Edison issues review on Canadian General Inv.
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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