Christine Hughes is president and chief investment strategist of OtterWood Capital Management. Her focus is North American equities.
BSM Technologies is involved in the area of telematics or fleet machine-to-machine communication. The combination of services BSM provides allows fleet managers to improve asset utilization, fuel and operating costs, and preventative maintenance. We believe that the increased focus on efficiency within the commercial vehicle space will be the catalyst for significant growth in the telematics penetration rate throughout the global commercial fleet. At the end of 2012 there were more than 333 million commercial vehicles in operation but with only 4 per cent penetration by machine to machine telematics solutions.
DHX Media is a pure play on the rising value of content. Content owners are now able to increase their return on content investment by simultaneously scoring non-exclusive deals with cable channels plus content access agreements with platforms such as Netflix, Amazon, Hulu, iTunes and YouTube. The recent agreement to acquire Family Channel along with its affiliated networks of Disney XD and Disney Junior (English and French) is highly accretive. This transformative deal gives DHX a platform to market their content and build brand recognition.
Boyd Group Income Fund
The North American auto collision industry is extremely attractive with $38-billion in revenue, is highly fragmented, and very defensive. Boyd, the largest publicly traded multi-shop operator (MSO) in North America, is in prime position to continue growing. Direct Repair Agreements (DRPs), which set out a standardized pricing list for certain items, are becoming the norm in the industry thus benefiting auto insurance companies by providing them with cost certainty. Boyd has DRPs with all major U.S. insurers and several regional players as well. In fact over 90 per cent of Boyd’s revenue is from insurance companies (if you have insurance and your car gets damaged, you will be taken care of).
The theme of the year has been the great rotation (out of bonds and into stocks) and we expect this theme to continue into 2014. While we do believe the stock market is in a bubble, we are nowhere near a top yet. With central banks around the globe focused on stimulating economic growth, we believe the market has more room to run. More specifically, we are bullish on U.S. and Canadian equities and expect financials and energy stocks to perform well. With the Federal Reserve beating the tapering drum there seems to be a growing sense of comfort with the idea of reduced stimulus, as long as they keep printing. As such we expect interest rates to remain flat or edge higher, a negative effect for bondholder wealth. With the continued healing of the U.S. economy we expect the U.S. dollar to strengthen against most other major currencies. We foresee the Canadian dollar to continue weakening as the central bank is warning of persisting low inflation.
This is Christine Hughes’ first time on Market Call. Consequently, there are no “Past Picks.”