Norman Levine is managing director at Portfolio Management Corp. His focus is on North American large caps.
Over the last year-and-a-half, there have been management changes galore: CEO Robert Card: engineer, former undersecretary for the U.S. Department of Energy, and formerly at CH2M Hill; also changes to CFO and 4 other top executives. There has been monetizing of concession assets – putting an unspecified stake of Altalink (Alberta's main electricity distributor) up for sale. Now that the CEO has been on board long enough and internal ethics issues are nearing resolution (although class action suits ongoing), the company is finally able to tackle SG&A (reduce IT, simplify reporting, staff cuts etc).
In a former life, BankUnited was a failed Florida bank that collapsed during the housing bubble. Now scrubbed clean with substantial excess capital, the bank is Florida's second biggest by deposits and has $12.4-billion (U.S.) in assets. The bank is run by John Kanas of North Fork Bank fame. For its entry into the New York metropolitan market as a commercial bank, the infrastructure is complete and Q3 will be its second quarter of full operations in the New York City area. The current 2.6-per-cent yield is secure.
Corning's businesses (LCD screens, solar/silicon, medical and telecom) have all moved off the bottom and are recovering nicely. The solar/silicon areas are linked to construction activities and telecom is linked to the roll-out of fibre-to-the-home strategies. It has a very strong balance sheet and has increased its dividend three times in the past 18 months and currently yields 2.8 per cent.
Past Picks: September 24, 2012
International Forest Products
Total return: +84.82 per cent
Total return: +6.01 per cent
Total return: +31.88 per cent
Total return average: +40.90 per cent
We remain quite positive on equity markets with special emphasis on U.S. and international markets. We are not doing anything differently due to the political shenanigans going on in Washington. We (and the markets) do not believe they are stupid enough to cause a default or that President Obama wants to go down as the first President to be in office during a default. If in fact there is a technical default, there should be a very temporary rise in bond yields and a very temporary stock market sell-off. We are long-term investors and don't pay much attention to short-term events, unless they give us a buying opportunity.