October 2, 2025 • 51 mins
Tonight on The Brian Crombie Hour, Brian interviews Alex Letko. Alex Letko, Regional Manager for Central Canada at LetkoBrosseau and Portfolio Manager, analyzes markets, investment strategies, and the AI boom. He recalls the 1987 stock market crash, noting parallels with today as a few AI firms dominate valuations, similar to the dot-com bubble. He warns of challenges in infrastructure profitability but highlights the firm’s emerging markets fund focused on unmet needs like water, clean energy, and healthcare. Alex sees Canada facing recession risks but benefiting from a relatively strong fiscal position among G7 nations. He predicts Canada may outpace U.S. growth by 2026, with opportunities in infrastructure, natural resources, defense, and high-tech.
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Speaker 1 (00:00):
The views expressed in the following program are those of
the participants and do not necessarily reflect the views of
Saga nine sixty am or its management.
Speaker 2 (00:17):
Good Evening, every want to welcome to the Brian crimeby
Radio Hour. We're going to talk a little bit about
investment management tonight because I think that number one, you know,
all of us have got retirement funds and a little
bit of money we want to invest in. So understanding
what's happening with the markets where to invest, how to
invest is one of those critical things that we do
and probably don't spend enough time thinking about, and so
(00:40):
it's worthwhile talking to an expert and understanding a little
bit more about it. And then also I've met Alex
Letco our guest previously, and his company has got a
really interesting story, and so I think that that's worth
the conversation. Our guest, Alex Letko, is the regional manager
for Central Canada for Letco Brossar, a Canadian independent investment
manager investment measure they got nineteen billion dollars of assets
(01:02):
under management and he leads their Toronto office. We're going
to chat a little bit with him about his background,
about how we got into this business, about let cobrasar,
and about the markets. Alex, welcome to the show.
Speaker 3 (01:13):
Thanks for having me, Brian, my pleasure.
Speaker 2 (01:15):
So tell me first off the top, how your company,
how your firm is different than the typical investment management company.
Speaker 4 (01:25):
That's a great question, Brian. Well, first of all, we
label ourselves a little bit of a boutique or independent
investment management firm, and so what that means to us
is independent of thought and independence in terms of how
we allocate our client's capital. And so what we do
is we put in a great deal of diligence and
research into the companies and the fixed income products that
(01:48):
we invest in. And so we're not a firm that's
trying to make a quick buck by trading around the quarter.
We're very long term oriented. We do a great deal
of research and depth word to understand the companies. We
consider ourselves as partners with the company's longer term and
so I think that that's one of the hallmarks of
our investment process, is really the in depth diligence that
(02:11):
we carry out.
Speaker 2 (02:12):
So most people these days are just you know, buying
the index. Why is your process better and different?
Speaker 4 (02:20):
Yeah, So, I mean, so the index, index investing, passive
investing has really, I mean, it has taken the investment management
industry by storm.
Speaker 3 (02:30):
It really has.
Speaker 4 (02:31):
It was about twenty five percent total assets under management
about ten years or so ago, and today it's about
fifty percent. And just a year or two ago in
the United States, index investing or passive investing surpassed active
management for the first time. It's now about fifteen trillion
dollars of active of assets under management. And so this
(02:54):
is really this is this has brought about questions as
to whether or not active management is dead. Why on
earth someone would need to even hire an active manager.
And so I think that there's great value in having
somebody make investment decisions from being curious about the world,
trying to understand things, trying to understand the companies that
(03:16):
are being invested in, and to make you know, allocation
of capital on behalf of clients according to that. And
so I'll give you an example. So in nineteen eighty seven,
our firm was founded, and had you invested in a
global balanced benchmark of security through passive ETFs in nineteen
(03:37):
eighty seven, that would that would have mirrored global equities
and fixed income.
Speaker 3 (03:44):
You would have made.
Speaker 4 (03:45):
Had you invested one million dollars in that cocktail, you
would have made about fifteen million dollars on that investment.
That's a compound annual growth rate about seven point eight percent.
Had you invested with leco Brosso's Global Balance mandate, you
would have made about forty five million dollars. So that's
about triple the amount. And this is what it comes
(04:05):
down to in the investment management industry is that we
work on behalf of people that have financial objectives. And
so whether or not that's purchasing a new car, or
affording a down payment on a new home, or leaving
a certain amount of money for your kids, or funding
a charitable organization, people have investment objectives and adding a
few basis points or a few percentage points to return
(04:28):
over a long period of time goes a tremendous way
in helping people achieve those objectives. So there is tremendous
value in active management.
Speaker 2 (04:36):
What are ETFs? You said, ets? What are ets? Can
you explain that to everybody?
Speaker 5 (04:40):
Please?
Speaker 2 (04:41):
So?
Speaker 4 (04:41):
ETFs or exchange traded funds, and so what they are is,
let's say you wanted to own a portfolio of securities.
Let's say you wanted to mirror the benchmark, say the
S and P five hundred. It used to be you
would have to have to buy each one of those
five hundred stocks.
Speaker 3 (04:58):
But in ETF is a product.
Speaker 4 (05:01):
Where you buy the stock, you buy the ETF and
it gives you a little slice of the index. And
so what that's done is it's allowed people to diversify
their holdings a lot more easily than it has before.
Speaker 2 (05:14):
So, you know, I went to business school and they
talked about rational markets and that there was no opportunity
for anyone to beat the market. If there's no opportunity
for anyone to beat the market, if all the information
that is out there is already reflected in market pricing,
how can you actually beat the market? How can you
do better via active management? Why don't why don't I
just buy the index?
Speaker 4 (05:35):
Well, if that were true, Brian, if all information was
properly reflected in the market, then it wouldn't be possible
for active managers like ourselves to consistently beat the market
over time. And so I mentioned our Global balanced fund,
But you can look at all the investments we've made
in Canadian public equities since nineteen eighty seven, and they've
returned compound annually about fourteen and a half percent, and
(05:58):
the benchmark returned about nine percent. And so we've consistently,
and other active managers have done this as well, consistently
beaten the market. And so what that necessarily implies is
that not all information is reflected. And so again there's
a tremendous amount of value that can be said for
actually doing the work, not just simply you know, sitting
(06:20):
back and pushing a button and owning the index, but
actually doing the diligence and the work required to understand
the world, understand the companies that you're investing in.
Speaker 2 (06:31):
Well, the retort that I've always heard is that you know,
in econos that believes in rational markets and efficient markets
would tell you if you saw ten bucks on the sidewalk,
don't bother picking it up, because it's already been picked
up by somebody else, and it does that ten bucks
sitting on the cybe work doesn't exist in reality, but
clearly it does, and by picking it up, you're actually
making the market efficient. And so I think what you're
(06:52):
doing in your active management is making the market efficient,
and other active managers are doing the same thing. So
if you didn't have a whole bunch of active managers,
the market wouldn't become efficient. It's your role in exploiting
the inefficiencies that make it effectively efficient after time. I
won't make you respond to that unless you want to.
Speaker 4 (07:12):
No, that's a great perspective, Brian, And of course I
agree with the large part of what you're saying there.
Speaker 2 (07:19):
So you know, there's different strategies that people have talked about.
I wonder if you can explain how they're different and
if you follow one. You know, there's this sort of
value investing strategy where people follow low price earnings ratio stocks.
There's a growth strategy, and there's an index strategy, and
(07:40):
maybe you've got some others. But can you describe sort
of different strategies and what they are.
Speaker 4 (07:44):
Sure, so you know the index strategy, I think I
already probably hit on it, which is just sort of
owning the index, owning the broader market, and your hands
are completely in the wisdom of the crowd. If the
market goes up, then you go up. With the market
goes down, then you go up. Growth investing would be
in owning typically more expensive stocks that are pricing in
(08:08):
higher rates of growth over time, and so the idea
would be that they'd be able to compound their earnings
over time, and value investing would be trying to own
stocks that are not quite pricing in the all the
upside just yet. And so we consider ourselves more in
the value camp. We don't like to bucket ourselves, but
(08:29):
when clients come and look at us and compare to others,
they see a little bit more of value. And what
we mean by value investing, it's the same thing. If
you were buying a car or something, you would want
to make sure that it's well made, that it's good quality,
and that you're not over paying for it. And so
it's the same thing in investing in the stock market.
You want to make sure that what you're buying is
(08:50):
a solid, high quality company, that the management team knows
what they're doing, and that you're not overpaying for it.
The more that you overpay for a secure, more you
overpay for anything, the more risk that you're putting on
the table. And so when we as value managers think
about investing, first and foremost top of mind is the
(09:11):
preservation of our client's capital. We don't want to overly
risk our client's capital. If you pay up for something
like a growth stock that is already pricing in a
lot of the upside, well, if something if it goes great,
then fine, you'll make money. But if it doesn't go well,
there's a lot more downside. But if you invest by
protecting the downside through being very attentive to the valuation
(09:35):
and the price that you're paying, then there's simply less
downside in case something bad happens, and you retain a
lot of upside as well. So that's how we think
about value investing.
Speaker 2 (09:44):
There was a famous book by Ben somebody rather a
by value investing. Do you follow that book? But do
you know who I'm talking about?
Speaker 4 (09:52):
Well, there's a lot of books on value investing, to
be honest, But what is it about that book.
Speaker 2 (09:58):
That it's been Templeton or some of that. It's the
book that everyone talks about is being the bible of
value investing. Anyway, I was getting you know, that book
talked about where the book value of the asset was
greater than the stock price and the price earnings ratio
(10:20):
was low. So you wanted to find stocks where they
were asset rich. But we're earning a lot of money.
Is that something you look at Yeah.
Speaker 4 (10:30):
And I think the ben you're talking about might be
Benjamin Graham. Yeah, but that's one way of looking at it. Absolutely,
And so you want to invest in companies where they
have assets or potential that is not recognized by the market,
where the price is not reflective of that potential.
Speaker 3 (10:50):
And so we.
Speaker 4 (10:52):
Find that over time, you know, and that's been an
investment philosophy of ours that really hasn't changed since nineteen
eighty seven. We find over time that that's reaped, you know,
tremendous rewards for our clients. We've been able to protect
it downside while ensuring you know, very good upside as well.
Speaker 2 (11:07):
Warren Buffett, I think, often said that he'd rather invest
in a company that had great management, even if the
company wasn't great, rather than a company that was great
with bad management. What do you think about that?
Speaker 6 (11:23):
Good?
Speaker 4 (11:23):
It's an interesting perspective, and I don't entirely disagree with it.
I think there's a lot of different ways to make money,
and so I wouldn't want to paint everything with the
same broad breaststroke. Certainly, when we go about our diligence process,
and I talked about a little bit about the fundamental
diligence process that we undertake. One of the very most
(11:44):
important things that we do is we want to interview
the management team. We want to talk to the CEO
or the CFO, and we want to understand how they
think about the business.
Speaker 3 (11:52):
And so for us to.
Speaker 4 (11:53):
Be able to assess management's competency and also their long
term alignment with shareholders is tremendously important.
Speaker 3 (12:01):
So I think I think mister Buffett was onto something.
Speaker 2 (12:04):
I used to work for Jim Pattison, who you may
know from reputation. He's a reasonably successful billionaire on the
West coast of Canada, and he would always say, Brian,
you're investing in people and you've got to get to
know these people really well.
Speaker 3 (12:17):
Do you agree? Absolutely?
