In short: Last year's second pro pick reviewed: +54%, still held. The host frames it as a staffing company and he corrects the frame: "they do also training. They do a lot of work for governments and now that Canada and Europe have decided to spend a lot more on military and training and building new areas and stuff, so they will benefit out of that." The valuation has re-rated but the earnings are catching up: "the stock also last year was extremely cheap. It was about 10 times earnings. Now it's probably 14, but the earnings are growing and probably will grow for actually years to come." The stated catalyst is M&A: "the company also said officially very recently they're looking to grow further more on making some more acquisitions. So we still own it. We still own it."
Last year's second pick, up 54% and still held. The name gets mislabelled as a staffing company, which is why it was cheap. What it actually does is supply services and training to governments — including military training — alongside its staffing operations.
That distinction is the whole thesis, because Canada and Europe have both committed to spending materially more on defence, and a large part of that spending is not equipment but the training and services required to use it. Calian sits directly in that flow.
The valuation has already moved from about 10 times earnings to about 14, so the easy re-rating is behind it, but he argues earnings growth now takes over and continues "for actually years to come." Management has also publicly said it is looking to make more acquisitions, which is the next identifiable catalyst — the same pattern he looks for everywhere else.
44:40They do a lot of work for governments and now that Canada and Europe have decided to spend a lot more on military and training and building new areas and stuff, so they will benefit out of that. And the stock also last year was extremely cheap. It was about 10 times earnings. Now it's probably 14, but the earnings are growing and probably will grow for actually years to come.
In short: Owned ("CE Callen, which we also own") — one of the very few publicly-listed Canadian ways to own the domestic defence/security spending push he heard about first-hand at an Ottawa dinner. Canada is "not blessed with many big companies" in the space.
Calian, based in Ottawa, provides technology, health and defence-related services largely to governments — the kind of contractor that benefits directly when Ottawa decides to spend more on the military. Morrison owns it, and the sourcing is the interesting part: he found it in the same round of Ottawa meetings that produced his BlackBerry purchase, sitting at a dinner with a Calian executive while a politician explained where defence money was going.
His broader observation is a scarcity argument. Canada has very few listed companies capable of capturing a domestic defence build-out — he names Calian, MDA (which he doesn't own) and Kraken Robotics, then says "and then we're done." When the money has almost nowhere else to go, owning the few available recipients is a low-imagination way to participate.
28:07MDA 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
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