Title: The $2.2 Billion Contrarian: How to Profit From Unpopular Ideas Show: In the Money with Amber Kanwar (episode 157) Guest: Scott Morrison, Founder & CIO, Wealhouse Capital Management (Toronto; ~$2.2B AUM, founded 2008, seeded by BlackBerry's Jim Balsillie) Date: 2026-07-23 URL: https://youtu.be/QA6Qvs_V-D0 Length: ~62 min Note: YouTube auto-transcript; [music]/[clears throat] artifacts and pure fillers (um/uh, "you know" as interjection, tic "like") removed and stutters/false starts collapsed — wording otherwise verbatim, so the caption's mis-hearings are preserved as heard. Known garbles (mapped in the analysis page, NOT corrected here): "Wheelhouse" = **Wealhouse Capital** (the fund's correct name, verified from the show's RSS feed); "Jim Bossley/Balsley" = Jim Balsillie; "Seag"/"Seagro" = SEGRO plc; "Big Bad Prologes"/"Pearlis" = Prologis; "Rotorque" = Rotork plc; "Big Bad AB from Switzerland" = ABB Ltd; "Polyeptide" = PolyPeptide Group; "Sang Sam biologics" = Samsung Biologics; "Klepier"/"Klepierre" = Klépierre; "Whitstone"/"whitest stone" = Whitestone REIT; "Aries" = Ares Management; "Merridge" = UNRESOLVED Canadian mall REIT (no ticker assigned); "Triax"/"triax big box rate" = Tritax Big Box REIT; "Shinhan"/"Shenhan" = Shinhan Financial Group (NYSE: SHG); "Zeta Global … ZA on the New York Stock Exchange" = Zeta Global Holdings (NYSE: ZETA); "Palanteer"/"Palunteer" = Palantir; "can access"/"Kakus"/"Kaxis" = Kinaxis; "CE" = CAE Inc; "CE Callen" = Calian Group; "MDA" = MDA Space; "SKHX"/"SKINX"/"skain highex"/"SKX" = SK Hynix; "Beimo" = BMO (Bank of Montreal); "CIBC … Harry" = Harry Culham; "Llemon" = Lululemon; "Whimo" = Waymo; "Primis Rate" = Primaris REIT; "TGX or Wyinners" = TJX / Winners; "Zeers" = Zellers; "Ritzia" = Aritzia; "garage" = Garage (a Groupe Dynamite banner); "Abbercamri and Fitch" = Abercrombie & Fitch; "Publixes" = Publicis; "omniccoms" = Omnicom; "cybase" = Sybase; "Clive Ken Ross up" = Clive Kinross; "go easy" = goeasy; "Gary Aken" = the next episode's guest (Franklin Templeton); "Ben and I" = UNRESOLVED (likely OpenAI); "igopolistic" = oligopolistic; "nan dram" = NAND/DRAM; "59's reliability" = five-nines reliability. Sponsor reads (Raymond James ~01:02, Hamilton ETFs "MIX" ~13:53, ATB Financial ~47:03) are retained here as advertisements — they are NOT commentary and are excluded from the analysis page's stock table.
00:01 We've made the most money in our career finding contrarian opportunities or out of favor ideas with improving fundamentals. >> We are pounding the pavement with veteran money manager Scott Morrison. >> One of the easiest ways to make money is if you can identify sectors or companies that are benefiting from a decrease in supply with an increase in demand. Economics 101.
00:20 >> He goes around the world looking for ideas. And right now he says the best ones are outside US and Canada. >> I'm not in the memory bubble camp. When I talk to companies, oh my god, it's off the charts. >> David Rosenberg said, "My banks are in a bubble." What do you think about that? >> It's not lost to me that private equity people are coming in the public market and buying their assets.
00:38 >> Primaris got taken out. You're saying there's better opportunities internationally. Does that mean Canada isn't that attractive? >> I brought you a bull and a bear battling it out, which is my job every day. >> Oh, I love it. When you choose a Raymond James adviser, you're getting more than independent financial management.
01:02 You're getting access to complete financial guidance under one roof. From tax and estate planning to trust services for generational wealth, and strategies for life's key milestones like buying a home, funding your children's education, or preparing for retirement. They bring it together in one financial plan.
01:19 What also makes Raymond James Adviserss unique is their complete independence. With no proprietary product to promote, you will benefit from personalized services. All backed by the strength and resources of Raymond James, a powerhouse with a 100red billion in assets and over 520 advisers nationwide.
01:38 Discover how Raymond James can help you live a life well planned. Visit raymondjames.ca. The content provided in this podcast is forformational purposes only and does not constitute financial investment or professional advice. The views expressed by the host and the guest are their own and do not necessarily reflect the opinions of any organization or company.
02:03 The host and guest may maintain positions in any securities discussed on the podcast. Always consult with a qualified financial adviser or professional before making any investment decisions. Hey everyone, welcome to a brand new episode of In the Money with Amber Canar. On this episode, we've got veteran money manager Scott Morrison.
02:21 He's been around Bay Street for over 30 years. He's got his own fund, Wheelhouse Capital, which has a pretty strong track record of outperforming the markets and just by the way was seated by BlackBerry's Jim Balsley. So he tells a little interesting backstory about how that came to be. But he's been running his own book for several years now and his style is very different.
02:45 It is definitely not hugging the TSX60 or the S&P 500. He goes around the world. He looks at big ideas and small ideas and at the end of the day he's looking for that perfect combination of value and growth. So he brings us a lot of those ideas in his pro picks and he goes through a lot of nuanced under the radar names in the mailbag. Let's get into it.
03:13 Scott Morrison, thank you so much for joining me on the podcast. >> Thank you for having me here. Congrats on your success so far. >> Thank you. Thank you so much. And actually an extra thank you because if you're watching the podcast, you might notice that we have some new decorations courtesy of Scott.
03:31 He brought us So everybody knows we have a Hold on, I got to get it. We have this bull behind and Scott took a look at it and said, "Oh, maybe that's a little one-sided." And what did you bring us? >> I brought you a bull and a bear, battling it out, which is my job every day to battle against both the buller stories and the negative stories.
03:53 >> So, I love it. And so, now that's part of our new background. Thank you so much. We, so few guests bring us gifts, so I appreciate it. You're the kind of guy I see you a lot. I see you out in the world. When I'm at investor conferences, I see you. So, I know you're always out doing your due diligence out in the world, not just living in an Excel spreadsheet.
