Money Sense Top 50 Stocks for 2019 Aubrey Hearn, vice-president and portfolio manager, Sentry Investments
You won’t find any oil and gas companies in Aubrey Hearn’s portfolio. The sector is too dependent on commodity prices, he says. Rather, the award-winning fund manager likes companies that operate in industries with limited competition and can generate high returns on equity and invested capital over five to 20 years. When it comes to valuations, he tries to determine how much a business would cost if he wanted to buy it outright and then figured out how it can grow. Free cash is also critical, he says. Hearn’s Canadian Income Fund has a 10.74% annualized return, good for eighth best in its crowded category, according to Morningstar.
15. Brookfield Property Partners (TSX: BPY.UN)
Want to buy a promising real estate business for cheap? Then look no further than this Brookfield business, which is trading near all-time lows and 21% below its January 2018 price. It’s sold off because rising interest rates tend to hurt dividend-paying REITs, while a $15 billion purchase of GGP Inc., the second largest U.S. mall owner, raised some eyebrows. “The market doesn’t like malls right now,” says Hearn. The company, though, owns many kinds of properties, including office, industrial and multifamily space. It’s also adding gyms, food and theatres to its malls, most of which are located in downtown urban areas. With Brookfield’s history of generating strong returns on capital, and its 8% yield, now’s a good time to buy in.