London, UK, 13 May 2022
Edison issues review on Canadian General Investments (CGI)
Canadian General Investments (CGI) has been managed by Greg Eckel at Morgan Meighen & Associates (MMA) since 2009. Despite elevated levels of stock market volatility, he is maintaining his disciplined approach to stock selection, seeking high-quality companies that can be held for the long term. The manager believes the chance of a recession in Canada is 'slim to none in the near to medium term' as the economy is in 'good shape'. However, if changes to the portfolio are required, due to a sustained change in the investment backdrop, they will be undertaken in a measured way. CGI has a progressive dividend policy, paying regular quarterly dividends; the total distribution in FY21 was 4.8% higher year-on-year and the fund currently offers a 2.5% yield.
While CGI's shares trade at a wide discount, which may be due to the high level of family ownership and the inability to repurchase shares due to tax reasons, the current 25.6% discount is narrower than the range of 29.7-31.3% average discounts over the last one, three, five and 10 years. As a reminder, CGI has traded at a higher valuation in the past; it traded close to NAV in 2006, which was a during a commodity super-cycle.
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