04:15 And I think it'd be helpful. You have decades of experience on Bay Street. And you started your own shop in 2018, I believe. >> 2008. >> 2008. 2008. >> Oh my gosh. Okay. So, yeah, you've been on your own for quite a while. Give us a sense of your bent. What gets Scott Morrison excited when he's investing? What can people expect from your kind of investing style? >> Sure. Yeah.
04:40 I always been trying to figure out who wins and who loses, right? So sometimes you're bullish, sometimes you're bearish, there's times to be offensive, there's times to be defensive. I have the assumption that there's going to be winners and there's going to be losers. And so as an allocator of capital, my job on behalf of clients with our team is to figure out where to put the money to get the most return going forward.
05:01 And it's been a good track record most years double digit returns 2.2 billion in assets under management. And am I right about this? The first investor, the person who seated you was Mr. Jim Bossley. >> Yes. Yes, you're right. I usually don't like to talk about our investors or clients in public, but he has mentioned us many times.
05:22 And so, always grateful. In January of08, drove out to Waterlue. I had been told a lot in my career growing up in the 90s and early 2000s by companies that I had invested in, they liked the way I underwrote their business plan. And so as they got richer, someone would say, "If you ever start your own firm, I'd like to allocate capital to you."
05:40 And so, yes, so Jim definitely was the lead order to get us going and so very thankful >> And he's going to be coming up on our series about Canadian innovation. So that's so interesting. You didn't know him really before. Well, I met him in the 90s as my day job trying to figure out who wins and who loses and was able to figure out that they were going to disrupt >> Nokia back in the '90s, just like Nokia had disrupted Motorola before them.
06:05 And so yeah, that was a very successful investment back in the '90s for us. >> The way you frame it, who wins, who loses, that's what we're out here trying to do every day. And in let's locate it in the current market condition, right? Is energy the place to be? Oh, no.
06:25 We decided it wasn't, except now it is again. Are tariffs going to cause the market to topple over? No, looks like it's not going to be that. AI, that's still something that we're really nervous about. It feels like that word uncertainty, which is so overused, it's just really looming large in 2026. >> Very much so. Yeah.
06:47 So, I assume that there's going to be continued uncertainty going forward because there's lots of debt in the world. Here comes AI, here comes US midterms. To your point, no one knows how to dak out what's going on in the Middle East right now. So, I don't spend much time trying to figure out all those macro issues where I focus with our team every day.
07:06 So, we get up and we just, we meet companies, we do due diligence, we do have some time in a spreadsheet on top of doing meeting with companies just like you're interviewing me. We interview companies, pretty much every day >> And the point there is that we just try and find businesses that have idiosyncratic opportunities.
07:24 We want to make the portfolios better each and every day based on the metrics that we look for. >> Why does your portfolio look so international versus Canada US exposure? >> Yeah, I think we go where the opportunities are. There's every most everything goes in cycles in my career. There's been times where I'm massively overweight Canada.
07:44 There's times when I'm massively overweight the US and right now we're just finding better value outside of North America. That's just, when we meet companies and we see where the best value, we want to find growth. At the end of the day, we want to find earnings growth. We want to find free cash flow growth.
07:59 We just don't want to pay a lot of money for it. And right now, within a North American context, there are still stocks here in Canada that we're bullish on as are in the US, but we're finding more opportunities. And so that's where we're allocating more capital because we see better opportunities for clients.
08:15 >> Yes. Say more about that. How long has that trend been persisting for you? Because in many ways we have seen over the last year international starting to outperform. Are you noticing that people are starting to perk up and notice okay maybe there's life outside of the United States and are the flows following you internationally? >> Yeah I think we've got ahead of it.
08:38 I think the catalyst you could have said this 10 years ago, right, and then yet the US outperformed and so obviously the catalyst happened a couple years ago when we had a change in government or leadership in the US. I think that that was something that happened and I think now you've seen in the US these the hyperscalers have been outperforming close to 50% of the US market is technology oriented so a lot of money has gone into that space I learned early on in my career that the most money
09:07 tends to go to the wrong place at the wrong time. And so, if you go to our website, back when that election happened in the fall of 2024, we wrote a piece saying that we thought age of US exceptionalism had peaked. And one of the inputs in our conclusion was based on valuation based on different strategies coming out of Washington.
09:30 And so, as we travel the world, we think, yeah, there's you see it here in Canada, right? Who would have thought it that that Canada would have outperformed the US all the while we've been under attack as much as we are right and I think that speaks to valuations I think that speaks to domestic investors in different jurisdictions allocating their capital or repatriating their capital back home and so we see that in many jurisdictions
09:58 >> and yet it's not like the US markets have been pathetic they're still up 10% that's a really nice that's supposed to be the annual move and we've done that in the last six or seven months. I'm sure you got push back when you said US exceptionalism has peaked. >> Yeah. So when I go back in my career, I have a tendency, you learn from your mistakes and where I've tried to get better as I get older is I tend to spot things early, right? And the goal is to try not to invest or allocate too early.
10:26 So yes, for sure consensus is always hard to push against. But if you stick to your process which in part is valuation driven for us the valuations just became too compelling and we had an example today we made an investment in a UK real estate company called Seag and they got a takeover offer from Big Bad Prologes the largest US industrial real estate company. They were trading above net asset value.
10:52 Today they made their second bid to take out Seagro which trades at a massive discount in net asset value. We've had since 2018 we've had over 30 companies in our portfolio get takeover offers and increasingly more and more of them are from international jurisdictions.
11:11 Last week we had Rotorque from the UK get a takeover offer from Big Bad AB from Switzerland. And then on Monday this week we had a company from Switzerland that we owned in the healthcare biologic space called Polyeptide. they got a takeover offer from Sang Sam biologics in Korea. So we're our underwriting thesis our process is being validated where by which we are seeing more and more takeovers and they're happening outside of the US.
11:33 And >> that's interesting because a lot of your pro picks that you brought to us. In fact, all of them are international companies in industries that you could probably get exposure to in the US and Canada. But maybe that value piece, we'll hear more about that in pro pick.
11:50 But I think it's interesting that you like Canada as you mentioned has outperformed but that you lump Canada and the US together when you're saying there's better opportunities internationally. Does that mean Canada on a relative basis isn't that attractive? >> I think if you go down what we're seeing it's not hard to find companies that are cheap below say 50 billion US market cap in both Canada and the US.
