Pat McKeough

A professional investment analyst for more than 30 years, Pat has developed a stock-selection technique that has proven reliable in both bull and bear markets. His proprietary ValuVesting System™ focuses on stocks that provide exceptional quality at relatively low prices. Many savvy investors and industry leaders consider it the most powerful stock-picking method ever created.

As early as 1980, Pat was recognized as #1 in the world of published investment advice by the Washington, DC–based Newsletter Publishers Association, and he was the first multi-year winner of The Globe and Mail’s stock picking contest.

Both CBS MarketWatch and The Hulbert Financial Digest recognized Pat as one of North America’s top stock analysts. The Wall Street Journal called him “one of only four investment newsletter advisors who have managed to serve their readers well over the long haul.”

A best-selling Canadian author, he wrote Riding the Bull, his 1993 book that predicted the stock-market boom of the last half of that decade. Through his many television appearances, he is well-known to investors for his insightful analysis and his candid, unpretentious style.

Bottom line: Pat’s conservative, reduced-risk strategy is a proven approach to safe investing.

Posts by the author
ISHARES MSCI EMERGING MARKETS INDEX FUND $41.73 (New York symbol EEM; buy or sell through brokers) is an exchange traded fund that aims to track the MSCI Emerging Markets Index. Its geographic breakdown includes China, 18.6%; South Korea, 15.7%; Brazil, 11.6%; Taiwan, 11.3%; South Africa, 7.4%; Russia, 6.2%; India, 5.8%; Mexico, 5.2%; Malaysia, 3.7%; and Thailand, 2.5%.

The ETF’s top holdings are Samsung Electronics (South Korea), 3.7%; Taiwan Semiconductor (computer chips), 2.3%; China Mobile, 1.8%; China Construction Bank, 1.5%; Tencent Holdings (China: Internet), 1.5%; Industrial & Commercial Bank of China, 1.4%; Gazprom (Russia: gas utility), 1.4%; and America Movil (Brazil: wireless), 1.0%.

The fund’s industry breakdown is as follows: Financials, 26.8%; Information Technology, 14.8%; Energy, 11.7%; Materials, 9.8%; Consumer Staples, 8.8%; Consumer Discretionary, 8.8%; Telecommunication Services, 7.6%; and Industrials, 6.4%.
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ISHARES MSCI JAPAN INDEX FUND $11.81 (New York Exchange symbol EWJ; buy or sell through brokers; us.ishares.com) is an exchange traded fund that tries to match the return of the Morgan Stanley Capital International (MSCI) Japan index.

The ETF’s top holdings include Toyota, 6.6%; Mitsubishi UFJ Financial, 3.1%; Sumitomo Mitsui Financial, 2.4%; Softbank Corp., 2.4%; Honda Motor, 2.3%; Mizuho Financial Group, 1.9%; Japan Tobacco, 1.5%; Takeda Pharmaceutical, 1.4%; Canon, 1.3%; and Hitachi, 1.2%.

The fund’s industry breakdown is as follows: Financials, 21.4%; Consumer Discretionary, 21.1%; Industrials, 19.6%; Information Technology, 9.6%; Consumer Staples, 6.3%; Materials, 6.2%; Health Care, 5.9%; Telecommunication Services, 5.1%; Utilities, 2.8%; and Energy, 1.2%.
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ENBRIDGE INC. $42.55 (Toronto symbol ENB; Shares outstanding: 825.7 million; Market cap: $35.0 billion; TSINetwork Rating: Above Average; Yield: 3.0%) invested $23.8 million in 2010 for a 20% interest in the 35-megawatt Neal Hot Springs facility in Oregon, which was then under construction. U.S. Geothermal (New York symbol HTM) owns the other 80%.

The plant, which taps into heat from below the earth’s crust, has now started up.

The renewable energy facility is a small one for pipeline operator Enbridge, which also owns 12 wind farms and four solar plants. But these should help deflect criticism from environmentalists opposed to some of its pipelines, as well as let it steadily diversify into power generation.
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ALLIED PROPERTIES REAL ESTATE INVESTMENT TRUST $32.50 (Toronto symbol AP.UN; Units outstanding: 68.2 million; Market cap: $2.2 billion; TSINetwork Rating: Extra Risk; Dividend yield: 4.2%; www.alliedpropertiesreit.com) owns 134 office buildings, mostly in major Canadian cities. These mainly Class I properties contain over 9.5 million square feet of leasable area.

