Canadian General Investments (CGI) is managed by Greg Eckel at Morgan Meighen & Associates. He stresses that despite the tough macro backdrop as a result of the coronavirus pandemic, he is sticking to the company’s philosophy and fundamental investment process, which has generated a very long-term record of outperformance versus the Canadian market. The manager says: ‘We will not veer off into unknown, dangerous territories and away from our core, proven strengths. It is easy to fall victim to near-term pressures, but doing so has proven to handicap and impair returns otherwise available. We rely on our experience and learnings of the past in an effort to avoid such pitfalls, and make every effort to provide our shareholders with the results to which they have become accustomed.’
Stock prices have been under significant pressure as a result of the COVID-19 outbreak. However, if history is any guide, markets have recovered from all setbacks, regardless of their severity, and gone on to set new highs. The current weakness may thus provide an opportunity for investors to add to their exposure to high-quality, well financed businesses that can be held for the long term.
- Broad exposure to the Canadian stock market, along with selected exposure to US equities.
- Fundamental, long-term approach to bottom-up stock selection.
- Long-term NAV and share price outperformance versus the benchmark S&P/TSX Composite Index.
- Growing dividend, which can be paid out of capital gains as well as income.
CGI’s shares are currently trading at a 31.1% discount to NAV, which is broadly in line with the 30.6%, 29.6%, 29.1% and 27.7% average discounts over the last one, three, five and 10 years, respectively. The company has moved away from paying special as well as regular quarterly dividends, and in FY19 the total distribution increased by 5.3% year-on-year. Based on its current share price, CGI offers a 3.6% dividend yield.