Domenic Bruno opened his first brokerage account at the age of 18 and spent a summer day trading.
Domenic Bruno
Occupation
Actuarial analyst at a life-insurance company
The portfolio
Shares in Enbridge Inc., Toronto-Dominion Bank, Wells Fargo & Co., Coca-Cola Co. and other blue-chip companies.
The investor
Domenic Bruno opened his first brokerage account at the age of 18 and spent a summer day trading. After a succession of winning and losing days, he ended neither up nor down. Thinking there was a better way, he consulted with his father. His recommendation was to "read up on Mr. Warren Buffett."
How he invests
"After months of reading, I finally learned the Warren Buffett way," Mr. Bruno reports. "Find companies with a durable competitive advantage – then buy them at a reasonable price and hold for the long haul."
Enbridge fits this profile, he believes. "They're the largest liquids pipeline operator in Canada and their business is not easily replicated. Moreover, Enbridge's earnings aren't directly related to oil and gas prices: Instead, for each barrel of oil and gas that flows through their pipes, they earn cash flow much like tolls on a road."
The decline in the share price since April does not "reflect fundamentals." Earnings per share continue to increase and the company forecasts them to grow by 10 to 12 per cent annually. "Also, $37-billion of Enbridge's $44-billion in growth projects are commercially secured, so this adds a bit of certainty to management's future earning's growth projections."
At 65 per cent of assets, its debt is sizable. But interest payments are hedged with interest-rate swaps to minimize the risk of any sharp increases in lending rates.
Enbridge is capable of delivering shareholder value over the long run, Mr. Bruno believes. Over the past seven years, for example, the shares have more than doubled in value while the dividend (currently yielding 3.3 per cent) has nearly tripled. The dividend payout ratio is 75 per cent of net income.
Best move
Buying Enbridge about seven years ago.
Worst move
"Risking hard-earned money day trading …"
Advice
Mr. Bruno believes in investing like Mr. Buffett – not speculating for quick gains.
Want to be in Me and My Money? Contact Larry MacDonald at mccolumn@yahoo.com or his Website.