Speaker 4 (12:20):
I think it goes exactly with what I was just
saying that the management teams of these companies go a
long way to ensuring that they're successful or vice versa,
and so we are investing in people.
Speaker 3 (12:31):
Absolutely.
Speaker 2 (12:32):
So you know Buffett's common about he'd rather invest in
a B company with an A management team than an
A company with a B or C management team.
Speaker 3 (12:40):
You would agree with, yes, as you as you pointed
up before.
Speaker 2 (12:45):
So again it's how do you do that. You interview people,
you say Buffett interviewed people, Jimmy Patterson interviewed people, but
how do you actually do that? How do you assess
a management team?
Speaker 4 (12:55):
That's a great question, And first of all, it comes
with experience. I mean, I don't know how many interviews
you've done by now, Brian, but you can probably assess
your your interviewee a little bit better than you could
write it first. And so there's a certain amount of experience.
But you want to make sure to ask, for instance,
open ended questions and to let the management team tell
(13:15):
you sort of what is top of mind and kind
of see what it is that bubbles to the surface
in their thought process. And so I think that if
you do that enough times, it becomes a little bit
more clear over time sort of which management teams have
the chops and which might not.
Speaker 3 (13:35):
It is it is.
Speaker 4 (13:37):
It is very important, I think, to not just speak
with management team once. You know, we like to get
to know the companies for a certain period of time
before we invest, typically, and so oftentimes we'll speak with
one or two or three members of the management team
over a long period of time. So that allows us
to get to know them a little bit. And so
(13:58):
it's a process. Brian is the process.
Speaker 2 (14:01):
Jimmy Patterson had an interesting strategy that I'll volunteer up
for you and for the listeners because it was interesting.
He always wanted to go to their set of business
rather than having them come to him. He says, you know, efficiency,
maybe it's better if they come to see you, but
I want to get to see them in their own
place of business. I want to tour their factory, or
tour their store, tour their real estate development, or tour
(14:24):
you know, their laboratories or something like that. Says, I
want to see how they interact with their employees. I
want to see how they can describe their plan or
describe their lat laboratory, to see if they actually know
what the blank they're talking about. And you can tell
that far better when they're actually doing a tour and
walking around than you can if they've got a PowerPoint
presentation that they're flipping through in your office. And he
(14:46):
said that that will always give you a chance for
a lunch or a breakfast or a dinner, and he says,
you'll learn more about the ability for them to be
good managers over that social interaction than you will in
the a half hour hour that you spend flipping through
a flipbook in the in the boardroom table. What do
you think of that?
Speaker 4 (15:06):
I absolutely agree, and so it's interesting that, you know,
it's kind of exciting if you're a junior analyst and
you join our team. We have about twenty portfolio.
Speaker 3 (15:16):
Managers and analysts on our investment team.
Speaker 4 (15:18):
If you're a junior analyst you joined leco broso one
of the first things you'll notice is there don't cap
on the travel budget. So you're encouraged by the top
layers of our management to get out there and sort
of we call it tasting the ice cream. Get out there,
do as many site visits, factory tours, go to conferences
as you need, pardon me, I'm just gonna and so
(15:44):
that gives us a real sense of sort of what's
going on in the field. And the more times you
do that, the more you understand about the business. And
so that's a really really important part of our diligence.
Speaker 2 (15:55):
Markets are incredibly volatile today, and you know, people are
thinking the market's going to go up, We're going to
go down based on politics or what Donald Trump is doing,
et cetera, et cetera. We're going to take a break
for some messages and we come back. I'm going to
ask our guest Alex Lefko a little bit about what
he thinks is happening in the markets, and also about
AI stocks and if we're into potentially bubble territory. And
(16:17):
he's got I think an interesting story about what his
firm did during prior boom bus cycle. Stay with us,
everyone back in two.
Speaker 1 (16:25):
Minutes stream us live at SAGA nine six am dot CA.
Speaker 2 (16:44):
Welcome back everyone to the Bran Crimeby Radio Hour. We're
talking investments today, Investing in the market with Alex Letko.
He is the regional manager for Central Canada for Letko Brassaar,
a Canadian independent manager. He's got nineteen billion dollars of
assets under management. This gentleman is one of these smart
guys you meet in life. He leads their firm here
(17:05):
in Toronto, but prior he worked in the South Side
research in New York City, so that'll be interesting. He
was one of these guys on Wall Street. He's a
graduate of Columbia University with an NBA University College Dublin
with a master's in economics and McGill University with a
bachelor's in economics. And he's also a Chartered Financial Analyst holder,
(17:26):
so he's a numbers guy, but he's also, you know,
a business guy with with two masters and and and
a bachelor's as well. So you've got tons of letters
after your name, buddy.
Speaker 4 (17:38):
Yeah, maybe maybe too many, a little bit too much
time with the books, to be honest, but no, I
love learning, and all of us here on the research
team at Leco bro so that's what we do.
Speaker 3 (17:48):
We're curious about the world and we love learning about it.
Speaker 2 (17:51):
So I think if you go with alex you probably
have more letters after your name. If you went with Alexander,
then you might be equal with letters in the name
versus after the day. And Leco Brossere is a pretty
oppressive company itself. But when were you founded?
Speaker 3 (18:08):
So?
Speaker 4 (18:08):
Leco Brosso was founded in nineteen eighty seven by my father,
Peter Leco and his business partner Danielle Brosso. It's a
really interesting sort of quintessentially Canadian success story, and it
starts not in Canada but in Czechoslovakia. My father was
born in Czechoslovakia at the time Slovakia now and he
(18:31):
was born to His father was a business owner, his
mother was one of the very first female lawyers in
Slovakia and probably in.
Speaker 3 (18:39):
That part of the world.
Speaker 4 (18:40):
But between World War Two and the Iron Curtain coming down,
they essentially lost everything, like so many at the time,
they found themselves on a boat headed for greener pastures
in North America. They settled in Montreal and to make
ends meet, my grandparents so children's clothing in their basement
and that's what gave their son an opportunity to kind
(19:02):
of make the most of this amazing country. And so
he went to McGill, got an education, found his way
into finance, ended up at the CN Pension Fund, which
was the largest private pension fund in the country at
the time, and that's where he met his business partner,
Danielle Grosso, and they basically worked their butts off at
the CN Pension Fund and rose through the ranks, and
(19:23):
then in nineteen eighty seven, finally they tendered their resignation
in September, and then one month later, the infamous October
of nineteen eighty seven, they founded Black Cobroso what.
Speaker 2 (19:33):
A wonderful timing. So what happened in the fall of
nineteen eighty seven.
Speaker 4 (19:38):
Yeah, wonderful, depending on how you look at it, Brian.
But so October nineteen eighty seven is home to Black Monday.
October nineteenth, nineteen eighty seven. And when you think of
the great stock market crashes in history, you might think
of the nineteen twenty eight crash that precipitated the Great Depression,
or twenty nine. You might think of the Great Financial
(19:58):
Crisis or the pandemic, But it's actually Black Monday nineteen
eighty seven, that is, that's the worst stock market crash,
single day crash in history. The doubt fell about twenty
three percent or so. And so for most people starting
a finance firm, an investment management firm at that time,
that probably would have spelled disaster. But they saw things
(20:20):
a little bit differently. They saw that the reason that
the stock market crash, and they foresaw this is because
in nineteen eighty seven, interest rates had practically doubled over
that time, and yet the stock market continued grinding higher.
And students of finance will know that usually those two
things go are negatively correlated. Usually as interest rates go
(20:43):
faster go higher, especially so quickly you know, the stock
market usually doesn't like that. It raises borrowing costs on everyone.
Companies have less profits, and it also reduces the valuation
on the companies, and so usually stocks crash when interest
rates go.
Speaker 3 (21:00):
But that didn't happen yet in nineteen eighty seven.
Speaker 4 (21:02):
So they foresaw this coming, and so when it did happen,
they were not running for the fences like a lot
of their peers. They were ready, and so they put
money to work very quickly. They only had a couple
of accounts as clients there, two mothers, but soon a
lot of other investors followed as they as they gained
a lot of success coming out of the crash there,
(21:23):
and so very interesting timing, I would say, to start
an investment management company.
Speaker 2 (21:28):
Very interesting. I'll tell you my own personal story. I
also got an MBA, and I worked on Wall Street
the summer of nineteen eighty seven and thought at the
time that Wall Street future was in my career. And
then went back to my second year of business school
in the fall of nineteen eighty seven, and as you say,
in October, obviously every class was focused on what had
(21:51):
just happened on Wall Street. And that's when I decided
to go into industry. So maybe I made them wrong
mistake and should have followed your father's track. Can still
gone into Wall Street financial sector rather than saying I'm
out of here. I don't want this. But you know,
I've had some people that I knew that someone who
I knew that knew the gentleman that threw himself out
(22:15):
of the CSFB window. So I didn't know him personally,
but knew someone who knew him, and then knew lots
of other people that really came two huge collapses of
their monetary wealth and firms that went under after nineteen
eighty seven. It was really kind of quite.
Speaker 6 (22:28):
A catastrophic crash.
Speaker 2 (22:30):
We've got volatility today and I'm told and you would
know far better than I, but the stock market that
people brag about that Donald Trump lags about is at
a high in the United States. If you took out
something like five companies, it wouldn't be that the vast
majority of the current market valuation of the Dow Jones
(22:50):
is five AI related companies. Is that true?
Speaker 4 (22:55):
So if you look at the market today, about forty
percent of the market cap of the S and P
five hundred is the top ten companies. It's pretty much
unprecedented in modern times. And if you look at the
total market cap in the S and P five hundred,
it trades very expensively. So over seventy percent of all
(23:18):
the market cap in the S and P five hundred
trades at an earnings multiple of over twenty times. There's
only been a couple times in history that's happened. One
was the zero interest rate environment right at the pandemic,
but that was a funny time. But before that you
have to go all the way back to the dot
com boom. So historically, in some ways, the way you
(23:39):
cut up the market and the valuations these days, the
market has never been quite as expensive as this.
Speaker 3 (23:45):
And so we see that and we see a lot
of couse for optimism.
Speaker 4 (23:50):
There are good reasons why a lot of these stocks
are trading up.
Speaker 3 (23:54):
They're growing very rapidly.
Speaker 4 (23:56):
And I'm not taking anything away from the secular trend
that is, a AI is here to stay and it's
going to change our world in ways that are probably
somewhat unfathomable.
Speaker 3 (24:05):
To us today.
Speaker 4 (24:07):
That said, just like in the dot com boom, when
the Internet ultimately changed the way that we live and work,
the market got it wrong back then, the market can
still get it wrong today, and so we see a
little bit of a risk in the market. We see
a little bit of risk in certain stocks that you know,
(24:29):
as soon as they're enveloped by the aura of AI,
they immediately start trading up. I'll give you an example.
So Oracle is a stock that reported earnings a couple
of weeks ago, and they made an announcement that their
business was going faster and they were getting more backlog
because of AI related demand. It took just a few
minutes for the stock to shoot up about thirty five percent.
Speaker 3 (24:52):
And this is not a penny stock.
Speaker 4 (24:54):
This is already a stock that was around a five
hundred billion dollar market cap, And so for two hundred
and fifty billion dollars of capital to flow into any
one stock in a matter of minutes or a day
just goes to show how the market right now is
probably in a shoot first, ask.
Speaker 3 (25:11):
Questions later sort of mode.
