Mackenzie Minute: September 1, 2017
Wincy Wong, Portfolio Manager on the Mackenzie All Cap Value Team, says disruptions in the wider economy can create value opportunities for Canadian investors.
WINCY WONG: I think it’s just an interesting time to be a Canadian Value investor, even as market multiples, broadly, are at the higher end of their historic norms. Business models are being disrupted, new technologies are being implemented; all changing the way that we engage. So that’s impacting a number of different industries, including automotive, media, food retailing and general merchandising, just to name a few.
As a Canadian investor, I feel that we get front row seats to watching how things get played out in one of the largest, most competitive markets in the world: the US. And opportunities arise when the market takes this broad-brush approach towards sectors and sub-sectors indiscriminately, basically assuming that all markets are structured exactly the same. So with our deeper knowledge of the Canadian marketplace, we look for these opportunities to take advantage of market dislocations.
In Canada, we’re finding pockets of value in different sectors. An example would be the food retailers, where we’ve seen some Canadian share prices decline following the announcement by Amazon of its acquisition of Whole Foods. Now, we see these Canadian businesses holding solid balance sheets, strong store and distribution networks, with robust IT systems and free cash flow that can support future dividend growth going forward. We believe these businesses are solid and well positioned, from both an offensive and a defensive perspective, should the competitive environment increase.