Bryden Teich — Follow the Money: How to Profit From the Government Spending Boom

2:07 The setup — durable businesses + the government-spending story

• Teich looks for durable businesses "resilient no matter where we are in the cycle." The big story right now, "not just AI," is that governments worldwide are spending — he wants the portfolio positioned in the fiscal-impulse beneficiaries.
• Still constructive on Canada: his annual-letter line, "better days ahead for the great white north," despite USMCA not renewing and a technical recession.

4:51 How Avenue builds a portfolio — rank top-quartile quality per sector

• The process: go through every sector, rank the top-quartile quality names on criteria that drive consistent profitability, and own as many of those as possible — banks, consumer, energy, energy infrastructure, industrials.
• New wrinkle: Canada is now running "almost an industrial policy," creating specific fiscal beneficiaries — while staying wary that more government involvement isn't always good.

7:02 Canadian banks at record highs — still comfortable

• Was most nervous into 2021–22 on the unsecured-mortgage frenzy, but embedded home equity meant no credit cycle. Not being allowed to do international acquisitions forced a focus on domestic + fee businesses (wealth, investment banking) — a decade of ROE growth.
• Valuations now at the high end; a pause "would be healthy" ("parabolic moves don't correct sideways") — but still likes them long-term.

11:37 Fiscal impulse is the biggest story — bigger than AI

• US has the biggest fiscal impulse; Canada "joined the party"; Europe spending heavily. The challenge is filtering where fiscal actually hits company profitability — long stretches where policy "doesn't move the needle," then it does.
• Marks the 2016 US tax cut into a full-employment economy as the flag pole; fiscal now used almost for partisan purposes to make the economy look strong into elections.

14:08 Fiscal as "the new ZIRP" — filtering fiscal out of real earnings

• Where zero rates were once "the only game in town," COVID taught governments they can pump direct fiscal into the economy, moving inflation and nominal growth. On a 2020 conference call a CEO credited government checks for a great quarter — Teich's team debated whether those earnings were even "real."

15:02 Three sectors benefiting most — and the K-shaped consumer

• Industrials "huge"; technology (chips), defense; and the essential-consumer. Discretionary consumer (Nike, General Mills) is hurt in the K-shaped world — he focuses on essential, smaller-dollar, repeat purchases that stay supported.

16:44 The debt endgame — long rates at highs, funding the short end

• The untold story of 2026: long-term rates at highs everywhere (Japan/Germany/France/Canada/US 30-yr ~5% vs 2%). Treasuries do a "sleight of hand" — fund 12–18 months, not the long end; that issuance gets rehypothecated and leveraged through the banking system.
• US will spend more on interest this year than on defense or Medicare — and Social Security/Medicare/Medicaid compound 5–7%/yr; US debt went from ~$20T (2019) to ~$40T in under a decade.

18:33 Why not "all golded up"? Took profits after the parabola

• Owned a lot of gold "when it was less fashionable"; wrote a very positive gold letter last September. But the Jan/Feb parabolic move + a sentiment phase-shift ("why don't we own more gold?") prompted cutting several positions in half from a mid-teens weight.
• Still a core long-term weight; comfortable with a multi-year gold correction/consolidation as "healthy" — would be opportunistic again lower.

20:48 Underweight the AI trade — own the value chain, not the boom-bust

• Underweight tech vs a ~35–40% index weight — but not zero exposure. Prefers owning industrials that benefit from the AI-spending "value chain" rather than the boom-bust names, which by definition aren't in the "super stable consistent" bucket.

22:09 Contrarian in software — profitable names at risk of AI disruption

• Spending time on highly profitable software whose results "haven't even been bad yet" — just dramatic multiple compression. Risk: when AI actually hurts numbers there's further to fall; but buybacks at ~10x earnings are accretive. The shareholder base is turning over — a choppy bottoming phase.