Speaker 4 (25:13):
And so when we see that, it reminds us of
other times, like you know, the dot com boom like
I mentioned, where you know, investors were probably met with
or probably you know, exuded a little bit too much
exuberance and so when animal spirits sort of start to
get going like this, we we do find reason for caution.
(25:34):
And so what we've done over the last year or
so is we've we've raised a little bit of cash
in our portfolios and we're happy to be sitting on
a bit of cash just in case we do get
opportunities to redeploy some of that.
Speaker 2 (25:46):
You know, lots of us have read that book or
seen the movie. But the big short would you short
AI stocks today?
Speaker 4 (25:52):
So we're not a long short fun First of all,
we're we're a long only money manager. We only take
long positions. We only want to see the companies do
well over time. So but but but the the other
questions would you invest in them?
Speaker 3 (26:09):
And we are.
Speaker 4 (26:10):
We are invested in some in some stocks that are
that are greatly benefiting AI from AI. But that said,
we only want to do so in a very prudent way.
And so if you look at some of the stocks, uh,
you know, the nvideos of the world. And this is
not to say that those stocks are going to crash
down or anything like that, but if you were to
pay up for those stocks at current valuations, you would
(26:34):
be you would be paying a price that implies that
they continue to be successful growing the business UH for
a long period of time. And so that's fine, you'll
make money if they're continue if they continue to be successful,
But if anything bad happens, if they're not able to
meet their earnings targots, et cetera, then there's a lot
of air in the evaluation, a lot of opportunity UH
(26:54):
to potentially lose money. And so for us, as very
prudent allocators of our client's capital, we simply don't feel
comfortable in those sorts of environments putting too much money
on the table in those specific stocks. And so it's
nothing to take away from the from AI as a
secular trend. I mean, again, this is going to change
the world in ways that are hard to even imagine,
(27:16):
but the market seems to be a little bit over
at xuberant right now.
Speaker 2 (27:20):
So the sort of the analogy that I've heard in
that regard is, you know, railways in the eighteen nineties
nineteen hundreds changed America, changed Canada, and there was way
too much investment in them, and the stocks were a
big up, like crazy, and a whole bunch of them
went bankrupt. But that was actually great for the economy
(27:42):
because you had a whole bnitch of cheap railways available.
So it didn't change the industrial economic trend, but there
was too much exuberance and you had to be very
careful about who you invested in. Similarly, you know, in
the dot com boom, there was fiber being laid all
around the world and global rossing in other companies you know,
we're laying like crazy and had huge, lofty valuations. Some
(28:05):
of them went bankrupt, but that fiber was therefore available
at a cheaper price, and so it was good for
the economy, good for the industry, bad for a couple
of stocks. Are we into a similar situation that that
that AI is going to be great and it's going
to have a profound effect, but there's some companies that
are dramatically overvalued and there's going to be some bankruptcies.
What do you think.
Speaker 4 (28:26):
Not necessarily calling for any bankruptcies per se, Brian, I
take your point though, that a lot of the infrastructure
right now is being put in place for society and
benefit from AI for years to come. So you call
these the hyper scalers. So that the facebooks and the
Googles and the Amazons of the world right now are
spending billions collectively, hundreds of billions of dollars on capital
(28:51):
investment to purchase these AI chips and to build data
centers that will house these AI capabilities for years to come,
and so is infrastructure that will be in place and
the society will benefit from. But sometimes it's hard to
see how these companies are really going to earn that
much of a return.
Speaker 3 (29:09):
On that capital anytime soon.
Speaker 4 (29:11):
And indeed, that's exactly what's going on, is that it's
very difficult to see the profitability flowing through to their
bottom lines currently, and that's one of the problems.
Speaker 2 (29:20):
Other people have told me, don't invest in the United
States right now, there's too much volatility. Canada, we're not
sure about put your money in emerging markets. Where do
you invest geographically?
Speaker 4 (29:30):
So we're global investors, as we invest in Canada and
the US globally. We've had a lot of money since
actually nineteen ninety two was our first emerging market investment.
In emerging markets, by the way, for your listeners, these
are places like Mexico, Brazil, India, etc. So non developed economies,
and so in twenty eleven, after a number of years
(29:53):
of success, investing in emerging markets.
Speaker 3 (29:55):
We started our own Emerging.
Speaker 4 (29:56):
Markets fund, and this has been tremendously successful because what
we do is we go out there and we try
to invest in the great unmet needs of these emerging
market societies. So we're investing in water companies that are
meeting the needs of greater access to clean water, clean
drinking water, water sanitation in many of these places. We're
(30:19):
investing in clean energy producers. We're investing in healthcare companies
society as o societies. As the middle classes rise in
the at and they demand greater access to affordable healthcare,
there's a world of healthcare companies out there that will
cater to those needs and we'll see their earnings grow.
And so we have a number of very interesting themes
(30:41):
that bubble to the surface in our Emerging Market's portfolio.
And this portfolio is done tremendously well since we incepted
the fund in twenty eleven, actually ranks from the fifth
percentile globally of all emerging market all cap.
Speaker 3 (30:54):
Portfolios out there.
Speaker 4 (30:56):
That's according to the Investment Database, which is one of
the main institutional databases used.
Speaker 3 (31:02):
And so it's been tremendously successful for us.
Speaker 4 (31:05):
But really that's because we have this very optimistic view
of that part of the world where you have basic
needs in these societies that are as yet unmet, and
there's a universe of companies out there that are working
every day to meet those needs and they will see
their earnings grow and they have and they will probably
continue to see that.
Speaker 2 (31:25):
Tariffs are concerned to a lot of us from the
United States. What do you think about investing in Canada,
What do you think about the risk of tariffs? What
do you think about investing in companies? And can you
identify companies they're at risk of being damaged by tariffs?
Speaker 4 (31:40):
Yeah, so it was one of the first things that
we did as an investment management team is as the
tariffs were being announced, and actually as Trump came to
power last year and we foresaw this, we looked inward
at our portfolios and identified any sort of red flags
or any companies that might be at risk. Luckily, though,
(32:03):
we do have a bias for investing in very, very
high quality companies, and so we didn't really identify companies
that needed to be sort of trimmed from the portfolio
for for those reasons.
Speaker 3 (32:13):
That being said, it is an overhang.
Speaker 4 (32:15):
It's an overhang in terms of the economic impact from
the tariffs, and it's an overhang in terms of the uncertainty.
And so look, we've we've been through these sorts of
things before Trump's first term, for instance, But we do
believe that ultimately there is a community of interests where
people will logically realize that, you know, if you do
(32:38):
do well, then I'll do well.
Speaker 3 (32:40):
And so we've had I hope you're right.
Speaker 6 (32:41):
I hope you're right.
Speaker 3 (32:44):
I know, I.
Speaker 4 (32:45):
I you know, and I know a lot of people
are you know, it's been very painful for a lot
of people. And I don't mean to sugarcoat it or
anything like that, but we are long term investors and
we do believe that it is important to look around
the corner. And so in Canada, the economy is getting
a little bit beat up right now. So we printed
(33:05):
a negative quarter of GDP growth last quarter. We may
well print another one and be in a technical recession.
But we have some firepower and some ammunition to help
us get through this kind of negative period. And so namely,
you know, if you look at all the G seven
countries out there, and you look at their fiscal deficits.
(33:26):
Canada actually has just about the most favorable position, about
two percent physical.
Speaker 3 (33:30):
Jet deficit as a percent of GDP.
Speaker 4 (33:33):
That's not very large to the United States, which prints
a deficit, a big deficit of around seven or eight percent.
Especially with the Big Beautiful Bill, it's going to expand
the deficit. And so actually in Canada, we do have
room for the government to protect the economy a little
bit here from stimulating and the government actually has a
very good balance sheet, and so it's able to do so,
(33:53):
we believe, and so we actually foresee a situation despite
everything that's going on, we're starting sometime in twenty twenty six.
We actually think the Canadian economy can start growing faster
than the US economy, and so we don't believe that
that's widely accepted right now, and so that should benefit
Canadian companies and ultimately by twenty twenty six at least,
(34:16):
it seems that the United States administration is signaling that
that's when you know, they plan on getting around to
negotiating with US, and so hopefully we'll see a resolution
on the trade front as well. So there there are
there are sort of we hope some green shoots around
the corner here, and that's sort of how we see
(34:38):
the world as it relates to Tarris.
Speaker 2 (34:40):
I think you're right, and there's two sectors, maybe three,
that I'd like to identify, and I'd love to hear
what you think. I think that this major Project's Office
that the government's put in place is going to accelerate
some development of infrastructure and natural resources. And so if
you can find the right companies that are going to
be able to get faster approval and explore that opportunity,
(35:00):
whether it be in you know, pipeline construction or liquefied
natural gas or critical minerals or whatever it is, I
think that there's an opportunity, a great opportunity there. So
that's number one, you know. Number two, I think if
we ramp up our defense spending from less than two
percent to two and a half to three potentially to
five in the future, we're going to have to be
(35:22):
spending some of that domestically, hopefully a lot of it domestically,
and so therefore defense manufacturing should be an area that
should be attractive from an investment standpoint. And the third
one that I'd suggest to you is pharmaceuticals or maybe
it's high tech generally, because I think that there's going
to be less people going to the United States to
(35:43):
work given all the immigration constraints that the United States
has put in place, and we're already seeing some of
the brain gain that's coming to Canada from the US
immigration policies, and I think that's going to help us
some high tech biotech pharmaceutical companies.
Speaker 6 (35:57):
What do you think about those three suggestions?
Speaker 4 (36:00):
Yeah, Brian, I think where you're going with all that
is that there is like a glass half full side
to all of this, and hopefully the Canadian economy can
structurally improve from this bit of turbulence and kind of
diversify our trade partners a little bit and also change
the way that we do business with each other through
moving into provincial trade barriers. And I'd like to pick
(36:22):
up on one of the points that you made there,
which is that major project's office and I don't know
if that is necessarily the right vehicle, but there is
a general appreciation now, I think a little bit more
than in the past for making sure that it is
easier in Canada for getting these major projects approved, specifically
also in the energy space, and so look, energy is
(36:46):
just one of those things that Canada has a natural
advantage in. You know, we have tremendous endowment of resources
in the energy sector, and it's always been a problem
of getting those to market. So if you look at
the year's worth of production, if you're a natural gas producer,
if you're an oil producer, you have decades worth of
production in Canada. In the United States, you're very short
(37:09):
on production relatively speaking, same thing with most other places
in the world. And so there is a competitive advantage there,
and we would like to shift to energy transition technologies
and not have to rely on those parts of the
economy necessarily, but the reality is that we probably will
(37:30):
for many years to come, and so if we will,
I think that Canada is better off being a net
producer and supplier to the world of those sorts of resources,
rather than importing it from jurisdictions that might not have
the same sort of regard for worker safety and environmental
standards and that sort of a thing. And so if
(37:50):
we can get some major projects in order where we
can get some of those molecules to market, I think
that would go a long way to helping the economy.
Speaker 2 (37:58):
Were all we're going to take a break semesters and
come back with some concluding comments from our guest in
just two minutes. Stay with us, everybody. We're talking about
the economy and where it's going. Stay with us.
Speaker 1 (38:09):
Back into No Radio, No Problem stream is live on
SAGA ninety sixty am dot C.
Speaker 2 (38:19):
A welcome back everyone to the Brian Crimeby Radio Hour.
I've got Alex let Co of Letco Brassar with us tonight.
