech should be broken up. It's getting too big. I would not be surprised if there's a similar kind of action against a Google, for example, in the next couple of years, because it is easy political points. Even if it doesn't amount to much, they can point to that and say, look, we know you're paying high fees. These guys are getting too big. Here's what we're trying to do about it.

Yeah, the problem with breaking up big tech is all the lawmakers seem to have big tech in their US retirement 401k plans. It's so weird in the US how that works. They literally do legislation and they own all the stocks that they do legislation on. It is ass backwards. Is it ever? So yeah, you and I, I mean, you and Dan will keep following the story. I'm going to keep following it from the business.

Look, at the end of the day here, I have my opinions about the ticket game, but I'm an investor and I'm here to objectively try to buy underpriced assets, look for opportunities of companies that are unfavored and unloved by the public that are economic powerhouses. So I'm not going to lie about what I'm looking for here. That's what I am looking for here. Whether I like it or agree with the you know how the ticket business works is is really just not a knot it's not gonna be changed by me so I'm just looking for maybe opportunity and that's to be seen yeah and I guess the last thing I'll say here is like I mentioned with Dan is you know we try not to get political or

anything like that but the reality is politics does have influence on definitely certain types of business when it comes to regulations, because they're the ones that vote these laws in. And we think about we talk about railways and the regulatory mode that they have. I mean, obviously, these have been in place for decades, if not, you know, almost a century. But the reality is some kind of businesses, it will have a big impact. We're just trying to kind of give our perspective on it, not taking sides or anything, but just wanted to clarify 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.

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 not so long ago, self-directed investors caught wind of the power of low-cost index investing. Once just a secret for the personal finance gurus is now common knowledge for Canadians. And we are better for it. When BMO ETFs reached out to work with the podcast, I honestly was not prepared for what I was about to see because the lineup of ETFs has everything I was looking for. Low fees, an incredibly robust suite, and truly something for every investor. And here we are with this iconic Canadian brand in the asset management world, while folks online are regularly discussing and buying ETF tickers from asset managers in the US. Let's just look at ZEQT, for example, the BMO All equity ETF, one single ETF, you get globally diversified equities.

So easy way for Canadians to get global stock exposure with one ticker. Keeps it simple yet incredibly low cost and effective. Very impressed with what BMO has built in their ETF business. And if you are an index investor and haven't checked out their listings, I highly recommend it. I bet you'll be as pleasantly surprised as I was that BMO, the Canadian bank is delivering these amazing ETF products. Please check out the link in the description of today's episode for full disclaimers and more information. All right, what do you got on the docket here yeah so this one i think you may have talked about this company before once on the podcast so it's called savaria corporation ticker sis.to and the way i got inspired or reminded of this company is i just i didn't want to do a screener although finchat.io has great screeners, but I wanted for people to just give

me some ideas. So I said, give me some ideas that fit into this criteria. Under 2 billion market cap, sales growth of at least 5%, profitable both on a net income and free cash flow basis, and bonus points if it's Canadians. And I asked people to give me the ticker and a brief description of the business. I got some great names, some more that I'll be digging into. Some, you know, didn't fully meet the criteria, but that's okay. And I think Severia probably doesn't meet the sales growth criteria, but it still piqued my interest because I think there's some interesting tailwinds going on here. So Severia specializes in, and actually the inspiration was from Danny on Twitter. So Danny Gallo, so big props to Danny for responding and

giving me that idea. Severia specializes in the design, manufacturing, distribution of accessibility equipment and products. It's a pretty small company at 1.25 billion market cap listed on the TSX. So it is a Canadian company. They manufacture a range of lifts, including wheelchair lifts, stair lifts, and vertical platform lifts. The company also produces home elevators. These elevators are often customized to fit the specific needs and aesthetics preferences of homeowners that require them. They also offer elevators for commercial buildings, including low-rise and mid-ride structures. They are designed to meet the accessibility requirements of public and commercial spaces. They provide vehicle lifts

and modifications that enable people with disabilities to enter, exist, and drive vehicles independently. And they also offer a variety of patient handling equipment as well as other accessibility products. And what makes Severia interesting as a growth play in the future is our aging population, which I don't think I'm breaking that to anyone that knows a little bit about demographic, our population, especially with baby boomers getting older, is getting older. And the reality is that, you know, as you get older, the probability that you're going to start having some mobility issues increase. And I found a paper by Stats Canada, and I will add it in the show note, that was from 2021 on the age of

disability from onset to limitation. And I found the data quite interesting since they break it down by type of disability. And some are much younger than I expected. If you're thinking about mental health or even vision or hearing disability. I think those just, you know, going on memory, I think they tend to start in the late 20s on average to in your 30s. So that was something I wasn't really expecting. But according to this paper, and don't at me because I just took the information and I wanted to make sure I had that because so people didn't, you know, say, well, you know, I'm 65 and I'm super mobile. Like I know plenty of people in their 60s, 70s and even older that are super active that are probably more mobile than I am because of my back issues.