12:13 It is more difficult when you get above 50 billion. We have a thesis we've been observing. There's more and more money chasing fewer and fewer investment opportunities. In many ways, the equity market has been shrinking. The analogy I always use is Apple, right? So since 2012 when it put its first buyback in place, they've bought back over 40% of their stock.
12:33 The multiple's gone from being pre-teen, right, to high30 level, right? And so they have this massive buyback on place. And so what we're seeing and hearing as more North American investors like us travel the world and we just talk to management teams, we're like, why don't you take a page out of the playbook from the North American companies which are buying back their stocks, >> right? And so that I think that trend is still in its early days in it's yeah Japan it's been in place for 10 years and then now Korea
13:03 has taken a page out of the Japanese playbook and they're doing and in the UK as I said they were very dividend oriented investment culture now there's more and more buybacks happening there and so yeah I think Apple foreshadowed what's this this trend and so we want to go as Gretzky would say where the puck is going as opposed to where the puck is and that's what one that's one driver we think that is helping the international markets outperform the next 5 10 years versus last 5 10 years.
13:29 >> Okay. Because I know you're such a stock picker, I feel like that's enough highle stuff. Let's go into the mailbag and see what you think about some of the companies we got questions on. >> Great. >> The mailbag is brought to you by Hamilton ETFs. The traditional 60/40 portfolio, 60% stocks and 40% bonds, has been a cornerstone of investing for decades.
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15:26 A modern mix of stocks, bonds, and gold built for today's market. For more information, visit hamiltonetfs.com or visit the link in the show notes. Our first question in the mailbag, I'm laughing because you've just spent time talking about international and value and this is going to be the most domestic question and arguably not value at all.
15:52 And it's about the Canadian banks. And I think this week especially, there's a great debate about the Canadian banks. They it's not just been gold energy that's powered the TSX. It's been the banks, too. They're trading at record highs, very high multiples. And the question we have is, is this the new normal? And is it too risky to add more capital here? Should I be taking profits? >> I think it depends on your individual asset mix.
16:20 As I said, I think there's better value in banks around the world, but the Canadian banks are an incredibly powerful oligopolistic franchise that I've been hearing for last two decades, you want to sell Canadian banks. You want to short Canadian banks. When I travel to financial services conference in Europe or in the US, and you sit beside a hedge fund manager, that's their go-to short thesis is short to Canadian banks, which has not been a successful idea.
16:49 And they don't understand, it's a very very igopolistic industry. Their ROEs have been expanding. They're growing their dividends. And again, what I said before, they're buying back stock. Right? If you listen to their most recent conference calls, Royal Bank is up their buyback, Beimo's up their buyback, right? CIBC is up their bank, and I could just go on and on and on.
17:13 So, they're capital shrinking. And the other thing that you many of your listeners might not appreciate, I say this when you've seen me sometimes out at speaking engagements, and most people don't know the answer to this, but who's the largest shareholder? Royal Bank. >> Oh, but I do know. It's Royal Bank.
17:29 It's the other bank. >> Yeah. Yeah. And the other Canadian banks, right? So when you when you go if you look at other international banks they don't own each other as much as we do here in Canada. >> So incestrous. >> Yes. So add the buybacks to the equation right that they're doing themselves.
17:45 Then add the fact that they're all buying each other. Then add the fact that they're 40% financials are say call it 40% of the index. Add to that the fact that the market is getting more and more ETFed. So there's this natural flow. If you wake up today and you sell your business in Canada and you bank with one of these five banks, they're going to be all over you to cross- sell you their other services, right? And then so if you allocate your proceeds from your sale in your business or whatever windfall gain you've had to your savings account,
18:13 they're going to take your money and in part they're going to buy themselves, right? So, so you're really fighting against a big tailwind, our pecking order. We've liked what Daryl White's done at Beimo. The we like the fact that he has exposure to US commercial, right? You got a new CEO at CIBC, Harry, who's going after this high net worth franchise.
18:34 So there are still a lot of little drivers if you listen to them, you go to their analyst days, you they have a lot of things they can still do. And then of course, topic dour is AI. Who's going to benefit the most from AI? It's going to be big companies with lots of people and proprietary databases, right? So, I can't think of too many businesses out there where there's a bigger database.
18:54 And then going back to interest rates, it's good to be a lender, right? Rates are high. So, they're in a great spot. And I think that people underestimate how their franchises have been able to expand our wise on the back of the wealth management. And then we are in a very lucrative, profitable capital markets environment, which to your point maybe might be reason.
19:18 Can it get any better than you get to take a multi-t trillion dollar IPO in SpaceX? Can it get better than that? Well, we'll see. Here comes Anthropic and maybe Ben and I. We'll see. >> This week, David Rosenberg said he always bubble spotting said Canadian banks are in a bubble. Time to take profits.
19:34 which is interesting cuz he came on our podcast and he kind of said, I won't say a bad word about the Canadian bank. So, but obviously the stocks have gone up and the multiples higher. What do you think about that? Would you go so far as to say they're in a bubble? >> No. Can banks not in a bubble? No. I their capital structures have been so strong, hence they have the ability to just up their buybacks, right? I talk to companies every day, right? Right.
20:02 And so I talk to companies that have good balance sheets and I talk to companies that have bad balance sheets. That's not where I'm worried. Where I'm worried about there being a bubble to be frank would be in the general partner, private equity, private credit world where there's been some questionable practices around marks. Right.
20:19 So that's where I think there could be a domino that fly because you have leverage. >> Your Apollo's your KKRS. >> Well, I'm not going to. Yeah. So I met Apollo in June and they have an incredibly great franchise. great underwriting. I think it's more smaller GPS, the ones that have been gating that we don't hear about necessarily.
20:40 I don't think the Apollos are the ones with the strong LP relationships they have where the troubles are going to come. It's going to be, I don't know when I started my career, I don't know if there were a thousand private equity firms in the world. I don't know today if there's 10 or 15,000, but there's too many, right? Again, too much money during the time of quantitative easing and free money went towards private markets.
21:04 And so there were a lot of upstart small private equity, private credit firms, not of the AAA ilk of Apollo that got going. And so right now we're in a process where there's a lot of debt set to mature the rest of the decade. And we'll see who we're really good at underwriting and I think that that's going to be where there could be some risks.