We've had a really interest conversation about his firm, his background,
(38:41):
where they they're sort of value investors and they're active investors.
He's a little bit concerned about the overconcentration of the
market right now and AI and and I think I'd
like to read into what you said that you're a
little bit concerned with lofty valuations in AI. That said,
you're convinced that there's some opportunities in the marketplace today.
(39:03):
You like the emergency markets, and you like some sectors
of Canada. You're worried that we're in a recession, that
we may have a technical recession. So let me ask you, Alex,
are you optimistic or pessimistic about Canada about investing today.
Speaker 4 (39:17):
Well, we're absolutely optimist. Brian we're you know, we're big believers.
First of all, in Canada. I mentioned the story of
the firm and how what I think is what I
think is a very very nice Canadian success story. And
I think it's nice to share these success stories with
fellow Canadians, make them aware because with everything going on
(39:40):
in the world, with our neighbors to the south, it's
nice to draw inspiration from one another. And so we're
really optimistic in the opportunity that we have here in
Canada to invest. We do think that, you know, investors
should be investing more in Canada and helping, you know,
bring projects to fruition, bring capital to places that it
needs in order for the econ me to thrive. But
(40:01):
we're also global investors and so look, we've been through
a lot the last you know, decades. You know, every
decade there's there's a reason to sell. If you look
at the decade after the Great Financial Crisis, so you
had things like, you know, the Greek financial crisis, and
(40:23):
there was all sorts of European sort of debt issues,
all sorts of reasons for the market to sell off.
But if you zoom out, the stock market kind of
just had a straight left, right up, and so we
can get in the thick of these sort of troughs
in the market and really get down on ourselves. But
I think that our firm and many investors in general,
(40:46):
have given great value to their clients from making sure
that we keep our heads above the water, that we
stay level headed, and that we continue to read the
tea leaves properly, and.
Speaker 3 (40:57):
That we continue to do the work.
Speaker 4 (40:59):
And so whether it's you know, through you know, the
crash of nineteen eighty seven or the dot com boom
where you know, we we you know, the.
Speaker 3 (41:10):
Phone was ringing off the hook at Leco broso with.
Speaker 4 (41:12):
With clients and other industry observers asking why the heck
we didn't know in a company called Nortel Networks. And
so it's really easy in these moments of either exuberance
or pessimism to kind of lose sight of the fundamentals.
And so you have to just kind of stick with
your thesis, stick with the research, stick with the in
depth diligence that you can do on the market and
(41:34):
on the companies that you invest in and think long term.
And so that's all that we're trying to do when
we're trying to do that with as your question implies,
a very optimistic lens.
Speaker 2 (41:45):
If you sat down with the head of a CPP
or or the Case to the Pope, what would you
tell them.
Speaker 4 (41:52):
I'd say that Canadians have a lot to be proud
of in terms of you know, these are some of
the some of the the great financial institutions of the world.
These are global investors that put Canada on Canada on
the map financially. I would also say that there's tons
of opportunity to invest, not just internationally as they've done
(42:13):
very successfully, but also in Canada, as they've done very successfully.
And you know, the Case is one of the only ones,
I believe with a dual mandate where their mandate is
to grow the capital of their constituents, but also to
invest within Quebec. And so I think it's nice that
(42:34):
these large pool of capitals also recognize that there is
opportunity domestically to invest and to help grow the economy.
But yeah, that's I think we're very lucky in Canada
to such a well developed financial sector.
Speaker 2 (42:50):
You're obviously very smart and your firm has been very successful.
If people want to read some of your research or
potentially invest in some of your funds. They best do.
That is their website they should go to.
Speaker 4 (43:02):
Yes, our website is www dot LBA, dot ca. Let
Cobrosownassociates dot ca and they can reach out to us
as a contact us link and so feel free to
do that.
Speaker 3 (43:14):
We'd be happy to talk to you.
Speaker 2 (43:15):
Do you publish research on a regular basis?
Speaker 4 (43:17):
Yeah, you can see in our perspectives on our website.
We publish our quarterly economic updates, our portfolio updates. You
can always go on our website and check out how
we're thinking about the market these days.
Speaker 2 (43:29):
So if there's a crash, I got to call you
and ask what's going on anytime, Brian, this has been
a fascinating conversation. I really have enjoyed it. Thanks so much.
I think that you know a lot of us, you know,
put our money into a g C or put it
into a fund, and they don't watch what's going on
either at all or enough. And I think you're right
(43:52):
that a little bit of active investment, if not a
lot of active investment, or finding someone like you that
can invest for us makes a ton of sense. And
you know, we read the popular press probably about what's
going on, but getting some specific opinionated research from a
firm like yours is extremely helpful. I found it invaluable
in my experience, and so you know, Alex obviously is
(44:14):
a very smart guy. He's got the right education, He's
joined an interesting firm, he's launching their Ontario office and
really trying to invest and grow here. So I really
appreciate it, Alex. That's been a fasting conversation, and I
think I'm going to to think about my portfolio a
little bit more tonight when I when I look at
my my online database more than I may have done before,
(44:38):
maybe mastally, mainly mostly because of you, So thanks so much.
Speaker 3 (44:43):
Thanks you for having me. Brian, really appreciate.
Speaker 2 (44:44):
It with us. Everyone back in two minutes.
Speaker 1 (44:51):
Stream us live at SAGA nine six am dot C.
Speaker 7 (44:54):
A welcome back everyone to the Brink from you Radio Wire.
Speaker 2 (45:08):
Been passionate movie people for a long period of time
and also been passionate but really getting to know people
with in depth conversations.
Speaker 6 (45:14):
Some people who criticized me in the past.
Speaker 2 (45:15):
Today, I'd like to really sit down with people and
get to know what they're all about and not participate
in those really quick ten or fifteen or thirty second
quick shit handshakes.
Speaker 6 (45:26):
I'd like to sit down with people and get to
know what they're.
Speaker 2 (45:28):
All about, and you've given me that opportunity, and so
thank you very much for that. And for those of
you that have tuned in on several occasions over the
course of the last the last six years, three thousand shows,
over two thousand interviewees. It's just been an incredible opportunity
and thank you for that. I'm on every night Monday
through Friday at six o'clock on nine to sixty AM.
(45:49):
But in addition to on average getting about thirty thousand listeners,
I have the opportunity to post on podcast servers, on YouTube,
on social medi I get a lot of following on LinkedIn,
and I therefore get a breadth of exposure and people
listening to me, frankly, from around the world and from
(46:10):
a lot of my different business contacts and political contacts
and other contacts really you know, across the Greater Toronto, Werry,
across Canada, across North America, across the world, and it
is really an incredible experience. I've been lucky enough to
interview some of my heroes in business and politics from
you know, Jim Pattison, David Peterson, John Torrey, Hayes, mccallian.
Speaker 6 (46:33):
The list goes on, and it's.
Speaker 5 (46:35):
Been a unique opportunity for me to spend fifteen minutes
with interesting people.
Speaker 6 (46:38):
Asking me about their life, their career.
Speaker 2 (46:40):
I've interviewed business people, developers, people head of different associations
high tech, biotech, from France, from Israel, from Canada, from
the United States about their passion, their business, their.
Speaker 6 (46:56):
Scientific develops and interests.
Speaker 2 (46:58):
And that's been a huge opportunity for me to really
delve into what makes these people excited about their business,
their prospects, their scientific inventions, etc.
Speaker 6 (47:08):
And that's been a great opportunity. I also got an
opportunity to rant, and have been encouraged by my broadcaster
to close.
Speaker 2 (47:16):
My shows and or open my shows with my own
little rant or my own five or seven or ten
point plan on how I.
Speaker 6 (47:23):
Would solve problems, so that you get to know me
and I get.
Speaker 2 (47:26):
An opportunity to chat about the things that I'm so
passionate about. I ended up talking about politics often earlier
in the week, and our international affairs. I've been very interested,
obviously what's going on in the Middle East, in Ukraine,
and I've been able to reach out to people that
are very knowledgeable in Ukraine, in Eastern Europe, in the
Middle East, and or people that are aware of a
(47:47):
former ambassadors of the like and really delve into what
caused the problem, what is causing the problem, what the
potential solutions are, and some of the more negative side
of things in regards to abductions, kidnappings, hostages right.
Speaker 6 (48:04):
And it's been.
Speaker 2 (48:06):
Fascinating for me the individuals that I get from Keith
from different parts of Israel that are willing to and
interested in talking to me. I've interviewed people from South Africa.
I've interview peep from China. I've interviewed people from Japan.
I've interviewed people from across Canada and in the United
States and in France, in the UK from Ireland, I
ended up connecting up with some of my long distance
(48:30):
cousins that are in either Scotland or Ireland and had
the opportunity to interviewed in them, as well as some of
my cousins from the United States as well as across
Canada later in the week. I haven't talked about arts
or lifestyle issues. I am passionate about that. I have
been presidents of the Mississiga Arts Council, I've been chair of
the Mississigi City Summit. I worked for the Walt Disney Company,
(48:51):
not necessarily in entertainment. I was doing amusement parks. I've
did movies at the TVs, i did hotels at the restaurants.
But I really got exposed to the entertainments and loved it,
and so I get the opportunity to delve into that
at a far greater degree. And I've also been very
interested in social capital and building communities. I've started and
got halfway through a doctoral thesis on social capital. And
(49:12):
so therefore it's a real pleasure of mine to delve
into some of these people that you know, some people
would call culches or lifestyle people, and what they think
makes people take you know, you, you know, a professor
of empathy on several occasions that I just think is
fascinating people on happiness.
Speaker 6 (49:29):
That is obviously very interesting.
Speaker 5 (49:32):
And I get to therefore interview people from all walks
of life from across the world and come to you
every night and try to get my message and my
interviewees to you through.
Speaker 2 (49:44):
Radio, through through podcasts, through video on social media and
on YouTube, and it's an incredible experience. And I get
to listen to them all, synthesize what they have to say,
think about them in regards to my own points of view,
and turn around and give you often my rent, my
ten point plan.
Speaker 6 (50:04):
And it's an incredible opportunity.
Speaker 2 (50:06):
And for those of you that reach out and I
get comments every day, people recommending great topics, great interviews,
people criticizing some of the comments, people suggesting what new
topic I should be focused on, people trying to get.
Speaker 6 (50:20):
On my show, and it's an incredible opportunity.
Speaker 2 (50:23):
I really enjoy that opportunity to interact with you and
have the opportunity, if you're interested, get to know you
over fifty minutes of a very long in deet conversation,
which I think is what we don't have enough of
in our world today.
Speaker 6 (50:37):
So thank you for the opportunity to spend six years,
five nights a week, I.
Speaker 2 (50:45):
Will really days that is fifty two times five, so
over two hundred days a year in chatting with you.
Speaker 6 (50:52):
I appreciate it.
Speaker 2 (50:53):
Thank you for listening, thank you for watching, thank you
for your participation, and thank you to sign and sixty
for the opportunity. It's a unique one, a great one
one that I'm very very happy that I've had the
privilege to host, to interview, to spout my own point
of view and interact with.
Speaker 6 (51:12):
All the people.
Speaker 2 (51:13):
Thanks, good night, and to repeat which I often close
my show by saying, I'm on every night, five nights
a week.
Speaker 6 (51:21):
I did a Friday I'm nine to.