Class I refers to 19th- and early-20th-century light industrial buildings that have been converted to retail space. They usually feature exposed beams, interior brick and hardwood floors.

The trust bought $400 million worth of properties in 2012. In the first half of 2013, it added a further $170.2 million worth. Allied has a 92.0% occupancy rate.
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RIOCAN REAL ESTATE INVESTMENT TRUST $24.19 (Toronto symbol REI.UN; Units outstanding: 300.7 million; Market cap: $7.3 billion; TSINetwork Rating: Average; Dividend yield: 5.8%; www.riocan.com) is Canada’s largest real estate investment trust (REIT), with interests in 348 shopping malls containing over 83 million square feet of leasable area. That total includes 50 U.S. malls with over 13.7 million square feet.

Earlier this year, RioCan ended its joint venture with Retail Properties of America (New York symbol RPAI). As a result, RioCan now holds 100% of eight malls in Texas, including the dominant shopping centres in Austin and San Antonio.

In the quarter ended June 30, 2013, RioCan’s revenue rose 9.7%, to $272 million from $248 million a year earlier. Cash flow per unit increased 8.1%, to $0.40 from $0.37. The units yield 5.8%.
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LOBLAW COS. $45.67 (Toronto symbol L; Shares outstanding: 282.1 million; Market cap: $12.8 billion; TSINetwork Rating: Above Average; Dividend yield: 2.1%; www.loblaw.ca) has transferred the bulk of its real estate holdings to a new, publicly traded real estate investment trust called Choice Properties REIT, $10.10, Toronto symbol CHP.UN.

Loblaw sold a 16.9% interest in the REIT to the public in July 2013 as a new issue at $10. It kept 83.1% of Choice Properties’ units.

Choice owns 425 properties, including 415 supermarkets and shopping centres, nine warehouses and one office building. Ontario accounts for 43.2% of its earnings, followed by Quebec (17.8%), Alberta (13.1%), B.C. (7.7%), Saskatchewan (5.1%), Nova Scotia (4.6%), New Brunswick (3.9%), Manitoba (2.5%), Newfoundland (1.7%) and P.E.I. (0.4%).
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BANK OF NOVA SCOTIA $59.16 (Toronto symbol BNS; Shares outstanding: 1.2 billion; Market cap: $71.5 billion; TSINetwork Rating: Above Average; Div. yield: 4.2%, www.scotiabank.com) is the third-largest of Canada’s five big banks, with assets of $742.6 billion.

In its fiscal 2013 third quarter, which ended July 31, 2013, the bank earned $1.30 a share, up 12.1% from $1.16 a year earlier.

Higher loan demand and an increase in deposits pushed up the Canadian banking division’s earnings by 13.2%. That includes the contribution from ING Direct, which Bank of Nova Scotia bought for $3.1 billion late last year. ING Direct offers a wide variety of no-fee banking services, mainly over the Internet. It has 1.8 million customers and $30 billion of deposits.
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Hotel giant Wyndham aims to spur more growth as shares hit new highs
WYNDHAM WORLDWIDE (New York symbol WYN; www.wyndhamworldwide.com) is one of the world’s largest hospitality companies, with 7,440 franchised hotels worldwide. Its business originated with the Howard Johnson and Ramada chains which opened their first hotels in 1954. The company subsequently added such well-known brands as Days Inn, Super 8, Knights Inn and Travelodge hotels....
Acquisition could help trigger rebound for high-yielding construction stock
Pat McKeough responds to many requests from members of his Inner Circle for specific advice about buying stocks as well as questions on investment strategy and the economy. Every week, his comments and recommendations on the most intriguing questions of the past week go out to all Inner Circle members. And each week, we offer you one of the highlights from these Q&A sessions. While we reserve our buy-hold-sell advice for Inner Circle members, these excerpts provide a great deal of information and analysis on stocks we’ve covered for members of Pat’s Inner Circle....