Warren Buffett's interest in investing in Canada has caught the attention of investors. Middlefield Canadian Income fund managers Dean Orrico and Rob Lauzon discuss the attractiveness of the Canadian market and the potential for large, good value income stocks that are growing their dividends. They highlight Canada's proximity to the US, its abundance of natural resources, and its growing population as factors that make it an excellent diversifier for UK investors. The managers believe that Canada offers good value compared to the US market, with lower valuations and higher earnings growth expectations. They also mention the potential for Canada to outperform during periods of higher inflation and when commodities are on the upswing. The managers highlight the fund's exposure to energy, real estate, and financials, and the positive economic outlook for Canada with expected interest rate cuts. They mention the fund's unhedged exposure to the Canadian dollar and its use of gearing to enhance returns. They also discuss recent M&A activity in the Canadian REIT sector, which they see as validating the NAVs of the REITs they own. The managers mention the fund's 5% dividend yield and its focus on income generation. [cd5cd718]
Canada is the first developed economy to cut interest rates, which is significant for a resource-rich, growing country whose stock market trades at a lower valuation than the US. Middlefield Canadian Income fund manager Dean Orrico highlights Canada's attributes, including being a major resource country, a top five energy producer globally, the largest net exporter of electricity, and having a growing population. Canada has a points-based immigration program that attracts immigrants who contribute to the economy, resulting in population growth and increased demand for Canadian products and services. The Toronto Stock Exchange trades at about 15 times forward earnings, compared to the S&P 500 at about 21 times. Canada has experienced inflation and raised interest rates earlier than the US, UK, and Europe, but is now starting to see rates come off. [1679c6cc]