Speaker 2 (51:22):
Sixty a m and streaming online at Triple W Saga
at sixty dot All my podcasts and videos go up
on my website, Briancomy dot com as soon as the
radio show goes to air as well. I put them
on several different podcast servers, on YouTube, on LinkedIn, et cetera.
Speaker 6 (51:36):
So if you missed my show on the radio, you
can get me a whole bunch of otherways. Thanks for
six years. Good night.
Speaker 1 (51:48):
Stream us live at SAGA nine am dot CA.
The views expressed in the following program are those of
the participants and do not necessarily reflect the views of
Saga nine sixty am or its management.
Speaker 2 (00:17):
Good Evening, every want to welcome to the Brian crimeby
Radio Hour. We're going to talk a little bit about
investment management tonight because I think that number one, you know,
all of us have got retirement funds and a little
bit of money we want to invest in. So understanding
what's happening with the markets where to invest, how to
invest is one of those critical things that we do
and probably don't spend enough time thinking about, and so
(00:40):
it's worthwhile talking to an expert and understanding a little
bit more about it. And then also I've met Alex
Letco our guest previously, and his company has got a
really interesting story, and so I think that that's worth
the conversation. Our guest, Alex Letko, is the regional manager
for Central Canada for Letco Brossar, a Canadian independent investment
manager investment measure they got nineteen billion dollars of assets
(01:02):
under management and he leads their Toronto office. We're going
to chat a little bit with him about his background,
about how we got into this business, about let cobrasar,
and about the markets. Alex, welcome to the show.
Speaker 3 (01:13):
Thanks for having me, Brian, my pleasure.
Speaker 2 (01:15):
So tell me first off the top, how your company,
how your firm is different than the typical investment management company.
Speaker 4 (01:25):
That's a great question, Brian. Well, first of all, we
label ourselves a little bit of a boutique or independent
investment management firm, and so what that means to us
is independent of thought and independence in terms of how
we allocate our client's capital. And so what we do
is we put in a great deal of diligence and
research into the companies and the fixed income products that
(01:48):
we invest in. And so we're not a firm that's
trying to make a quick buck by trading around the quarter.
We're very long term oriented. We do a great deal
of research and depth word to understand the companies. We
consider ourselves as partners with the company's longer term and
so I think that that's one of the hallmarks of
our investment process, is really the in depth diligence that
(02:11):
we carry out.
Speaker 2 (02:12):
So most people these days are just you know, buying
the index. Why is your process better and different?
Speaker 4 (02:20):
Yeah, So, I mean, so the index, index investing, passive
investing has really, I mean, it has taken the investment management
industry by storm.
Speaker 3 (02:30):
It really has.
Speaker 4 (02:31):
It was about twenty five percent total assets under management
about ten years or so ago, and today it's about
fifty percent. And just a year or two ago in
the United States, index investing or passive investing surpassed active
management for the first time. It's now about fifteen trillion
dollars of active of assets under management. And so this
(02:54):
is really this is this has brought about questions as
to whether or not active management is dead. Why on
earth someone would need to even hire an active manager.
And so I think that there's great value in having
somebody make investment decisions from being curious about the world,
trying to understand things, trying to understand the companies that
(03:16):
are being invested in, and to make you know, allocation
of capital on behalf of clients according to that. And
so I'll give you an example. So in nineteen eighty seven,
our firm was founded, and had you invested in a
global balanced benchmark of security through passive ETFs in nineteen
(03:37):
eighty seven, that would that would have mirrored global equities
and fixed income.
Speaker 3 (03:44):
You would have made.
Speaker 4 (03:45):
Had you invested one million dollars in that cocktail, you
would have made about fifteen million dollars on that investment.
That's a compound annual growth rate about seven point eight percent.
Had you invested with leco Brosso's Global Balance mandate, you
would have made about forty five million dollars. So that's
about triple the amount. And this is what it comes
(04:05):
down to in the investment management industry is that we
work on behalf of people that have financial objectives. And
so whether or not that's purchasing a new car, or
affording a down payment on a new home, or leaving
a certain amount of money for your kids, or funding
a charitable organization, people have investment objectives and adding a
few basis points or a few percentage points to return
(04:28):
over a long period of time goes a tremendous way
in helping people achieve those objectives. So there is tremendous
value in active management.
Speaker 2 (04:36):
What are ETFs? You said, ets? What are ets? Can
you explain that to everybody?
Speaker 5 (04:40):
Please?
Speaker 2 (04:41):
So?
Speaker 4 (04:41):
ETFs or exchange traded funds, and so what they are is,
let's say you wanted to own a portfolio of securities.
Let's say you wanted to mirror the benchmark, say the
S and P five hundred. It used to be you
would have to have to buy each one of those
five hundred stocks.
Speaker 3 (04:58):
But in ETF is a product.
Speaker 4 (05:01):
Where you buy the stock, you buy the ETF and
it gives you a little slice of the index. And
so what that's done is it's allowed people to diversify
their holdings a lot more easily than it has before.
Speaker 2 (05:14):
So, you know, I went to business school and they
talked about rational markets and that there was no opportunity
for anyone to beat the market. If there's no opportunity
for anyone to beat the market, if all the information
that is out there is already reflected in market pricing,
how can you actually beat the market? How can you
do better via active management? Why don't why don't I
just buy the index?
Speaker 4 (05:35):
Well, if that were true, Brian, if all information was
properly reflected in the market, then it wouldn't be possible
for active managers like ourselves to consistently beat the market
over time. And so I mentioned our Global balanced fund,
But you can look at all the investments we've made
in Canadian public equities since nineteen eighty seven, and they've
returned compound annually about fourteen and a half percent, and
(05:58):
the benchmark returned about nine percent. And so we've consistently,
and other active managers have done this as well, consistently
beaten the market. And so what that necessarily implies is
that not all information is reflected. And so again there's
a tremendous amount of value that can be said for
actually doing the work, not just simply you know, sitting
(06:20):
back and pushing a button and owning the index, but
actually doing the diligence and the work required to understand
the world, understand the companies that you're investing in.
Speaker 2 (06:31):
Well, the retort that I've always heard is that you know,
in econos that believes in rational markets and efficient markets
would tell you if you saw ten bucks on the sidewalk,
don't bother picking it up, because it's already been picked
up by somebody else, and it does that ten bucks
sitting on the cybe work doesn't exist in reality, but
clearly it does, and by picking it up, you're actually
making the market efficient. And so I think what you're
(06:52):
doing in your active management is making the market efficient,
and other active managers are doing the same thing. So
if you didn't have a whole bunch of active managers,
the market wouldn't become efficient. It's your role in exploiting
the inefficiencies that make it effectively efficient after time. I
won't make you respond to that unless you want to.
Speaker 4 (07:12):
No, that's a great perspective, Brian, And of course I
agree with the large part of what you're saying there.
Speaker 2 (07:19):
So you know, there's different strategies that people have talked about.
I wonder if you can explain how they're different and
if you follow one. You know, there's this sort of
value investing strategy where people follow low price earnings ratio stocks.
There's a growth strategy, and there's an index strategy, and
(07:40):
maybe you've got some others. But can you describe sort
of different strategies and what they are.
Speaker 4 (07:44):
Sure, so you know the index strategy, I think I
already probably hit on it, which is just sort of
owning the index, owning the broader market, and your hands
are completely in the wisdom of the crowd. If the
market goes up, then you go up. With the market
goes down, then you go up. Growth investing would be
in owning typically more expensive stocks that are pricing in
(08:08):
higher rates of growth over time, and so the idea
would be that they'd be able to compound their earnings
over time, and value investing would be trying to own
stocks that are not quite pricing in the all the
upside just yet. And so we consider ourselves more in
the value camp. We don't like to bucket ourselves, but
(08:29):
when clients come and look at us and compare to others,
they see a little bit more of value. And what
we mean by value investing, it's the same thing. If
you were buying a car or something, you would want
to make sure that it's well made, that it's good quality,
and that you're not over paying for it. And so
it's the same thing in investing in the stock market.
You want to make sure that what you're buying is
(08:50):
a solid, high quality company, that the management team knows
what they're doing, and that you're not overpaying for it.
The more that you overpay for a secure, more you
overpay for anything, the more risk that you're putting on
the table. And so when we as value managers think
about investing, first and foremost top of mind is the
(09:11):
preservation of our client's capital. We don't want to overly
risk our client's capital. If you pay up for something
like a growth stock that is already pricing in a
lot of the upside, well, if something if it goes great,
then fine, you'll make money. But if it doesn't go well,
there's a lot more downside. But if you invest by
protecting the downside through being very attentive to the valuation
(09:35):
and the price that you're paying, then there's simply less
downside in case something bad happens, and you retain a
lot of upside as well. So that's how we think
about value investing.
Speaker 2 (09:44):
There was a famous book by Ben somebody rather a
by value investing. Do you follow that book? But do
you know who I'm talking about?
Speaker 4 (09:52):
Well, there's a lot of books on value investing, to
be honest, But what is it about that book.
Speaker 2 (09:58):
That it's been Templeton or some of that. It's the
book that everyone talks about is being the bible of
value investing. Anyway, I was getting you know, that book
talked about where the book value of the asset was
greater than the stock price and the price earnings ratio
(10:20):
was low. So you wanted to find stocks where they
were asset rich. But we're earning a lot of money.
Is that something you look at Yeah.
Speaker 4 (10:30):
And I think the ben you're talking about might be
Benjamin Graham. Yeah, but that's one way of looking at it. Absolutely,
And so you want to invest in companies where they
have assets or potential that is not recognized by the market,
where the price is not reflective of that potential.
Speaker 3 (10:50):
And so we.
Speaker 4 (10:52):
Find that over time, you know, and that's been an
investment philosophy of ours that really hasn't changed since nineteen
eighty seven. We find over time that that's reaped, you know,
tremendous rewards for our clients. We've been able to protect
it downside while ensuring you know, very good upside as well.
Speaker 2 (11:07):
Warren Buffett, I think, often said that he'd rather invest
in a company that had great management, even if the
company wasn't great, rather than a company that was great
with bad management. What do you think about that?
Speaker 6 (11:23):
Good?
Speaker 4 (11:23):
It's an interesting perspective, and I don't entirely disagree with it.
I think there's a lot of different ways to make money,
and so I wouldn't want to paint everything with the
same broad breaststroke. Certainly, when we go about our diligence process,
and I talked about a little bit about the fundamental
diligence process that we undertake. One of the very most
(11:44):
important things that we do is we want to interview
the management team. We want to talk to the CEO
or the CFO, and we want to understand how they
think about the business.
Speaker 3 (11:52):
And so for us to.
Speaker 4 (11:53):
Be able to assess management's competency and also their long
term alignment with shareholders is tremendously important.
Speaker 3 (12:01):
So I think I think mister Buffett was onto something.
Speaker 2 (12:04):
I used to work for Jim Pattison, who you may
know from reputation. He's a reasonably successful billionaire on the
West coast of Canada, and he would always say, Brian,
you're investing in people and you've got to get to
know these people really well.
Speaker 3 (12:17):
Do you agree? Absolutely?
Speaker 4 (12:20):
I think it goes exactly with what I was just
saying that the management teams of these companies go a
long way to ensuring that they're successful or vice versa,
and so we are investing in people.
Speaker 3 (12:31):
Absolutely.
Speaker 2 (12:32):
So you know Buffett's common about he'd rather invest in
a B company with an A management team than an
A company with a B or C management team.
Speaker 3 (12:40):
You would agree with, yes, as you as you pointed
up before.
