When Norman Levine says he holds stocks for the long term, he isn’t kidding. The investment industry veteran—he’s been in the business for 39 years—tends to hold companies for between three and five years, but he’s hung on to businesses far longer. The most extended period he’s held a stock? About three decades, says the co-founder and managing director of Portfolio Management Corp., a private-client firm for high net-worth investors.
Levine is a value investor who buys companies that are underowned and underfollowed. He’s interested in purchasing companies that have been sunk by a one-time event, like an unexpected earnings decline or a lawsuit, and then he’ll hang on until valuations rise. Everything he does is done with one thing in mind: protecting client capital. “My clients are between 50 and 90 years old,” he says. “They have money, but they can’t replace it.”
SNC-Lavalin Group Inc. (TSX: SNC)
1-yr. total return: -12.4%
A lot of investors bailed on this once-mighty Montreal engineering firm after it was rocked by a bribery scandal in 2012. To Levine, the bad news presented an opportunity. “We saw a world-premier company that got hit over something that happened in the past,” he says. While more unflattering news has come out since he bought it, he likes what he sees going forward. SNC is selling off non-core assets, and it’s inexpensive, trading at 11 times its core engineering and construction earnings, says Levine. The firm has a project backlog of about $12 billion. While it may still have fines to pay, Levine says it has enough cash to cover any penalties.
Sun Life Financial (TSX: SLF)
1-yr. total return: 13%
“We bought Sun Life when everyone thought life insurance companies were going out of business,” says Levine. The company’s rebound since the recession has been bumpy. Its latest setback? Lower interest rates, which affect how much the company can make in the market. When rates inevitably rise, though, Sun Life will earn more on every dollar than it does now, says Levine. It’s also better run than it was before the recession. The firm has sold off weaker assets, like its U.S. annuities business. It’s doing well in Asia, where individual policy sales rose 15% in Q1. Sun Life also plans to raise its dividend for the first time since the recession.
CCL Industries Ltd. (TSX: CCL.B)
1-yr. total return: 41%
This company has “flown under the radar” for most of its existence, says Levine, but it is the largest label company on the planet. It makes container labels for many of the world’s biggest brands, such as Pepsi and Nestle, and often makes the containers, too. The Toronto-based business has raised its dividend every year for the past 14 years, and while it’s only yielding 1.1% today, Levine points out that its payout ratio is below 20%. “That dividend has lots of room to grow,” he says. Levine expects earnings to jump 25% by next year and then another 13% in 2017. Most of CCL’s sales are in U.S. dollars and euros, so it’s benefiting from the low loonie.