21:25 and to bring it back to the banks that industry I guess grew because the banks in part were not willing to underwrite. >> Well, so there was the regulatory changes that pushed people towards the private credit markets after 2008 and those here coming back to the banks those regulatory restrictions headwinds are now being reduced across many jurisdictions around the world.
21:51 It look there if there's a big credit bubble to Mr. to Rosenberg to Rosy's to David's thesis. There will be there will be people will c the banks will catch a cold as well, right? But they're not going to be, it's not going to be a Leman and Bear event in my opinion. It's not going to be Silicon Valley Bank event with the Canadian banks in my opinion.
22:13 But there could there be could there be trouble like we've seen in Canada in the financial services sector go easy and the subprime lending space has had some troubles that not as well diversified business models but yeah the Canadian banks are not the banks that were around in the late 1980s early 90s during the real estate bubble that popped there right they have this these wealth management recurring revenue franchises are incredibly profitable incredibly powerful and they will enable them to weather storms that will come And
22:40 there will be storms, right? So they might not perform, I think they're up, 30%, let's say, this year. You can't extrapolate that every year. They've had massive multiple expansion on price to book, price to earnings. That's not going to happen as easily in the next 12 to 18 months as the last 12 to 18 months.
23:00 But yeah, I wouldn't it's dangerous to bet against the Canadian banks >> and I think he's not calling for a Leman style event, but yeah, just saying it's kind of become our AI trade and time to book profits. Good discussion on the Canadian banks. We've actually got a question in the mailbag about Blackberry, which is interesting given your very long history with the company and one of its founders.
23:22 But I want to talk about BlackBerry as of today, which is very different from what it was. no longer making smartphones. It's a software play and they've been trying to do that for a couple of years, no success, and then all of a sudden the stock takes off and I think if it's not the best performing stock in 2026 on the TSX, it's one of them.
23:44 What do you think of Black What is BlackBerry today? >> Yeah, so we're shareholders. We became shareholders last year again, right? So we've been monitoring watching it. It would be criminal almost for me if I didn't do that with based on my Canadian heritage with this business. >> Yes. >> And so look, it takes time to turn around, right? They got disrupted by Apple just like I said, they disrupted other digital device makers, but now they're a software company, right? Software has not been necessarily in favor
24:13 this year, but they have two primary assets that are best of breed in terms of technology. Q&X which the company luckily fortunately they bought that business 2009 2010 so really at the end of the day if they didn't have that then the turnaround would have been much more difficult to execute if at all so Q&X they're selling software and the operating system for cars right so here comes all this autonomous drives have you been in a Whimo >> I have not been in a Whimo but I do know
24:46 that >> right so they enable >> right and so the point being is that I was in Korea 18 months ago Hyundai is one of the best of breeds OEMs that will survive the day and that's one of their customers so they have this recurring revenue stream that's going to come from Q&X going forward I think is very powerful >> but they've always had that why is the stock taken off why have people just woken up to this >> well okay so if you're going to move into an autonomous world if you're going
25:14 to move into you're going to put software as an operating system it's different than your laptop, right? It's not going to bump into your colleague's laptops here, right? But if you're driving on the road, I can hear the cars outside. If there's a bug, right? You need truly 59's reliability.
25:29 You need to get through certifications. And it takes time. And the other thing with cars is the way the automs work is model years don't they change, right? So you to get into the design wins, you need to plant the seeds and then you're only going to get those sales come along as they sell the cars in the future years.
25:48 And then the bonus that's happened is this sadly on the back of what's happened in Ukraine and what's happened in the Middle East is as we've heard here domestically military and security has become front of mind after being a distant thought for our politicians for many years and so they have a security business that right now is booming right and so that sells into governments and governments right now are being forced by changes in policies from Washington to spend to illustrate that they're
26:13 spending more money on security for their NATO commitments and So they're going to get in the way of that. And so I think the thesis simply put is you got a company with clean balance sheet software multiples that are depressed because software sector is out of favor. And I think people are you're going to wake up one day and they probably should divest one of those divisions.
26:34 I would fathom that the security one will be the easier one because QX has huge growth curve going out in the next decade. And so when you do that that will even further strengthen the balance sheet and further simplify the investment thesis. So they, as you mentioned, they've had these businesses. Those are not new things, but it seems like it met a moment, right, where the market is hungry for that.
26:55 It's very low valuation. It was, yes, really dirt cheap. >> I want to know what happened a year ago for you to have an entry point because, as I mentioned, they had all this stuff. You've done very well since then. And with this kind of meteoric rise, do you think that most of the easy gains have been made? >> So I would say so our process is I spent a lot of time traveling and going out and meeting companies, be it domestically in the US or overseas.
27:24 So, I went to Ottawa and I got a tour of their R&D facility, met their chief engineers in charge of the Q&X. And then at that same trip, actually happened to go to a dinner with a politician from Ottawa talking about Ottawa's intention to spend our tax money more and more on >> on military and defense.
27:48 And so, and try and find domestic winners, to try and support and we're not blessed with many big company, right? At the time, you think about at the time, I was at a dinner with someone from CE Callen, which we also own.
28:07 MDA which we don't own and then okay we're done right that's it then okay there's BlackBerry okay then you could has a little bit of defense maybe to it but there's it's hard to find publicly they didn't even have Kraken Robotics is not there from the Maritimes but we're not blessed with a ton of opportunities there and so to me it didn't take a huge leap of faith to think Blackberry would find a way to get in front of some of that money
28:33 >> all right and more upside you're holding on >> yes >> what do you think about CE. I'm very CE curious cuz they're kind of they haven't benefited and the stock is sort of lost but new management they sound credible but you stress test them more than I do. >> Yeah. So talk of stress test I remember going to their flight simulator business in near Dorval in Montreal and they let me fly one of their simulators.
29:00 Yeah. Yeah. It was cool until I crashed it but it does make you appreciate their technology. I think there's just it's not been a definition cheap stock. And this is why your to your earlier question before. Once a quality Canadian company gets identified, it gets it in many cases why we don't necessarily own it will be because it gets bought by a small group of investors that are running too much money in my opinion and they're forced to own it. And so, it wasn't
29:31 I think they've struggled because it hasn't been definition cheap. and then there's a question mark about what happens to their US business right so as our prime minister is flying around trying to do jet deals with others it's you mentioned the word uncertainty I went to a dinner with the US ambassador and I lost count at I needed a calculator to count how many times the US ambassador used the word uncertainty they're obviously trying to diabolically create
29:59 this uncertain environment and so yeah if you're not going to give us the jet contract well maybe we're going to do something to you because last time I checked, we buy a lot of, we have a lot of military relationships with you going south of the border. So, so there's companies that are going to >> interesting being penalized that way.