Speaker 2 (12:45):
So again it's how do you do that. You interview people,
you say Buffett interviewed people, Jimmy Patterson interviewed people, but
how do you actually do that? How do you assess
a management team?
Speaker 4 (12:55):
That's a great question, And first of all, it comes
with experience. I mean, I don't know how many interviews
you've done by now, Brian, but you can probably assess
your your interviewee a little bit better than you could
write it first. And so there's a certain amount of experience.
But you want to make sure to ask, for instance,
open ended questions and to let the management team tell
(13:15):
you sort of what is top of mind and kind
of see what it is that bubbles to the surface
in their thought process. And so I think that if
you do that enough times, it becomes a little bit
more clear over time sort of which management teams have
the chops and which might not.
Speaker 3 (13:35):
It is it is.
Speaker 4 (13:37):
It is very important, I think, to not just speak
with management team once. You know, we like to get
to know the companies for a certain period of time
before we invest, typically, and so oftentimes we'll speak with
one or two or three members of the management team
over a long period of time. So that allows us
to get to know them a little bit. And so
(13:58):
it's a process. Brian is the process.
Speaker 2 (14:01):
Jimmy Patterson had an interesting strategy that I'll volunteer up
for you and for the listeners because it was interesting.
He always wanted to go to their set of business
rather than having them come to him. He says, you know, efficiency,
maybe it's better if they come to see you, but
I want to get to see them in their own
place of business. I want to tour their factory, or
tour their store, tour their real estate development, or tour
(14:24):
you know, their laboratories or something like that. Says, I
want to see how they interact with their employees. I
want to see how they can describe their plan or
describe their lat laboratory, to see if they actually know
what the blank they're talking about. And you can tell
that far better when they're actually doing a tour and
walking around than you can if they've got a PowerPoint
presentation that they're flipping through in your office. And he
(14:46):
said that that will always give you a chance for
a lunch or a breakfast or a dinner, and he says,
you'll learn more about the ability for them to be
good managers over that social interaction than you will in
the a half hour hour that you spend flipping through
a flipbook in the in the boardroom table. What do
you think of that?
Speaker 4 (15:06):
I absolutely agree, and so it's interesting that, you know,
it's kind of exciting if you're a junior analyst and
you join our team. We have about twenty portfolio.
Speaker 3 (15:16):
Managers and analysts on our investment team.
Speaker 4 (15:18):
If you're a junior analyst you joined leco broso one
of the first things you'll notice is there don't cap
on the travel budget. So you're encouraged by the top
layers of our management to get out there and sort
of we call it tasting the ice cream. Get out there,
do as many site visits, factory tours, go to conferences
as you need, pardon me, I'm just gonna and so
(15:44):
that gives us a real sense of sort of what's
going on in the field. And the more times you
do that, the more you understand about the business. And
so that's a really really important part of our diligence.
Speaker 2 (15:55):
Markets are incredibly volatile today, and you know, people are
thinking the market's going to go up, We're going to
go down based on politics or what Donald Trump is doing,
et cetera, et cetera. We're going to take a break
for some messages and we come back. I'm going to
ask our guest Alex Lefko a little bit about what
he thinks is happening in the markets, and also about
AI stocks and if we're into potentially bubble territory. And
(16:17):
he's got I think an interesting story about what his
firm did during prior boom bus cycle. Stay with us,
everyone back in two.
Speaker 1 (16:25):
Minutes stream us live at SAGA nine six am dot CA.
Speaker 2 (16:44):
Welcome back everyone to the Bran Crimeby Radio Hour. We're
talking investments today, Investing in the market with Alex Letko.
He is the regional manager for Central Canada for Letko Brassaar,
a Canadian independent manager. He's got nineteen billion dollars of
assets under management. This gentleman is one of these smart
guys you meet in life. He leads their firm here
(17:05):
in Toronto, but prior he worked in the South Side
research in New York City, so that'll be interesting. He
was one of these guys on Wall Street. He's a
graduate of Columbia University with an NBA University College Dublin
with a master's in economics and McGill University with a
bachelor's in economics. And he's also a Chartered Financial Analyst holder,
(17:26):
so he's a numbers guy, but he's also, you know,
a business guy with with two masters and and and
a bachelor's as well. So you've got tons of letters
after your name, buddy.
Speaker 4 (17:38):
Yeah, maybe maybe too many, a little bit too much
time with the books, to be honest, but no, I
love learning, and all of us here on the research
team at Leco bro so that's what we do.
Speaker 3 (17:48):
We're curious about the world and we love learning about it.
Speaker 2 (17:51):
So I think if you go with alex you probably
have more letters after your name. If you went with Alexander,
then you might be equal with letters in the name
versus after the day. And Leco Brossere is a pretty
oppressive company itself. But when were you founded?
Speaker 3 (18:08):
So?
Speaker 4 (18:08):
Leco Brosso was founded in nineteen eighty seven by my father,
Peter Leco and his business partner Danielle Brosso. It's a
really interesting sort of quintessentially Canadian success story, and it
starts not in Canada but in Czechoslovakia. My father was
born in Czechoslovakia at the time Slovakia now and he
(18:31):
was born to His father was a business owner, his
mother was one of the very first female lawyers in
Slovakia and probably in.
Speaker 3 (18:39):
That part of the world.
Speaker 4 (18:40):
But between World War Two and the Iron Curtain coming down,
they essentially lost everything, like so many at the time,
they found themselves on a boat headed for greener pastures
in North America. They settled in Montreal and to make
ends meet, my grandparents so children's clothing in their basement
and that's what gave their son an opportunity to kind
(19:02):
of make the most of this amazing country. And so
he went to McGill, got an education, found his way
into finance, ended up at the CN Pension Fund, which
was the largest private pension fund in the country at
the time, and that's where he met his business partner,
Danielle Grosso, and they basically worked their butts off at
the CN Pension Fund and rose through the ranks, and
(19:23):
then in nineteen eighty seven, finally they tendered their resignation
in September, and then one month later, the infamous October
of nineteen eighty seven, they founded Black Cobroso what.
Speaker 2 (19:33):
A wonderful timing. So what happened in the fall of
nineteen eighty seven.
Speaker 4 (19:38):
Yeah, wonderful, depending on how you look at it, Brian.
But so October nineteen eighty seven is home to Black Monday.
October nineteenth, nineteen eighty seven. And when you think of
the great stock market crashes in history, you might think
of the nineteen twenty eight crash that precipitated the Great Depression,
or twenty nine. You might think of the Great Financial
(19:58):
Crisis or the pandemic, But it's actually Black Monday nineteen
eighty seven, that is, that's the worst stock market crash,
single day crash in history. The doubt fell about twenty
three percent or so. And so for most people starting
a finance firm, an investment management firm at that time,
that probably would have spelled disaster. But they saw things
(20:20):
a little bit differently. They saw that the reason that
the stock market crash, and they foresaw this is because
in nineteen eighty seven, interest rates had practically doubled over
that time, and yet the stock market continued grinding higher.
And students of finance will know that usually those two
things go are negatively correlated. Usually as interest rates go
(20:43):
faster go higher, especially so quickly you know, the stock
market usually doesn't like that. It raises borrowing costs on everyone.
Companies have less profits, and it also reduces the valuation
on the companies, and so usually stocks crash when interest
rates go.
Speaker 3 (21:00):
But that didn't happen yet in nineteen eighty seven.
Speaker 4 (21:02):
So they foresaw this coming, and so when it did happen,
they were not running for the fences like a lot
of their peers. They were ready, and so they put
money to work very quickly. They only had a couple
of accounts as clients there, two mothers, but soon a
lot of other investors followed as they as they gained
a lot of success coming out of the crash there,
(21:23):
and so very interesting timing, I would say, to start
an investment management company.
Speaker 2 (21:28):
Very interesting. I'll tell you my own personal story. I
also got an MBA, and I worked on Wall Street
the summer of nineteen eighty seven and thought at the
time that Wall Street future was in my career. And
then went back to my second year of business school
in the fall of nineteen eighty seven, and as you say,
in October, obviously every class was focused on what had
(21:51):
just happened on Wall Street. And that's when I decided
to go into industry. So maybe I made them wrong
mistake and should have followed your father's track. Can still
gone into Wall Street financial sector rather than saying I'm
out of here. I don't want this. But you know,
I've had some people that I knew that someone who
I knew that knew the gentleman that threw himself out
(22:15):
of the CSFB window. So I didn't know him personally,
but knew someone who knew him, and then knew lots
of other people that really came two huge collapses of
their monetary wealth and firms that went under after nineteen
eighty seven. It was really kind of quite.
Speaker 6 (22:28):
A catastrophic crash.
Speaker 2 (22:30):
We've got volatility today and I'm told and you would
know far better than I, but the stock market that
people brag about that Donald Trump lags about is at
a high in the United States. If you took out
something like five companies, it wouldn't be that the vast
majority of the current market valuation of the Dow Jones
(22:50):
is five AI related companies. Is that true?
Speaker 4 (22:55):
So if you look at the market today, about forty
percent of the market cap of the S and P
five hundred is the top ten companies. It's pretty much
unprecedented in modern times. And if you look at the
total market cap in the S and P five hundred,
it trades very expensively. So over seventy percent of all
(23:18):
the market cap in the S and P five hundred
trades at an earnings multiple of over twenty times. There's
only been a couple times in history that's happened. One
was the zero interest rate environment right at the pandemic,
but that was a funny time. But before that you
have to go all the way back to the dot
com boom. So historically, in some ways, the way you
(23:39):
cut up the market and the valuations these days, the
market has never been quite as expensive as this.
Speaker 3 (23:45):
And so we see that and we see a lot
of couse for optimism.
Speaker 4 (23:50):
There are good reasons why a lot of these stocks
are trading up.
Speaker 3 (23:54):
They're growing very rapidly.
Speaker 4 (23:56):
And I'm not taking anything away from the secular trend
that is, a AI is here to stay and it's
going to change our world in ways that are probably
somewhat unfathomable.
Speaker 3 (24:05):
To us today.
Speaker 4 (24:07):
That said, just like in the dot com boom, when
the Internet ultimately changed the way that we live and work,
the market got it wrong back then, the market can
still get it wrong today, and so we see a
little bit of a risk in the market. We see
a little bit of risk in certain stocks that you know,
(24:29):
as soon as they're enveloped by the aura of AI,
they immediately start trading up. I'll give you an example.
So Oracle is a stock that reported earnings a couple
of weeks ago, and they made an announcement that their
business was going faster and they were getting more backlog
because of AI related demand. It took just a few
minutes for the stock to shoot up about thirty five percent.
Speaker 3 (24:52):
And this is not a penny stock.
Speaker 4 (24:54):
This is already a stock that was around a five
hundred billion dollar market cap, And so for two hundred
and fifty billion dollars of capital to flow into any
one stock in a matter of minutes or a day
just goes to show how the market right now is
probably in a shoot first, ask.
Speaker 3 (25:11):
Questions later sort of mode.
Speaker 4 (25:13):
And so when we see that, it reminds us of
other times, like you know, the dot com boom like
I mentioned, where you know, investors were probably met with
or probably you know, exuded a little bit too much
exuberance and so when animal spirits sort of start to
get going like this, we we do find reason for caution.
(25:34):
And so what we've done over the last year or
so is we've we've raised a little bit of cash
in our portfolios and we're happy to be sitting on
a bit of cash just in case we do get
opportunities to redeploy some of that.
