BNN - Monday, May 27, 2024 - 01:00 p.m. (ET) - Segment #4

that can be and esg fund that can be cinematic, but it is generally done by rote, by some sort of structure where if money comes in to that particular fund. I got to go by this in this quantity, that and not quantity eccentric cetera. What that tends to do. As a tends to make stocks moved a little bit more in unison, a little bit disparate chip price moves, I would say, but it also has some implications. I think in the in the ipo market, on our ability to raise new names. Well, that's interesting because as you just said in the u.s., the rate is even higher they've got all the ips. Yeah. Is a question of scale. More than anything. Would, I would absolutely say. >> The pot of money being run in the united states is, is so large that they have an ability to do those things. >> But make sure play of, right across the board with seeing private names and keep them long gun, a less likely to take them public. I was seeing few of the deals generally that we have in the so there's less underwriting activity. And one of the reasons we're seeing, for example, such concentration, even the s&p 500 we on creating those new entities that are really able to use up those those big names. What's interesting, because many would just dismiss sales the cycle. We're not there. We're not, that's not confident. And your argument is maybe the structure of market ownership is driving some of exactly and. >> And I am not saying that individual making bad decisions on saying I want etf product with the fees a lot. Yeah, I just want market exposure and get get it for me of the cheapest price. I'm not saying that that's not a that's right. All that's wrong. >> The city is a famine. The criticism levelled on active mutual fund industry. When you think about those things. But by the same token, when you look at etf ce, what do we benchmarking you would against that we benchmark a new against the brought him were we benchmarking you against benchmark against index that is unique to that particular etf. So I think there's a role to play for both sides. The concern I have is that when we look at the domestic, which will fund industry. Which will generally been the pot of money that supports non result. Ipos in the country. Remember when I say I p was initial public offering new offerings. They aren't in the the the etf, some not coming in from them, they're not buying them in any kind of quantity on secondary offerings. Yes, they're very important part of it. But on ipos, we really need the domestic mutual fund industry to be there to provide buying power for us to do those things. And that of all the categories we looked at, that is the one domestic act of mutual fund money shrinking as a percent of of the universe in a national mutual funds continue to grow, but their focus is overwhelmingly results oriented. As as I say, if you want to buy a best in class gold companies, you're probably coming to canada to do it. If you're looking for base metals, bulks whatever it is, you're going to be in canada, looking at those things. Energy companies are energy companies can stand shoulder to with with those anywhere in the world. So the international actu guys that are coming in a broadly thing. I gt to focus on canada, largely focusing on for for results, its work death by 1000 cuts to this might be one element, but there's so many small independent investment banks as well that no longer exist over the last 10 years. >> So they're not raising capital for these companies, even get them to that. It it is a vicious cycle where it just keeps going on absolutely right the day is of us having a very la oge. You know, a small broke a kind of business that's become less sitting on the south side as we less and less of a phenomenon and said when I 50 something years ago. A lot of names, you know, they the n's fries and the and the independents like that few and few of them. So absolutely right. But its hard for those guys to make money and operate successfully because they have to be in the resource sector because that's the part where they can raise money. But means they have to have you reach into the united states, which is harder for smaller companies to get. So it is one of these things with becoming more and more difficult as we as we move forward. But I think the canada what it means as we having a more difficult time creating the next jump young's that are, you know, we need more of the shopify's, we need more of those types of companies that come along. Henry able able to go forward things like a gfl things like, you know, we've connection, which was really a takeover of, of an existing entity. But those kind things, we need more of those to create a more diversified equity domestic equity market. Thanks so much great perspective them. An interesting way to think about what we're seeing in the markets every day. Appreciated. >> That's the and divert. I joining us of cibc. We're going to take a quick break. Speaking of acquisitions, we've got hot picks in 3

growth by acquisition stocks. Join us next. Have you heard? Super SaveToilet Rentals has brand newwashroom trailers. Sta trailers, are heated,come with hot fresh water. Flushable toilets, plus urinalsand sinks. Super Save provides professional service atcompetitive prices. and will ensure you constructionsite is looking its best. Elevate your current facility toa Super Save comfort station. Call Super Save Toilet Rentalsand show your site personnel how much you appreciate their hard work. Visit Super Save dot ca. Get more from trusted us Treasuries with hbnd. Canada's first covered call bond etf providing attractive monthly income with the strength and security of U.S. government bonds. Hbnd, more income, every month, from Hamilton ETFs. Hi Phil Swift here for FlexSuper Wide Duct Tape.Just check outhow wide this It's so widewe built this race boat. Not only can it speedacross the water, but our super strong backingcan take the pounding and our powerful adhesiveholds the boat together. Yee-Haa! Now that's whatI'm talking about. Woo Hoo! Get Flex Super Wide Duct Tape. (vo) Sail through the heart of historic cities and unforgettable scenery with Viking. Unpack once and get closer to iconic landmarks, local life and cultural treasures. Because when you experience Europe on a Viking Longship, you'll spend less time getting there and more time being there. Viking. Exploring the World in Comfort. For over 25 years, Trez Capital has contributed to the financial success of our investors as leaders in North American commercial real estate investments with proven expertise, we uncover the best opportunities and invest in today to build a better tomorrow. >> Sometimes growth by acquisition can be a bit of a naughty word in the market. So you really got to find players who are good and disciplined with deploying their capital and not just growing for growth sakes. We've got wong, cfa and head of research at baskin wealth management. Thanks so much for joining me. You have to be really careful in this space to discern, you know, just wallop strategies that are trying to paper over weak growth for says good allocators of capital. What does it look like to be a good there? >> Yes, so at baskin wealth. We are long-term investors. What we're looking for are companies where we have the confidence they can intelligently deploy capital for the next 5.10, or 20 years. And so the types of serial acquirers, which companies that primarily make a cross by acquisition. We want companies that first of all. They have a very clear playbook for how they're generating valley from the acquisitions. These are not businesses better. Simply a by buying companies for for multiple arbitrage, so to speak. They they have a clear playbook of what to do when they're going in and doing a deal and how to create value of that. The second thing that we're looking for in serial acquirers is businesses that are very disciplined in the price that they're paying. So they have a very clear return target. They're very prudent with how they used equity and debt in their acquisitions and bit that shows up and very high returns on invested capital over time. >> Let's some examples to discuss this. Your first pick is ccl industries and this is a stock that's 10 while extraordinarily well over the last year had that big to the what do you like there and and how, how much higher do you think your price targets? Pretty hot. Yes. So $50. Yes. >> So ccl industries is the largest provider of labels in the world and I think the important thing to realize about labels is that they are a very small portion of the cost of the product, but they drive the bulk of the value for the product that they're selling. So if you think about a shampoo bottle for p from png, for example, the maple, my cost a couple cents, but 100% of the value of the shampoo bottle. The price that png is able to charge comes from the label. And so what ccl has done over time is that they have become a trusted partner for many of the large multinational firms that are trying to grow in places like emerging markets. And they benefit from a variety of secular trends. They are building a new plant to labels for for the gop drugs. For

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