30:18 >> We've got a couple of questions on retail stocks, which I would say Canadian investors are pretty dismissive of retail stocks. We've got two hot ones in Aritzia and Group Dynamite. and talk about few large dollars chasing few names. Those are it.
30:38 Aritzia and Group Dynamite both have done really well when you pull back. Do you like either of them? Do you own either of them? >> So we don't own Aritzia right now. We've owned it in the past in a significant way. So a year ago in the eye of the tariff mayhem or in April, Liberation Day, so I actually rolled up my sleeves and did a lot of work on apparel, right? cuz that was they were getting punished right they got crushed and so we did invest in Aritzia back then and we did invest in group Dynamite which was an
31:08 underwater IPO and I've been to both their head offices in Vancouver for Ritzia and Montreal for Group Dynamite and I think they're great franchises and my secret weapon in analyzing that sector is I have a daughter and her girlfriends that have been gifts that keep on giving to our portfolio since Lululemon went public in08 and was an underwater IPO and then the same thing happened to Aritzia and then the same thing happened to Group Dynamite and so >> they tell you when it's cool when
31:38 it's not >> well yeah before they my daughter got her driver's license when the price of me chauffeering them to the mall because we don't have Whimo here was you have to tell me where are you going to spend your money and invariably the last decade Aritzia won hands down that was a layup right and then as at least with Aritzia you go there they have couch for the boyfriends or the dads.
32:00 So, I've sometimes been there, but I'll tell you, garage has been a little bit of a trickier analysis process for me because they have a younger target market. And >> you're aging out. Your kids are >> Well, yeah. I look as a 55year-old male, I was a little nervous going in a store.
32:19 But what I can tell you in both their cases longer term, apparel is a very cyclical business. Literally a fashion business goes in and out of favor. So group dynamite I think can follow in the footstep of Aritzia and in some ways Aritzia it's not apples to apples will follow in the footsteps of Llemon and so ideally we look for companies that can double or triple in size and I think both those businesses can right now Aritzia is selling at a low singledigit free cash flow yield group dynamite is say higher single
32:48 digits you could buy group dynamite at north of a 20% free cash flow yield 14 months ago it's not there anymore So, but I think in both cases they're led by kick butt founders that will that culturally have made those companies successful. And when I again when I talked to my daughter and her friends, they're spending money there, I'll tell you.
33:09 >> Well, and you're going to the mall, which I think is interesting and leads us to our next question, which is Primaris rate, the death of the mall. And then I'm looking at Primis Rate, which owns malls, not even the best ones, at a record high. >> Yeah. So I think I always say to my team you make the most money when you prove the most people wrong right and then the other thing that I like to find I love to find right is I love to find situations where supply is down and demand is up. So coming on the back of
33:39 that apparel research, one of the takeaways, a second derivative learning we had was when I was talking to Abbercamri and Fitch and talking to Aritzia and talking to Group Dynamite and other retailers last year and I was talking to them about their go forward expansion plans. One data point I kept on hearing over and over again is it's getting harder to find space, right? So all of a sudden, so Alex Avery, who runs Primaris, 52- week high, interesting to note, he bought shares at June 30th
34:06 before they went into blackout period, right? So the CEO stepped in and he bought 10,000 shares. That's, he has nearly $10 million when you read the proxy. And, stocks trade discounts. It's an 8% cap. they've been I think they can still consolidate that space, excuse the pun, but the point being is that I think the malls have been oversold.
34:29 We've had been fortunate this year we were big shareholders in First Capital which got taken over by Choice and King set and we were also shareholder in whitest stone which is a service retail not a mall company in the US which got taken over by Aries. >> Right.
34:44 So it's not to your point before about discussion about private equity. It's not lost on me that private equity people are coming in the public market and buying their assets. >> Does primaris get taken out? >> Well so to me there it's a easy scenar I don't buy a stock because I think it's going to get taken over but would I be surprised? Hell no. Right.
35:00 In terms of Simon Properties which has 20% stake in Klepierre from France to Merridge which just did a they're cleaned up they've been spending forever cleaning up their balance sheet. they finally got, they did a deal with a US bank recently to further clean up their balance sheet.
35:19 So, yeah, would it be a natural extension? Cuz yeah, you're not building new malls, right? So you if you're Simon Property and you're number one mall owner in the US and you wanted to expand north of the border with a very advantageous US dollar versus a depressed Canadian dollar and they sell at a significant premium on FFO or cap rates and implied cap rates and so forth or net asset value.
35:44 So yeah >> is it trading at a discount or premium to its net asset value >> primar is trading at a discount still. Oh yeah. And that's before we even start, let's talk about replacement value, right? You mean if you want to put together a new mall right now, special, in terms of let's pave the parking lot, let's spend money on the concrete and all in the postcoid world with all the in the inflation spike on the input cost.
36:09 So that's one stock that I think will be a very conservative compounder going forward because and the opportunity to buy that name and I think why it's done so well this year because not so long ago a year ago where you saw Hudson's Bay go to zero right and so there was this negativity around but they've been able to play they're replacing the tenants they're improving the tenants what would you rather have Hudson's Bay as a tenant or have a grocery store or have a TGX or Wyinners or low cost with a better
36:34 balance sheet right so they hampered with a very bad counterparty, very bad tenants. So I think >> I think that to your question about Aritzia and Group Dyn right now I would say >> we prefer to own the landlords as opposed to necessarily the tenants >> and what else would you own as you said a lot has already been cleaned up.
36:53 So >> well so we do we mentioned so we own one of the largest mall companies in France called Klepier. We've owned that for a while, right? I think we had Whitstone get taken out in the States, but we own Federal Realy in the US.
37:11 Well, it's not a mall company. It's more service retail, very quality company. So, I think right now that retail again when we do channel checks, so to speak, and we talk to simple power of the landlord versus power of the tenant, the pendulum has swung, right? The Amazon effect was real, right? 10 years ago, we wake up, Amazon buys Whole Foods.
