An Ernest Opinion

An Ernest Opinion2024-01-25T08:28:26-05:00

An Ernest Opinion is a blog written by Ernest Wong, Head, Research at Baskin Wealth Management. In it, he will provide thoughts on North American markets and companies with a focus on the business strategy and management quality. Baskin Wealth Management may or may not own these stocks and he will avoid the valuation aspect of the business and will not be providing any investment recommendations. We hope you will find it interesting.

What I’m watching from first quarter earnings

By |May 1st, 2024|

Beyond looking at reported macroeconomic figures from the Federal Reserve or the US Bureau of Labor, individual company results can provide an alternative gauge of the economy and business sentiment. Our portfolio companies tend to be leaders in their respective industries, and therefore give good insight into various dynamics at play within their various sectors.

What to do when a stock doesn’t work

By |Oct 4th, 2023|

Legendary investor Warren Buffett famously said that his favorite holding period is forever. Our aim at Baskin Wealth Management is to replicate this by owning great businesses managed by skilled & honest CEOs, and then sit back and let these [...]

How Patrick Doyle Can Fix Restaurant Brands

By |Jun 20th, 2023|

Last November, shares of Restaurant Brands International, the parent company of Tim Hortons, Burger King, and Popeyes, shot up on the announcement that Patrick Doyle would be the incoming Executive Chairman. The market’s enthusiasm is well founded: Doyle is best known for leading the turnaround of Domino’s Pizza as CEO from 2010 to 2018 with Domino’s Pizza being the #1 performing stock in the S&P 500 during that time.

A compounder thesis for Brookfield Corporation

By |May 25th, 2023|

Last December, Brookfield Corporation (BN) listed its asset management business into an independent company called Brookfield Asset Management (BAM), in essence separating Brookfield’s capital (Brookfield Corporation) from the third-party capital managed by Brookfield. The naming can be confusing, so in this blog, BN will refer to Brookfield Corporation, while BAM refers to Brookfield Asset Management.

ESG & Canadian Energy

By |Jan 16th, 2023|

In recent years, it has become common for companies to include a section on Environmental, Social, Governance (ESG) during investor calls and presentations. As an example, here is a slide from RioCan explaining their initiatives on ESG: I usually glaze [...]

The bottom line for big tech

By |Nov 2nd, 2022|

The recent underperformance of the so-called “FAANG” stocks has led some investors to question whether a strategy of owning these large technology companies remains sound. Ernest outlines why the long term prospects for these companies remains attractive.

Creating value in volatile markets

By |Sep 27th, 2022|

Amidst the market volatility, investors sometimes forget that stocks and bonds fundamentally represent sources of capital for business operations. When capital is plentiful and prices are high, it is cheap for companies to invest in growth to open new stores, spend on marketing, hire employees, and make acquisitions by issuing new equity or cheap debt.

Costco’s true moat

By |Aug 18th, 2022|

If you ask investors why Costco is so dominant, you will likely get answers such as low prices, strong cost control, consumer-friendly returns practices, membership program, and cheap gas, hot dogs, and rotisserie chicken.

Have growth stocks bottomed?

By |May 5th, 2022|

A notable feature of the current stock market decline is how disproportionately growth stocks have been impacted. The S&P 500 is down only about 12% year-to-date, while the technology-focused NASDAQ is down about 18%. Apart from Energy (+41%), the top performing sectors are low-growth, dividend-heavy Consumer Staples, and Utilities stocks. This result is not too surprising as high-growth stocks are more impacted by rising interest rates than low-growth stocks.

What to do about inflation

By |Apr 5th, 2022|

By now, there is unanimous consensus that inflation is happening and that it is not as transitory as once thought. I normally don't spend time thinking about macroeconomic issues such as future inflation since it is difficult to not only forecast such factors accurately, but even more importantly, have a correct non-consensus macro view that adds value. This is why our investment strategy focuses on company-specific factors such as business quality and capital allocation and why we often say, “We own individual companies, not the market”.

Why we don’t invest in oil stocks

By |Mar 9th, 2022|

Given the current oil price environment particularly with the geopolitical issues in Russia and Ukraine, it is natural to ask questions about whether an investor should buy energy producers.

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