So this is just the data that I found in this paper. But the average onset of mobility disability was 53 years of age. Now, according to Stats Canada, again, from 2019 to 2023, the population age 50 or older increased 6.1% from 14.3 million to 15.2 million. The reason I took age 50 is just because the brackets that they were giving, the closest one was the H50 bracket. So I took that one. But of course, it is showing that obviously we have an aging population and it could be a big tailwind for a company like Savaria Corporation. So before I talk a bit about the financials, anything you wanted to add here? about the financials. Anything you wanted to add here? This is a stock I have looked at,

gotten interested in every few years for a long, long time. Never pulled the trigger. There's always been something that I've just never really been comfortable with. Kind of its growth beyond its current market. And it's been a decent compounder. I haven't looked at the stock as of late. I think it's gone up around the market during that time, maybe a little better than that. I mean, they are certainly riding the tailwind of an aging population.

I see, you know, where I see their product a lot is the product that you put on the back of like cabs or vehicles that need to move people for accessibility. I see them quite a bit. And, you know, really cool company, like what they're doing, like it's kind of like a feel good company, right? Like providing people with more accessibility, people who are disabled, they get these lifts and modifications to help them get in and out of vehicles or up the stairs or these kinds of things. So it is really cool. I haven't looked at it in a while. So I'm just kind of all ears on a recap of their financials here.

And then we can go from there. Yeah, I mean, it is definitely a quick recap because it's our stock on the radar. So I didn't want to do a deep dive. I just wanted to bring some context as to why I think it's an interesting play. Again, just stock on a radar here. But here's a few things that are interesting. So revenues have increased at a compound annual growth rate, so CAGR, of 24% since 2018, although it has been plateauing a little bit in recent years. Last year, revenue

increased 6%. So that was a bit of slowdown there. But again, I think if you have a mindset of a bit more longer term, this could definitely be an interesting play. Net income has increased at a CAGR of 16% since 2018 and increased 7% last year. Free cash flow has increased at a CAGR of 32% since 2018, but was down 14% last year. And free cash flow per share has been trending quite nicely as well. It's kind of up, slightly down, up, slightly down, up, and increases more than down. And that free cash flow per share has increased at a growth rate of 21% over the last five years. And for a dividend investor, they pay a quarterly dividend that is currently yielding just shy of 3%. And free cash flow more than covers the dividend with the ratio typically being around 40 to 50%. Obviously, it'll vary

a little bit depending on the free cash flow for the year. So there is a lot of interesting things. I just started kind of looking at it a bit more. I wasn't meant to be a deep dive or anything like that. I would need to learn a bit more on the business, have a closer look at their margins, if they've had kind of price pressures as well, if they were able to pass that on to consumers. I think one of the things that I need to look into as well is I'm sure a lot of revenues are, they come indirectly from consumers. So they'll be paid by insurance companies or WSIB. So workplace, I can't remember the full name, but the workplace insurance board, workplace safety insurance board and things like that. So that's something as well to dig into, but definitely an interesting name,

at least on the possible tailwind going forward. I'm looking at forward estimates and forward estimates are not everything. Analyst estimates are not everything, but you're guiding for 4.8% on the top line for this year, 8% the following year, 8.5%. So you're looking at like mid, single high digit revenue growth on the top line here. I think, you know, they have that nice tailwind. I'd be really curious to know like what other geographies they can really break into. These are things that I'd really want to understand. I know I've been saying this a lot lately,

but it's true. Anything under like 10 billion in market cap right now, I get very excited because they're smaller than large big tech and stuff. But the bar has to be so much higher in my mind now in terms of like just growth, not even quality. I'm talking about just growth because my bar and hurdle rate is Visa. My bar and hurdle rate is Microsoft. And those companies are just growing so fast still. And they're so big. It's like, it has, if it's smaller, it's probably going to be lower, all things equal. It's like, if it's smaller, it's probably gonna be lower, all things equal. It's gonna have less competitive advantages, smaller scale, less brand recognition,

maybe less Lindy over time in terms of staying power. So it's gotta be grown at least faster. And for a lot of these names, I just can't justify it. Visa growing like mid double digits with 60% free cashflow margins. The hurdle rate for these smaller names, I think, is just so hard to get something like this, get something like Savaria excited in terms of owning it in the portfolio. Yeah. And for me, I think it would be similar to what you're saying. But I think for me, the biggest thing here is because the valuation

is not the cheapest either. So you're looking at around 19 times forward earnings and then 17 times free cash flow. So it's not super cheap for the kind of growth that you're getting the fact that it's a smaller cap company, I guess, yeah, definitely small cap, it's listed in Canada. So probably, you know, less visibility than the same type of company that would be listed in the US. So to me, and I mean, obviously, I still need to lean more, learn more about the business. But say I knew the business very well, everything checks out. It's a company that I would probably buy if the valuation would pull back a little bit. Just because I think you should be able to get this company a bit of better valuation based on the growth it's showing, but also what I just mentioned in terms of its size and being listed in Canada.

but also what I just mentioned in terms of its size and being listed in Canada. So if you get it at the right price, it can probably end up being quite a good investment with the caveat, I still need to learn more about it. Yeah. They're making over $100 million in EBITDA. It's pretty good. Yeah.