Speaker 2 (25:46):
You know, lots of us have read that book or
seen the movie. But the big short would you short
AI stocks today?
Speaker 4 (25:52):
So we're not a long short fun First of all,
we're we're a long only money manager. We only take
long positions. We only want to see the companies do
well over time. So but but but the the other
questions would you invest in them?
Speaker 3 (26:09):
And we are.
Speaker 4 (26:10):
We are invested in some in some stocks that are
that are greatly benefiting AI from AI. But that said,
we only want to do so in a very prudent way.
And so if you look at some of the stocks, uh,
you know, the nvideos of the world. And this is
not to say that those stocks are going to crash
down or anything like that, but if you were to
pay up for those stocks at current valuations, you would
(26:34):
be you would be paying a price that implies that
they continue to be successful growing the business UH for
a long period of time. And so that's fine, you'll
make money if they're continue if they continue to be successful,
But if anything bad happens, if they're not able to
meet their earnings targots, et cetera, then there's a lot
of air in the evaluation, a lot of opportunity UH
(26:54):
to potentially lose money. And so for us, as very
prudent allocators of our client's capital, we simply don't feel
comfortable in those sorts of environments putting too much money
on the table in those specific stocks. And so it's
nothing to take away from the from AI as a
secular trend. I mean, again, this is going to change
the world in ways that are hard to even imagine,
(27:16):
but the market seems to be a little bit over
at xuberant right now.
Speaker 2 (27:20):
So the sort of the analogy that I've heard in
that regard is, you know, railways in the eighteen nineties
nineteen hundreds changed America, changed Canada, and there was way
too much investment in them, and the stocks were a
big up, like crazy, and a whole bunch of them
went bankrupt. But that was actually great for the economy
(27:42):
because you had a whole bnitch of cheap railways available.
So it didn't change the industrial economic trend, but there
was too much exuberance and you had to be very
careful about who you invested in. Similarly, you know, in
the dot com boom, there was fiber being laid all
around the world and global rossing in other companies you know,
we're laying like crazy and had huge, lofty valuations. Some
(28:05):
of them went bankrupt, but that fiber was therefore available
at a cheaper price, and so it was good for
the economy, good for the industry, bad for a couple
of stocks. Are we into a similar situation that that
that AI is going to be great and it's going
to have a profound effect, but there's some companies that
are dramatically overvalued and there's going to be some bankruptcies.
What do you think.
Speaker 4 (28:26):
Not necessarily calling for any bankruptcies per se, Brian, I
take your point though, that a lot of the infrastructure
right now is being put in place for society and
benefit from AI for years to come. So you call
these the hyper scalers. So that the facebooks and the
Googles and the Amazons of the world right now are
spending billions collectively, hundreds of billions of dollars on capital
(28:51):
investment to purchase these AI chips and to build data
centers that will house these AI capabilities for years to come,
and so is infrastructure that will be in place and
the society will benefit from. But sometimes it's hard to
see how these companies are really going to earn that
much of a return.
Speaker 3 (29:09):
On that capital anytime soon.
Speaker 4 (29:11):
And indeed, that's exactly what's going on, is that it's
very difficult to see the profitability flowing through to their
bottom lines currently, and that's one of the problems.
Speaker 2 (29:20):
Other people have told me, don't invest in the United
States right now, there's too much volatility. Canada, we're not
sure about put your money in emerging markets. Where do
you invest geographically?
Speaker 4 (29:30):
So we're global investors, as we invest in Canada and
the US globally. We've had a lot of money since
actually nineteen ninety two was our first emerging market investment.
In emerging markets, by the way, for your listeners, these
are places like Mexico, Brazil, India, etc. So non developed economies,
and so in twenty eleven, after a number of years
(29:53):
of success, investing in emerging markets.
Speaker 3 (29:55):
We started our own Emerging.
Speaker 4 (29:56):
Markets fund, and this has been tremendously successful because what
we do is we go out there and we try
to invest in the great unmet needs of these emerging
market societies. So we're investing in water companies that are
meeting the needs of greater access to clean water, clean
drinking water, water sanitation in many of these places. We're
(30:19):
investing in clean energy producers. We're investing in healthcare companies
society as o societies. As the middle classes rise in
the at and they demand greater access to affordable healthcare,
there's a world of healthcare companies out there that will
cater to those needs and we'll see their earnings grow.
And so we have a number of very interesting themes
(30:41):
that bubble to the surface in our Emerging Market's portfolio.
And this portfolio is done tremendously well since we incepted
the fund in twenty eleven, actually ranks from the fifth
percentile globally of all emerging market all cap.
Speaker 3 (30:54):
Portfolios out there.
Speaker 4 (30:56):
That's according to the Investment Database, which is one of
the main institutional databases used.
Speaker 3 (31:02):
And so it's been tremendously successful for us.
Speaker 4 (31:05):
But really that's because we have this very optimistic view
of that part of the world where you have basic
needs in these societies that are as yet unmet, and
there's a universe of companies out there that are working
every day to meet those needs and they will see
their earnings grow and they have and they will probably
continue to see that.
Speaker 2 (31:25):
Tariffs are concerned to a lot of us from the
United States. What do you think about investing in Canada,
What do you think about the risk of tariffs? What
do you think about investing in companies? And can you
identify companies they're at risk of being damaged by tariffs?
Speaker 4 (31:40):
Yeah, so it was one of the first things that
we did as an investment management team is as the
tariffs were being announced, and actually as Trump came to
power last year and we foresaw this, we looked inward
at our portfolios and identified any sort of red flags
or any companies that might be at risk. Luckily, though,
(32:03):
we do have a bias for investing in very, very
high quality companies, and so we didn't really identify companies
that needed to be sort of trimmed from the portfolio
for for those reasons.
Speaker 3 (32:13):
That being said, it is an overhang.
Speaker 4 (32:15):
It's an overhang in terms of the economic impact from
the tariffs, and it's an overhang in terms of the uncertainty.
And so look, we've we've been through these sorts of
things before Trump's first term, for instance, But we do
believe that ultimately there is a community of interests where
people will logically realize that, you know, if you do
(32:38):
do well, then I'll do well.
Speaker 3 (32:40):
And so we've had I hope you're right.
Speaker 6 (32:41):
I hope you're right.
Speaker 3 (32:44):
I know, I.
Speaker 4 (32:45):
I you know, and I know a lot of people
are you know, it's been very painful for a lot
of people. And I don't mean to sugarcoat it or
anything like that, but we are long term investors and
we do believe that it is important to look around
the corner. And so in Canada, the economy is getting
a little bit beat up right now. So we printed
(33:05):
a negative quarter of GDP growth last quarter. We may
well print another one and be in a technical recession.
But we have some firepower and some ammunition to help
us get through this kind of negative period. And so namely,
you know, if you look at all the G seven
countries out there, and you look at their fiscal deficits.
(33:26):
Canada actually has just about the most favorable position, about
two percent physical.
Speaker 3 (33:30):
Jet deficit as a percent of GDP.
Speaker 4 (33:33):
That's not very large to the United States, which prints
a deficit, a big deficit of around seven or eight percent.
Especially with the Big Beautiful Bill, it's going to expand
the deficit. And so actually in Canada, we do have
room for the government to protect the economy a little
bit here from stimulating and the government actually has a
very good balance sheet, and so it's able to do so,
(33:53):
we believe, and so we actually foresee a situation despite
everything that's going on, we're starting sometime in twenty twenty six.
We actually think the Canadian economy can start growing faster
than the US economy, and so we don't believe that
that's widely accepted right now, and so that should benefit
Canadian companies and ultimately by twenty twenty six at least,
(34:16):
it seems that the United States administration is signaling that
that's when you know, they plan on getting around to
negotiating with US, and so hopefully we'll see a resolution
on the trade front as well. So there there are
there are sort of we hope some green shoots around
the corner here, and that's sort of how we see
(34:38):
the world as it relates to Tarris.
Speaker 2 (34:40):
I think you're right, and there's two sectors, maybe three,
that I'd like to identify, and I'd love to hear
what you think. I think that this major Project's Office
that the government's put in place is going to accelerate
some development of infrastructure and natural resources. And so if
you can find the right companies that are going to
be able to get faster approval and explore that opportunity,
(35:00):
whether it be in you know, pipeline construction or liquefied
natural gas or critical minerals or whatever it is, I
think that there's an opportunity, a great opportunity there. So
that's number one, you know. Number two, I think if
we ramp up our defense spending from less than two
percent to two and a half to three potentially to
five in the future, we're going to have to be
(35:22):
spending some of that domestically, hopefully a lot of it domestically,
and so therefore defense manufacturing should be an area that
should be attractive from an investment standpoint. And the third
one that I'd suggest to you is pharmaceuticals or maybe
it's high tech generally, because I think that there's going
to be less people going to the United States to
(35:43):
work given all the immigration constraints that the United States
has put in place, and we're already seeing some of
the brain gain that's coming to Canada from the US
immigration policies, and I think that's going to help us
some high tech biotech pharmaceutical companies.
Speaker 6 (35:57):
What do you think about those three suggestions?
Speaker 4 (36:00):
Yeah, Brian, I think where you're going with all that
is that there is like a glass half full side
to all of this, and hopefully the Canadian economy can
structurally improve from this bit of turbulence and kind of
diversify our trade partners a little bit and also change
the way that we do business with each other through
moving into provincial trade barriers. And I'd like to pick
(36:22):
up on one of the points that you made there,
which is that major project's office and I don't know
if that is necessarily the right vehicle, but there is
a general appreciation now, I think a little bit more
than in the past for making sure that it is
easier in Canada for getting these major projects approved, specifically
also in the energy space, and so look, energy is
(36:46):
just one of those things that Canada has a natural
advantage in. You know, we have tremendous endowment of resources
in the energy sector, and it's always been a problem
of getting those to market. So if you look at
the year's worth of production, if you're a natural gas producer,
if you're an oil producer, you have decades worth of
production in Canada. In the United States, you're very short
(37:09):
on production relatively speaking, same thing with most other places
in the world. And so there is a competitive advantage there,
and we would like to shift to energy transition technologies
and not have to rely on those parts of the
economy necessarily, but the reality is that we probably will
(37:30):
for many years to come, and so if we will,
I think that Canada is better off being a net
producer and supplier to the world of those sorts of resources,
rather than importing it from jurisdictions that might not have
the same sort of regard for worker safety and environmental
standards and that sort of a thing. And so if
(37:50):
we can get some major projects in order where we
can get some of those molecules to market, I think
that would go a long way to helping the economy.
Speaker 2 (37:58):
Were all we're going to take a break semesters and
come back with some concluding comments from our guest in
just two minutes. Stay with us, everybody. We're talking about
the economy and where it's going. Stay with us.
Speaker 1 (38:09):
Back into No Radio, No Problem stream is live on
SAGA ninety sixty am dot C.
Speaker 2 (38:19):
A welcome back everyone to the Brian Crimeby Radio Hour.
I've got Alex let Co of Letco Brassar with us tonight.
We've had a really interest conversation about his firm, his background,
(38:41):
where they they're sort of value investors and they're active investors.
He's a little bit concerned about the overconcentration of the
market right now and AI and and I think I'd
like to read into what you said that you're a
little bit concerned with lofty valuations in AI. That said,
you're convinced that there's some opportunities in the marketplace today.