37:33 Everyone was like, "Oh my god, here comes big bad Amazon." We're not going to build new malls. So, the beautiful thing is, Canadian population has grown. US population has grown. They're pausing right now. But, if you're a Dollarama, if you're in a successful retailer and you're trying to find new space, well, okay, the Bay went bankrupt, Zeers went bankrupt, Sears is gone, right? So, there's no lowhanging fruit.
37:58 Toys R Us has gone bankrupt. So where's the incremental space going to come now in the next 10 years for those re successful retail growth business plans to find space? It's going to get harder. And so I think that's good. As leases expire, there's going to be pricing power for these retail landlords. >> Okay.
38:16 Well, great education there about the landlords and out of consensus as you say, which you're not afraid to do. Which brings us nicely to a stock that we've got in the mailbag, which is Propel Holdings. It's a fintech it does lending primarily in the United States. It's kind of evened out a little bit this year, but it's been under pressure and I think it got caught up in two things.
38:41 One, go easy imploded and even though they're different businesses, Propel gets painted with the same brush and probably just a credit cycle crunch in the US. >> Yeah. So, it's a small cap subprime lender in a world where rates are going up and people are starting to question the strength of the US consumer in particular.
39:00 We've all heard about the K economy, right? So, that's their target market. >> Then, as you said in Canada, the regulatory pressures around where they can price their loans in context of delinquencies has been a headwind. But to your point, the US, so they need, they're just kind of underfollowed, underappreciated.
39:21 I met them twice in the last year. You said I'm a contrarian. I tend to look for things that are out of favor. They've definitely hit the screens. They look cheap on many metrics. We were shareholders in a company from the UK called International Personal Finance which always looked cheap and then got taken private.
39:40 And so we have as of yet not fully pulled the trigger. We're actually going back and forth right now. I want to go and meet their underwriters. I've met the founder. Very impressive. We like businesses where they're founder led, founderowned. So >> this is Clive Clive Ken Ross up. >> Yeah. Yeah. So met him.
39:58 He's and so we're I literally been going back and forth with him on trying to further due diligence to business and see how they underwrite. M >> so if you see that and maybe the underwriting is good as you mentioned the cycle is not favorable why what would make you inclined or what would it take for this stock to work
40:29 >> well I think you've got valuation protection where it is here when I put the numbers in my spreadsheet it's not an expensive stock right so what I need to have conviction that their risk management process is so the majority of our portfolio is >> which was the problem I'd go easy ultimately. >> Yes. Exactly. Right. So I have a tendency to keep my as we talked at the beginning of the show, right? There's all these macro uncertainties, right? So how do you protect against that? Well, one thing you can control with all these uncontrollables is balance sheet strain.
40:53 So if you're going to go into the finance domain, right, there's obviously leverage, right? And then so I want to if I'm going to take extra risk, I want to make sure I'm getting paid for that. And then I'm going to benchmark them relative to other subprime lenders I've seen throughout my three decades in the business.
41:10 And subprime lending has been an area like I said before, right? There's been a number of banks throughout my career that have gone to zero, right? Whether it's Silicon Valley most recently or it's Lehman Brothers or it was Korean banks or was there's been a lot of bank failures.
41:26 And so in this case, they're in a position to fill a niche need. They're in a position again, like I said before, to benefit from technological advancements. And so yeah, so stay tuned. Happy to follow up as >> Okay. No, I love it. It's on the watch list. Our final question is on what used to be, I think, a Bay Street Tech Darling can access and what you're smiling.
41:51 >> No, no, no. We own it. So, but so yeah, to your point, so yeah. Okay. >> 2014, 2018, 2019, great, great, great stock. And then it's been a little bit more middling since then. The growth is still there. The business has doubled in the last couple of years topline growth.
42:08 But what does it take to work? >> Yeah. So I think so it is a best of breed supply chain management software company. And so I think the overhang so that's >> in theory in this world. >> Yeah. >> Should be doing incredible, >> right? But if you're a large investor and you're investing in a small cap software company like this, would you like it if they change CEOs? Would you like it if they change CFOs? Would you like it if their head of IR is retiring? So, a lot of people would say, "Well, I'm going to wait to meet the new CEO. I'm going to wait to meet the new
42:36 CFO they announced this week. I'm going to wait to meet the new IR person, right?" A lot of size investors, once again, more and more money run by fewer and fewer firms. So, typically if you're going to buy this company, you're going to have to take a big stake. But what we like underlying the business has been performing well, right? Buffett has a line I think it is that says you want to own businesses that can almost run themselves right put it
43:02 politely and the idea being the business in many ways there's a lot of employees working hard at their head office in Ottawa around their operations around the world but the best they have fortune 100 and 500 companies and to your point we're in a world where supply chains thanks to tariff changes thanks to geopolitical tensions are changing rapidly here comes AI.
43:26 They have proprietary data sets. They've been sold off or depressed because everyone has just sold everything to do with software. So, we think there will be some hidden gems within the software arena that people are just exiting on. And so, can access so I went to their offices last September in Ottawa as well.
43:47 And so and I think the other thing that people have been trying to figure out with software is what's going to happen to the pricing model right so everyone was debating okay what's a terminal value right back in February well so now so they have AI agents as part of their offering to clients well how do you charge for that right how do you charge for an agent versus a seat right and so people have been in this period of uncertainty we like to invest in ideas that I call two quarter problems companies
44:16 that have a temporary dislocation that aren't structurally going to be challenged longer term, right? So-called bear traps, right? And so the what I've learned in my career is if you wait for the certainty, you pay a high price for the certainty. But if you're willing to get off your butt, get on a plane, go to, underwrite it, wait to see, make a educated guess that they're going to hire a good CEO and hire a good CFO and we aren't running
44:49 200 billion or two trillion. So we can change our mind, right? So if we don't like so we have ability to move faster, get ahead of our peers and that's the essence of I think why we've outperformed most of our peers because we are more nimble right and so that's I don't as the founder of wheelhouse I don't want wheelhouse to become the biggest money manager I want to be one of the best and so we want to own some of the we love it when we can buy some of the best companies like they would rank in the top quadrant for
45:13 Gartner right so if you're right now you're a Fortune 500 board trying to figure out how to squeeze extra efficiencies through the use of AI and AI agents in our supply chain. Kakus is getting invited to that RFP and they're winning way more than they're losing. And so I think going forward, I see no scenario where by which AI is not going to continue to help supply chains become more efficient and they're best to breed.
