My 4 smallest positions (should I add more?)

0:00Alright, so I need your help with something. I have like four companies that are under 1% weight in my portfolio. I don't know which one I should put a little bit more money and maybe which one I should sell. So we're going to take a look at four of my smallest positions today. Disclaimer. The following is for education and general information only. Not investment, legal or tax advice and not a recommendation to buy or sell anything. Money involves risk. Dividends are not guaranteed and past performance does not predict the future. I may hold position in securities discuss and may trade at any time. Hey, what's up? I'm Mike from the Moose and the Loose. I hope you're doing well today. Today, we're going to talk about my smallest positions. Why? Because I hate having companies that are under 1%. They're really close to 1% weight each of them. But my target is more like three. So they're very far behind all the other positions that I have in my portfolio.

1:02The reason why, quite simple. I started a smith maneuver account a few years ago. But I mean, I started putting like 500 bucks a month and then 750 and then now I'm in a thousand dollar a month. But it's not that much, right? Compared to the rest of my investment. So those four positions are getting close to 1%. Some did very good. Some not so well. And I'm debating which one should I sell or where should I put more money into it. So we're going to like take this exercise out loud. I'm going to talk about them and then you can go on YouTube and tell me what you think about that. So the first one on my list exchange income, IEF. And I'll put all the tickers also in the link description as usual on Spotify on YouTube. So the yield is at 2.37, 7 billion market caps. So not a big stock, but not a super small either. And it's quite interesting because it is divided into two completely different business model.

2:04Inside you have air services. So you have like regional airlines, MidiVac services, essential air services. They're mostly supplying air services in North and Canada. And it's vertically, vertically integrated, great business. A lot of the men on that. And on the other side, they also operate a manufacturer's business. And it's kind of funny because it's not as early related to your aerial space. We're talking about precision manufacturing, environmental access solution, multi-story window system. And they grow by acquisition there. So kind of odd type of business model. It's almost half an half. So it's kind of interesting. So the bookcase here is, well, they benefit from long-term government and commercial contract with their aerial space and aircraft services. So that's great for that because, you know, there will be always the men. They are making grow by acquisition also. So in this particular field, so they are very strong underneath.

3:08And if you need to go North and Canada, you're likely going to deal with exchanging income, which provides them with very good stability. And on the other side, they also grow by acquisition with the manufacturer as well. So the target like bolt on acquisition. And it's great because it's relatively stable. It's an initial business. It's like long term, not growing super fast, but again, providing some good cash flow. So as of late revenue and earnings, like started to go up, the stock price is on fire as well. And that raised me like thinking maybe I should put some money into this one, right? Of course, nothing is perfect. There's also a bear case. So this type of business needs a lot of capital. They need capital to grow by acquisition. They need capital to take care of their aerial space services. The aerospace, while it has long term contract, the growth will be cyclical because it's not always in super high demand.

4:08Same thing for manufacturing pieces. So again, it creates kind of like a non-perfect dividend triangle where you have ups and downs. Sometimes the company does not always increase the dividend. It comes with such a rich valuation at this point. So I made some good money on it. So maybe I could just sell. Anyways, it's not going to be a huge impact as I said. It's under 1% of my portfolio. So regardless if I sell or not, not going to change my life. But I don't know. I'm still on defense on this one because it's not 100% aligned with my strategy. And this is definitely something that stands because I prefer to have companies that will grow their dividend every single year, at least 5% per year, to maintain a good pace and show some growth behind, right? The next one on my list, Great West Life. This one you know it, I'm pretty sure, offering now a yield of 3%. So it's crazy how life insurance companies are not high yielders anymore, like 3% kind of crazy. And at the moment of recording, it was actually 2.97, not even the real three.

5:10So life insurance business in Canada, in US, and in Europe, asset management, retirement income, like retirement planning as well, they own over the, they have over 3.3 trillion dollars in assets under management. So very solid business, back by power corporation. The bull case here, well, you have the insurance that keeps on growing. They have like the scale. So it's great once you're big enough, you're going to make even more money because your underwriting process is going to get better. You have assets on their management that creates recurring cash flow as well. The retirement, the retirement planning play is great as well. They make some niche and precise acquisition in the US, for example, to get even more exposure. So a lot of good things are happening with Great West Life. So I'm not really surprised to see this one going up on the bear case. Well, a lot of life insurance product can be seen as commodities these days. So you're just shopping around for a company that yes, is big enough to pay and is insured