I mean, they have- Analysts expect that to double over the next three years too. Yeah. They saw the stats i just pulled i guess from exactly so like definitely get definitely getting profitable and getting more profitable well they mean they've been profitable for a long time but i mean like that they're definitely pulling that lever i just i just want to see more than i just want to see double digit growth on the top line for these things. Or single digit valuation.

Would that change your mind? Yeah. Half the valuation. That would be, that would be very attractive. Half, like if you slash that valuation in half, that'd be,

that'd be pretty interesting. Even if the growth's not crazy with the tailwind, that would definitely get my attention. Yeah. Maybe, maybe I'm more value investor at heart. No, I mean, they go hand in hand, right? It's just like to do really well with this stuff, yes, you need to pay the right price, but you also, I mean, there does have to be some level of long-term sustained growth for

the stock to do well. Yeah. No matter what. No, definitely. There does have to be some level of long-term sustained growth for the stock to do well. Yeah. No matter what. No, definitely. If you look at return decomposition, it's trading at less than 10 times next year's enterprise value to EBITDA. So depending on which metric you want to use, it's reasonable. It's not cheap, but it's reasonable.

Yeah, definitely. I can't really argue with that. But yeah, again, thank you to Danny for refreshing my memory on this name. And I'll definitely have a look at a few other names for sure. I'm not sure if I'll talk about them all on the podcast, but it was a fun little tweet. And the fact that people are actually giving me a brief description of the company, because screeners are fine, but it's kind of nice to have a name and then you also know quickly what the company does its business lines and then i kind of i it was a great exercise saved me a lot of time so thank you everyone yeah i mean there's like tens of thousands

of listed equities like i think there's like 65 000 active 100,000 in total on FinChat. And the people will suggest just a ticker. And I'm like, dude, you just mentioned a company that 200 million in market cap I've never heard of. Give me like a one-liner. Exactly, yeah. Give me just what they do. Give me your elevator pitch. Yeah, exactly.

Give me the elevator pitch. And then this one Yeah, exactly. Give me the elevator pitch. And then this one, the pitch is it helps you get into the elevator. Exactly. That's it. That's the elevator pitch on Safari. It helps you get in the elevator. Thanks for listening, folks. We really appreciate you taking the time to come on the show.

Thanks to our friends EQ Bank sponsoring off the top and this segment here. We couldn't do without you guys. We appreciate you. And if you haven't gone to join TCI.com, that's our Patreon. Simon's ETF sector exposure spreadsheet, Google sheet that you can look at is now on there as well. I was looking at it as well because I look at this as like, how do I get exposure to healthcare or biotech without losing all my money? And that's when these things are helpful. I'm not going to predict the next regulatory approval

for some hot fancy drug. No, no. And I mean, what it's nice nice to what the spreadsheet is there's links directly to the fun facts for each of them so people can really have a quick look that way and it's always funny with google when you just share the link and with viewer access get this anonymous kiwi and stuff like that yeah yeah and and so we also have a portfolios tracking spreadsheet on the patreon and since i'm the owner of it because i made it a couple years ago a lot of people don't recognize like you got to do file make a copy if you want to edit it yeah exactly not giving you edit access

to the template people like yeah what is this amateur out here file make a copy yeah if you make a copy you'll be able to use it on your own and not affect the content because obviously when we make something for a lot of people we want to we want to modify it or anything like that we want to make sure we have the ability to do so and there's not like you know not that people would do it purposely but sometimes someone might like forget and they modify it and then, you know, messes up the whole thing. Next thing you know, our template is someone's portfolio. Yeah, pretty much. That's why we lock it. Thanks for listening, folks. We are here Mondays and Thursdays. If you have not rated the show five stars on Spotify or Apple Podcasts. That really helps us a lot. We don't ask a lot, but if you can take

15 seconds, 20 seconds here to whatever platform you're on, on Spotify, you can press follow to be subscribed to the show and then hit five stars. And then the same thing, I think it's called subscribe on Apple Podcasts. And you can leave a little review. It massively helps us and it costs you nothing other than 15, 20 seconds of your time as a little thank you. We much appreciate it. We'll see you in a few days. Take care.

Bye-bye. The Canadian Investor Podcast should not be construed as investment or financial advice. The hosts and guests featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.