(39:03):
You like the emergency markets, and you like some sectors
of Canada. You're worried that we're in a recession, that
we may have a technical recession. So let me ask you, Alex,
are you optimistic or pessimistic about Canada about investing today.
Speaker 4 (39:17):
Well, we're absolutely optimist. Brian we're you know, we're big believers.
First of all, in Canada. I mentioned the story of
the firm and how what I think is what I
think is a very very nice Canadian success story. And
I think it's nice to share these success stories with
fellow Canadians, make them aware because with everything going on
(39:40):
in the world, with our neighbors to the south, it's
nice to draw inspiration from one another. And so we're
really optimistic in the opportunity that we have here in
Canada to invest. We do think that, you know, investors
should be investing more in Canada and helping, you know,
bring projects to fruition, bring capital to places that it
needs in order for the econ me to thrive. But
(40:01):
we're also global investors and so look, we've been through
a lot the last you know, decades. You know, every
decade there's there's a reason to sell. If you look
at the decade after the Great Financial Crisis, so you
had things like, you know, the Greek financial crisis, and
(40:23):
there was all sorts of European sort of debt issues,
all sorts of reasons for the market to sell off.
But if you zoom out, the stock market kind of
just had a straight left, right up, and so we
can get in the thick of these sort of troughs
in the market and really get down on ourselves. But
I think that our firm and many investors in general,
(40:46):
have given great value to their clients from making sure
that we keep our heads above the water, that we
stay level headed, and that we continue to read the
tea leaves properly, and.
Speaker 3 (40:57):
That we continue to do the work.
Speaker 4 (40:59):
And so whether it's you know, through you know, the
crash of nineteen eighty seven or the dot com boom
where you know, we we you know, the.
Speaker 3 (41:10):
Phone was ringing off the hook at Leco broso with.
Speaker 4 (41:12):
With clients and other industry observers asking why the heck
we didn't know in a company called Nortel Networks. And
so it's really easy in these moments of either exuberance
or pessimism to kind of lose sight of the fundamentals.
And so you have to just kind of stick with
your thesis, stick with the research, stick with the in
depth diligence that you can do on the market and
(41:34):
on the companies that you invest in and think long term.
And so that's all that we're trying to do when
we're trying to do that with as your question implies,
a very optimistic lens.
Speaker 2 (41:45):
If you sat down with the head of a CPP
or or the Case to the Pope, what would you
tell them.
Speaker 4 (41:52):
I'd say that Canadians have a lot to be proud
of in terms of you know, these are some of
the some of the the great financial institutions of the world.
These are global investors that put Canada on Canada on
the map financially. I would also say that there's tons
of opportunity to invest, not just internationally as they've done
(42:13):
very successfully, but also in Canada, as they've done very successfully.
And you know, the Case is one of the only ones,
I believe with a dual mandate where their mandate is
to grow the capital of their constituents, but also to
invest within Quebec. And so I think it's nice that
(42:34):
these large pool of capitals also recognize that there is
opportunity domestically to invest and to help grow the economy.
But yeah, that's I think we're very lucky in Canada
to such a well developed financial sector.
Speaker 2 (42:50):
You're obviously very smart and your firm has been very successful.
If people want to read some of your research or
potentially invest in some of your funds. They best do.
That is their website they should go to.
Speaker 4 (43:02):
Yes, our website is www dot LBA, dot ca. Let
Cobrosownassociates dot ca and they can reach out to us
as a contact us link and so feel free to
do that.
Speaker 3 (43:14):
We'd be happy to talk to you.
Speaker 2 (43:15):
Do you publish research on a regular basis?
Speaker 4 (43:17):
Yeah, you can see in our perspectives on our website.
We publish our quarterly economic updates, our portfolio updates. You
can always go on our website and check out how
we're thinking about the market these days.
Speaker 2 (43:29):
So if there's a crash, I got to call you
and ask what's going on anytime, Brian, this has been
a fascinating conversation. I really have enjoyed it. Thanks so much.
I think that you know a lot of us, you know,
put our money into a g C or put it
into a fund, and they don't watch what's going on
either at all or enough. And I think you're right
(43:52):
that a little bit of active investment, if not a
lot of active investment, or finding someone like you that
can invest for us makes a ton of sense. And
you know, we read the popular press probably about what's
going on, but getting some specific opinionated research from a
firm like yours is extremely helpful. I found it invaluable
in my experience, and so you know, Alex obviously is
(44:14):
a very smart guy. He's got the right education, He's
joined an interesting firm, he's launching their Ontario office and
really trying to invest and grow here. So I really
appreciate it, Alex. That's been a fasting conversation, and I
think I'm going to to think about my portfolio a
little bit more tonight when I when I look at
my my online database more than I may have done before,
(44:38):
maybe mastally, mainly mostly because of you, So thanks so much.
Speaker 3 (44:43):
Thanks you for having me. Brian, really appreciate.
Speaker 2 (44:44):
It with us. Everyone back in two minutes.
Speaker 1 (44:51):
Stream us live at SAGA nine six am dot C.
Speaker 7 (44:54):
A welcome back everyone to the Brink from you Radio Wire.
Speaker 2 (45:08):
Been passionate movie people for a long period of time
and also been passionate but really getting to know people
with in depth conversations.
Speaker 6 (45:14):
Some people who criticized me in the past.
Speaker 2 (45:15):
Today, I'd like to really sit down with people and
get to know what they're all about and not participate
in those really quick ten or fifteen or thirty second
quick shit handshakes.
Speaker 6 (45:26):
I'd like to sit down with people and get to
know what they're.
Speaker 2 (45:28):
All about, and you've given me that opportunity, and so
thank you very much for that. And for those of
you that have tuned in on several occasions over the
course of the last the last six years, three thousand shows,
over two thousand interviewees. It's just been an incredible opportunity
and thank you for that. I'm on every night Monday
through Friday at six o'clock on nine to sixty AM.
(45:49):
But in addition to on average getting about thirty thousand listeners,
I have the opportunity to post on podcast servers, on YouTube,
on social medi I get a lot of following on LinkedIn,
and I therefore get a breadth of exposure and people
listening to me, frankly, from around the world and from
(46:10):
a lot of my different business contacts and political contacts
and other contacts really you know, across the Greater Toronto, Werry,
across Canada, across North America, across the world, and it
is really an incredible experience. I've been lucky enough to
interview some of my heroes in business and politics from
you know, Jim Pattison, David Peterson, John Torrey, Hayes, mccallian.
Speaker 6 (46:33):
The list goes on, and it's.
Speaker 5 (46:35):
Been a unique opportunity for me to spend fifteen minutes
with interesting people.
Speaker 6 (46:38):
Asking me about their life, their career.
Speaker 2 (46:40):
I've interviewed business people, developers, people head of different associations
high tech, biotech, from France, from Israel, from Canada, from
the United States about their passion, their business, their.
Speaker 6 (46:56):
Scientific develops and interests.
Speaker 2 (46:58):
And that's been a huge opportunity for me to really
delve into what makes these people excited about their business,
their prospects, their scientific inventions, etc.
Speaker 6 (47:08):
And that's been a great opportunity. I also got an
opportunity to rant, and have been encouraged by my broadcaster
to close.
Speaker 2 (47:16):
My shows and or open my shows with my own
little rant or my own five or seven or ten
point plan on how I.
Speaker 6 (47:23):
Would solve problems, so that you get to know me
and I get.
Speaker 2 (47:26):
An opportunity to chat about the things that I'm so
passionate about. I ended up talking about politics often earlier
in the week, and our international affairs. I've been very interested,
obviously what's going on in the Middle East, in Ukraine,
and I've been able to reach out to people that
are very knowledgeable in Ukraine, in Eastern Europe, in the
Middle East, and or people that are aware of a
(47:47):
former ambassadors of the like and really delve into what
caused the problem, what is causing the problem, what the
potential solutions are, and some of the more negative side
of things in regards to abductions, kidnappings, hostages right.
Speaker 6 (48:04):
And it's been.
Speaker 2 (48:06):
Fascinating for me the individuals that I get from Keith
from different parts of Israel that are willing to and
interested in talking to me. I've interviewed people from South Africa.
I've interview peep from China. I've interviewed people from Japan.
I've interviewed people from across Canada and in the United
States and in France, in the UK from Ireland, I
ended up connecting up with some of my long distance
(48:30):
cousins that are in either Scotland or Ireland and had
the opportunity to interviewed in them, as well as some of
my cousins from the United States as well as across
Canada later in the week. I haven't talked about arts
or lifestyle issues. I am passionate about that. I have
been presidents of the Mississiga Arts Council, I've been chair of
the Mississigi City Summit. I worked for the Walt Disney Company,
(48:51):
not necessarily in entertainment. I was doing amusement parks. I've
did movies at the TVs, i did hotels at the restaurants.
But I really got exposed to the entertainments and loved it,
and so I get the opportunity to delve into that
at a far greater degree. And I've also been very
interested in social capital and building communities. I've started and
got halfway through a doctoral thesis on social capital. And
(49:12):
so therefore it's a real pleasure of mine to delve
into some of these people that you know, some people
would call culches or lifestyle people, and what they think
makes people take you know, you, you know, a professor
of empathy on several occasions that I just think is
fascinating people on happiness.
Speaker 6 (49:29):
That is obviously very interesting.
Speaker 5 (49:32):
And I get to therefore interview people from all walks
of life from across the world and come to you
every night and try to get my message and my
interviewees to you through.
Speaker 2 (49:44):
Radio, through through podcasts, through video on social media and
on YouTube, and it's an incredible experience. And I get
to listen to them all, synthesize what they have to say,
think about them in regards to my own points of view,
and turn around and give you often my rent, my
ten point plan.
Speaker 6 (50:04):
And it's an incredible opportunity.
Speaker 2 (50:06):
And for those of you that reach out and I
get comments every day, people recommending great topics, great interviews,
people criticizing some of the comments, people suggesting what new
topic I should be focused on, people trying to get.
Speaker 6 (50:20):
On my show, and it's an incredible opportunity.
Speaker 2 (50:23):
I really enjoy that opportunity to interact with you and
have the opportunity, if you're interested, get to know you
over fifty minutes of a very long in deet conversation,
which I think is what we don't have enough of
in our world today.
Speaker 6 (50:37):
So thank you for the opportunity to spend six years,
five nights a week, I.
Speaker 2 (50:45):
Will really days that is fifty two times five, so
over two hundred days a year in chatting with you.
Speaker 6 (50:52):
I appreciate it.
Speaker 2 (50:53):
Thank you for listening, thank you for watching, thank you
for your participation, and thank you to sign and sixty
for the opportunity. It's a unique one, a great one
one that I'm very very happy that I've had the
privilege to host, to interview, to spout my own point
of view and interact with.
Speaker 6 (51:12):
All the people.
Speaker 2 (51:13):
Thanks, good night, and to repeat which I often close
my show by saying, I'm on every night, five nights
a week.
Speaker 6 (51:21):
I did a Friday I'm nine to.
Speaker 2 (51:22):
Sixty a m and streaming online at Triple W Saga
at sixty dot All my podcasts and videos go up
on my website, Briancomy dot com as soon as the
radio show goes to air as well. I put them
on several different podcast servers, on YouTube, on LinkedIn, et cetera.
Speaker 6 (51:36):
So if you missed my show on the radio, you
can get me a whole bunch of otherways. Thanks for
six years. Good night.
Speaker 1 (51:48):
Stream us live at SAGA nine am dot CA.
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