6:13in everything that you have like you're good. But once that part is settled, you just want to have like the best coverage for the lowest price, right? And not more than this. So that could be a problem down the road. assets under management business. Well, it's great. Well, management, amazing. We we talked about that in banks last week. But the thing is if the market goes down, well, the assets under management is going to follow and then the revenue and margins are going to shrink. So that could hurt as well. And of course, interest rate because as an insurance company, they they must old a good portion of their portfolio for the two pay to premiums on the another premiums to pay the claims on the insurance into the bond market. So if you have lactuation, that could affect also the the bond value. So this one, I kind of like it. I'm already well exposed to the financial sector. So that's the reason why I've not put more money into it. So far, very happy about this acquisition in my submitment of report portfolio. The last two, I've not performed that well.

7:15I mean, CGI definitely not offering a very low yield, 0.65. It's an IT consulting firm. Most of it generating money from government contract. And they're they're there for like everything. They're talking about strategy. They can implement new technology. They can manage the technology for you. So they they have like all kinds of solutions. It's going to like kind of like an all in one done for you program for government. So the bull case here, well, it's generating a lot of cash flow. The payout ratio is super low. The free cash flow is going up high margin type of business, high switching costs as well. Because when you're in contract, it's usually long term. And then you get used to your IT consultant, your IT consultant knows your business. It's kind of hard to get away with that. They also grow with acquisition, which is interesting. They also offer a higher level of security because they are like used to work in that environment. And then AI interestingly could be a boost a tailwind or a headwind.

8:19And this also comes with a very strong bear case where AI could replace a lot of their solutions and IT consulting all together, right? That is not been proven yet because when you look at the dividend triangle, the revenue and the earnings keeps on going up, but this is definitely a dark cloud over their head. Another one, well commercial war with the US, not helping getting contracts overseas, right? Not overseas, but with our southern neighbors. And I'm not saying again, I don't do politics, you know, that's I'm not saying to be whatever they should do with the commercial war. I'm just stating that the current state between what's happening between Canada and the US is not helping CGI to get contracts. That's all I'm saying here. If they don't do acquisitions, the organic growth is not that big either. Those are like long term slow contract, not growing super fast in terms of like what they bill. So another reason to be a bit worried if they slow down on the acquisition side.

9:24So the last but not the least TMX, so thicker X 2% yield, they own the Toronto stock exchange. So they do trading, they do high PEOs, so the new listing, they do clearing as well. And they sell a lot of information. So data sales is a big part of their business. What I like about it, the bull market here in the bull case here is data is recurring revenue all the time. You pay for your subscription, you get it, you're super happy. They kind of have that kind of like monopoly around the information here in Canada. So it's great. Even though we have like a few cracks in this thesis, we're going to talk about in the bear case, they do strategic acquisition like trade port, for example, that has a trading software for energy trader, which is really liked. We have beta five. We have like plenty of likes, small acquisition on strategic niche market that boosts the data sell that boosts their services at TMX. So I really like the business.

10:25I like where it's going, very strong dividend triangle. Again, there's a bear case. It depends on market health. So so far the market has been incredibly healthy. A people are excited to invest. They are willing to take risk. So new IPOs, there's plenty of a lot of great things happening around the market. But whenever the trading volume falls down, well, margin will follow, revenue will follow. And it's going to be a little bit harder for them. The other thing is now I talked about the crack about having this monopoly around the Toronto Stock Exchange. You start to see alternative competitors like the Neo Stock Exchange, like the NASDAQ Canada that are trying to attack market share of TMX in in in their own turf. So we don't know where it's going to go with this story, but definitely must keep an eye on this one as well. And finally, valuation is not cheap. We're talking about a P or ratio of 25 right now, forward P is at 21, a little bit better,

11:26but definitely not a huge deal on the stock market at this point. Everything is trading above 20 times the earnings. So when you're at 25, it's not exactly the best bargain in town. So I'm curious, let's go on YouTube and put out a comment, which is your favorite one among this short list. Exchange income, create West life, CGI or TMX. As of late, with the extra money, I've been adding to my position into Dollar Rama and Stentek. So I've been ignoring my smaller position, but I'm just curious about which one do you prefer on this short list. Alright, Moose, that's enough for today. Tomorrow it's retirement Friday. Man, the week has gone so fast. We're going to talk again tomorrow. Until then, don't forget to stay invested.