45:37 >> Does it get taken out? $4 billion market cap is so easy. >> So once again, I don't buy stocks because I think they're going to get taken over. But when you But no, but yeah, would I be surprised if we woke up and they got taken over? Heck no. They've got net cash on the balance sheet.
45:52 They're achieving rule of 40. There's kind of a bit of right now they've had management turnover, right? So there was a moment in time there where they didn't have a CFO CEO that they just announced a new CFO this week. So I don't want to they there is definitely and then it's not lost on me that back in the spring they superersized their buyback, right? So we why do we like owning companies with clean balance sheets, net cash? Well, because when they think their stock gets too cheap to be true, they step up and they buy the stock, right?
46:21 And so, Kaxis stepped in very aggressively in the high 120s and 130s and they then, it was a very emphatic we're buying back our stock very aggressively even before we attract the new management team, right? To do that. So, you think about it, they did that without a new CFO.
46:40 >> CFOs typically play a pretty important role when it comes to capital structure decisions, right? So that speaks to the opportunity they saw and so no, would I be surprised to see them get taken out? No, not at all. >> Okay. We've talked a lot about Canadian stocks, but as you mentioned, you're seeing more opportunities internationally and you brought three interesting ideas to us.
47:03 So let's get into ProPix. Proix is brought to you by ATB Financial. With over 100 billion in assets, ATB Financial is powering possibilities for more than 843,000 financial services clients. ATB Cormar Capital Markets is a leading North American investment firm providing holistic corporate and capital markets advice and full service financial solutions.
47:31 Visit atb.com/intheoney for more information. Okay, these are international. In two cases though, you can buy it on the New York Stock Exchange. So for our Canadian investors, I know they complain sometimes when we get a little too exotic. These are international companies, but you can purchase them on the NY.
47:51 The first one is Shinhan Financial. It's a South Korean bank. So we already talked about banking. And you talked about loving international opportunities. How does this fit into both of those thesis? >> Yeah. So I met them last year when I was in Korea in September. And so they trade below book value versus Canadian banks that trade at two to three times book value.
48:13 They trade at a singledigit multiple of earnings versus Canadian banks that trade at mid- teens multiple of earnings, right? They are growing their dividend more aggressively now because there's been a regime change in South Korea, right? So again, I have a tendency to encourage our team to run to areas of difficulty.
48:31 You might remember two years ago there was martial law in Korea, right? So they had literally had a regime change and I think sadly for Canada right we talked about some great successful Canadian names so I feel I can say this now we're not blessed with a Samsung we're not we don't have an SKHX right we don't have a Hyundai right there's so many great global powerhouse companies there and you might have read with this memory mayhem that's going on that if you work at these companies for
49:02 example you're going to get big bonuses Not just $1,000 or 10,000. We're talking Yeah. Right. >> And so who will win from that in my opinion will be the Korean economy as evidenced by the fact that their bank raised interest rates, right? Versus our central bank has is on pause after having cut rates.
49:21 Korea has because of their economic growth and their economic boom is starting to raise rates. Who benefits? Which sector? Which companies benefit when rates go up? Banks. Now the other way is it's such you look at Samsung skain highex and you say there is a bubble we're in a boom time what happens if when it goes bust >> so I think there are pockets of AI that are in a bubble am I really worried about a pocket where there's only two or three suppliers and there's an oligopoly no right but am I worried about the
49:52 fourth or fifth LLM model? Yeah, I think that's going to get commoditized. Right. it is getting commoditized. So yeah, I grew up in the 90s in 2000 when memory nan dram so be it were very cyclical. But what I think is missing so once again I keep I have a process where I keep a spreadsheet free cash flow yields right now for Samsung and for SKHX are in the high teens to low 20s right and then Micron in the mid to high teens hence SKH came here to try and compress some
50:27 of the valuation gap >> so there's only three of them so up till a year ago when Nvidia needed high bandwidth memory there was only one call they could make right so my teammate Devon who flagged SKINX to me a few years ago after he went to head office in Nvidia, he said, "Oh, by the way, there's this company across the street that had office space across the street from Nvidia.
50:50 He said, "We got to buy this SKX because when I talked to Nvidia, there's only one supplier. That's an awesome business." So, I'm not in the memory bubble camp to be frank. >> And this time is different. >> I would not say this time is everything is cyclical. There will eventually be a moment in time where before I always say I try and gauge.
51:09 It's a lot easier in my experience in my career to track supply than to figure out demand. Right? I'm concerned about demand in certain AI pockets because when we talk to companies we are hearing mixed reviews about AI ROI success stories. Right? Here come all the hyperscaler conference calls next week. Well stay tuned.
51:32 Right? and for their capex budget, right? So stay tuned for that. They've been underperforming >> because they've gone from being asset light to asset heavy. But anyway, the point being on the memory, if you want to talk about memory, >> there's when I talk to companies, oh my god, there's here come the robots, here comes more automation, here comes you haven't been in a Whimo, right? So it's a giant supercomput.
51:54 Do you know how much memory you need in one Whimo, right? It's off the charts. Did you just can't throw up, a fab to build? I've been to fabs, right? They're not very easy to build. So, right now, I don't see significant supply coming from memory in the next couple of years.
52:16 We'll keep doing research. We can report back to you. But it's if you woke up today said, "Hey, I'm going to phone, all the supply chain lamb researchers and so forth, say, I want equipment to build. I need to call up ASML." Yeah. Get in line. And so I think it's I think it's but I come back to my valuation discipline.
52:36 These stocks are incredibly cheap. I'm way more worried about many other parts of the AI stack than memory. >> And I like that Shinhan is sort of a derivative play, maybe a cheaper derivative play on that. >> Well, look, yeah, again I come back to the banks, right? If when the hyperscalers report conference calls next week, if they're not improving the margins of banks, which is one of the biggest sectors in the world, they got problems.