26:00 Thomson Reuters — looking; the multiple must reset

• Stable legal/tax/accounting software priced "bulletproof." The real threat isn't rip-and-replace but the next company that starts AI-native and never uses it. Pricing power gone, profitability not yet — sub-10x is "way too low" given buyback capacity (buy back >half the float in 10 yrs).
• Method aside: he shies away from projections — "you can make a model look like whatever you want"; anchor on capital allocation + profitability instead.

29:12 Accenture & Intuit — pricing power gone; Intuit most interesting

• Accenture at risk as consulting budgets get cut and AI reduces headcount. Intuit "the most interesting" — 80% gross margins, near-zero capital, ~10–11x earnings: "completely mispriced" if profitability holds, "a fair price" if AI disrupts QuickBooks/Mailchimp/tax.

30:53 Medtech "too hard" — Medpace is the healthcare pick

• Boston Scientific (Watchman), GE Healthcare (margins/orders), Stryker — dominant but post-COVID growth is moderating → multiple compression, "too hard for us." Medpace instead: runs clinical-trial sites, the "toll booth on pharma R&D" — high-FCF, low-capital, aggressive buybacks; results track VC-funding cycles; AI probably means more R&D.

35:22 Canadian Natural Resources — own it and don't think about it

• Held since 2014, the only oil name; down 20% since March. Debated trimming into the oil-price spike but cutting it would drop energy to a ~2% weight — too low. A low-cost, efficient bellwether; prefers it to Suncor despite Suncor's turnaround under Rich Kruger.

37:36 South Bow — a dividend funded by cash flow

• Owns the Keystone liquids pipeline spun from TC Energy; pure-play, low capex, dividend funded from cash flow = sustainable (though spun with higher-than-ideal debt). The Prairie/Keystone-XL growth is "nice to have" only if funded internally — he avoids companies that must issue equity or debt to grow.

41:04 Enbridge — the textbook case against EBITDA

• Not owned. Cash flow ~$11B, capex ~$9.5B, dividend ~$8B → a deficit that debt (>$100B) fills; interest ~$5B/yr. Depreciation (~$5B) is half of true capex (~$10B), so EBITDA flatters it. A ~5% ROC business paying ~5% on debt and growing by acquisition/equity issuance = economics that "just don't work" for equity holders, even if the stock has done well.

46:52 WSP Global & Stantec — fiscal beneficiaries, but "not there yet"

• Engineering/construction consultants that rode the fiscal tailwind, now down ~30% on AI fears. WSP was expensive with a recent debt-funded deal; Stantec favoured for better returns on capital. Both need "another bigger fiscal push" to re-rate — on the watch list, not owned.

49:19 National Bank — small but mighty

• Avenue's biggest bank position. Once an oil-and-gas-exposed Quebec lender "in the penalty box" (2015–16), it cleaned up, consistently posts the highest ROE, and did well acquiring Canadian Western Bank + Laurentian's Quebec retail book. ~17x — deserves a premium for earnings quality.

53:34 Pro pick 1 — AutoZone

• Held since 2020. Demand driven by car age (~13 yrs, most off warranty) and very stable miles driven (~3.3T/yr), not the economic cycle; store supply is flat-to-shrinking while demand grows. Prolific buybacks (bought back its market cap several times since the '90s), zero acquisitions, now expanding in South America. Down ~30% = multiple compression, an attractive entry.

57:49 Pro pick 2 — Toromont

• The largest publicly traded Caterpillar dealer, held 3 yrs — "picks and shovels in the ground." Strong service + rental + CIMCO ice-machine segments; a dividend aristocrat that finally deployed its pandemic cash into AVL Manufacturing (Hamilton), which builds backup-power enclosure modules for AI data centers (+ a Charlotte, NC facility). "Good problem bucket" — expectations and multiple now high, less room for error.

1:00:50 Pro pick 3 — Alimentation Couche-Tard

• Held for years. The 7-Eleven overhang — a deal needing a huge equity/debt raise he disliked (like the earlier abandoned Carrefour bid) — is gone; now driving organic US in-store merchandising toward the Casey's benchmark. Prudent debt-funded M&A they pay down (Circle K), consistent buybacks, heavy insider/family ownership = alignment.