53:02 Okay? So if they're not able to illustrate returns for all the capex or the products that the banks which need to adopt this new technology. So when I met Shenhan they had actually a fully automated bank right they are Korea similar to Canada there's five banks there but the difference is the valuation is pretty much half across the average metric and so >> they're always Korean banks should always be cheaper than Canadian banks okay but the gap as I've said I've seen in it in industry after industry
53:39 that we do work on is so wide it's at one of the widest junctures I've ever in my career. And so I think they these companies when I grew up in the 1990s I would have told my bosses when I was an analyst if you can find a non- tech company that understands how to use an Oracle database or a cybase database pretty much just buy the stock right and the banks were first one of the first adopters of database technology and it added basis points to ROE and in my career if you can find stocks that have improving ROE
54:12 you rarely lose money. Okay. And the ticker is SHG on the New York Stock Exchange. You've brought us an advertising tech software company, Zeta Global Holdings. This one hasn't done much in 2026. Why are we getting excited about it? >> So I've asked our team, as much as possible.
54:33 So, it's obvious the AI winners are Nvidia, the Pix and Shovel company. So, we all know that that ship sailed a few years ago. So I always try and encourage my team, tell me something I don't know. And so, based on my experience, if you can find companies with proprietary databases, right, that they themselves can use that proprietary database with AI technology to grow their business or help other companies grow.
54:58 So Zeta is, headquartered in New York, has net cash on their balance sheet. They've built proprietary databases, back when AI wasn't called AI and it was called machine learning. Yes. >> Right. and they sell to enterprises and they sell to agencies like the Publixes of the world and WPPs and omniccoms who are desperately trying to figure out ways to add value or add ROI on advertising spend.
55:21 So really they have been very good at optimizing companies advertising budgets and figuring out there's a lot of companies right now that don't necessarily trust the hyperscalers like the Metas and the Google's with all their proprietary data. So Zeta comes in and they show you how to optimize your proprietary data, marry it with their data, right? And then use agents and new AI tools and again it's got clean balance sheet.
55:46 That's what we look for, right? It's founderled still. It's we think it can double or triple in size. They just did a JV with Palanteer. >> I was just going to say that's a nice endorsement. >> That's a very nice endorsement. Right. So Palanteer, so they trade not quite at the multiples of Palunteer and I'm not suggesting that they will ever will trade at the multiples of Palunteer, but we've been tracking at our research department, companies
56:13 that are adopting Palanteer. We're trying, we're at a point where we think that it's going to be the ones that get enabled versus the ones that are necessarily enabling. at some point. It's hard to tell exactly when that's going to happen. But again, if all this capex that we're going to hear about in the next week is going to have a value ad for businesses and enterprises around the world, then we think the companies that get enabled will benefit the most.
56:41 I saw this happen earlier in my career. I was running money during the NASDAQ bubble burst. It's not the same, but there are similarities. And I think we're at a point now where yeah, you can still make money in some of the memory stocks. And I think you're going to have more improvement from the companies that actually use the high bandwidth memory, use the software tools, use the services from the hyperscalers to make their business more efficient and add productivity and have an expanding
57:13 margins. >> So Zeta Global ZA on the New York Stock Exchange. The third one, we're going across the pond, UK industrial rate, triax, big box rate. What is so exciting? >> Yeah, so I think real estate, so once again, I think one of the easiest ways to make money is if you can identify sectors or companies that are benefiting from a decrease in supply with an increase in demand, right? Economics 101.
57:41 So real estate's obviously suffered in terms of new supply the last 5 years in jurisdictions where interest rates have gone up significantly. There's the 10-year bond in the UK right now is 5%. Right? It's not so long ago that 10-year bonds in certain jurisdictions were negative. So it's been then add to this the UK from a contrarian standpoint 10 years ago they shot themselves in the foot economically with Brexit.
58:03 You have their I don't know fifth, sixth, seventh prime minister announced this week. So that's not been a go-to place for people saying, "Hey, if I want to build a new logistics center, send me money." Right? And so, as I said before, we fortunately we own a company called Seagro, which is getting a takeover for offer from Pearlis.
58:20 Triax is a it trades at it's discounted a 7% cap rate. It's got very low loan to value. Founders are still running the firm. Sells way discount to replacement value. they're benefiting. The incremental demand is coming from the military spend, right? So, if you're going to build a bunch of drones, you got to put them somewhere, right? So, you need logistics warehouses.
58:45 So, that's an incremental tenant that wasn't there before on top of the e-commerce effect that we already saw in place. And then some of their, an optionality is some of their logistics facilities have power. You might have heard that some people are looking for power these days. So, hence there's a better use for that real, some of that real estate could be converted to data centers for sovereign AI projects.
59:06 for example, if you're military inclined, but then for your listeners that want to find other ways to benefit from that like domestically here in Canada you can invest in Dream in the US we like East Group >> like Dream Industrial. >> Yeah. So the point being is that we went through a period of time where there was too much space globally during COVID the industrial complex overearned right because we all were at home we were all adopting Shopify and Amazon and so
59:36 and supply chains got challenged and so people needed more space so everything goes in cycles. industrial benefited from that short-term period of time where people needed to have place to store their goods and their supply chains. And so now fast forward to today and rates went up and so you had a little bit of increased vacancy as too much of the supply came to market.
1:00:02 And so here we are today and Amazon is expanding right there's incremental demand from them. We are seeing increased demand for automation. So some of the legacy logistics facilities are basically becoming obsolete, right? More and more companies, one of the biggest feedbacks, trends, themes we hear from company after company the last few years is because sadly on the back of COVID, we saw massive wage spikes, right? So some companies have told me that when they were paying someone in a warehouse
1:00:32 $15 an hour, they really didn't care about putting robots or automation equipment in place. But now if someone is making 25 or 30 bucks an hour, they're investing in robots and logistics. So hence they got to retool. They got to reoriented that box. And so that's good for the landlord because it means that they're investing more capex into that facility.
1:00:52 Makes them a better in many ways tenant. And so I'm bullish on the logistics business. It's an extension of our discussion earlier about retail rates too because they're kind of tied at the hip in many ways. And so I think real estate's been very much out of favor. And so, as I said before, we've made the most money in our career finding contrarian opportunities or out of favor ideas with improving fundamentals.
1:01:14 And so, I think this is an area in the next few years that we'll have improving fundamentals. >> Amazing. It has been such a pleasure to talk to you and learn more about these companies. Scott, thanks so much for joining me. >> Thank you for having me. >> And I think we had a nice bull bear debate. >> There we go. >> On some of these stocks.
1:01:28 Don't miss our next episode. We've got Gary Aken. He is the head of Canadian equities at Franklin Templeton joining us. If you've got questions, email us questions@inthemoneypod.com. Find us anywhere on social media @inthemoneypod. And we'll see you on the next episode.