Can aCCord FinanCial inC. (CF/TSX)
The position: Initiated in fall 2012.
Why do you like it? Skiba considers Canaccord a high-beta play that an improving stock market will generate stronger capital markets, increased trading volumes and more M&A activity.
“As the markets move up and people move more to equities, assets under management increase,” she said.
When Canaccord’s stock was trading at $5 per share in December, Skiba noted investors were essentially only paying for its asset management business and getting its brokerage operations for free. She also owns asset manager IGM Financial Inc.
Biggest risk: A slowdown in capital markets.
CiTigroup inC. (C/nYSE)
The position: Added in recent months.
Why do you like it? Skiba expects Citigroup to benefit from improving loan activity by U.S. consumers and businesses, as well as the growth in emerging markets due to its global presence.
She is also looking for Citigroup to dispose of more of the toxic assets in Citi Holdings, where a lot of its capital is tied up.
“There is huge room for cost cutting,” Skiba said. “The earnings power is much higher than people expect.” She also owns Morgan Stanley.
Biggest risk: The U.S. economy stalls due to the fiscal cliff.
CaE inC. (CaE/TSX)
The position: Long-term holding.
Why do you like it? CAE makes flight simulators and provides training for pilots, with its business roughly split between civil aviation and the military.
While there has a lot of discussion about budget cuts for the U.S. military, the manager noted 50% of CAE’s new military orders in 2012 came from Asia.
“Unfortunately, there is always a war somewhere and the emerging nations are buying equipment and training pilots for their military,” Skiba said.
She also believes CAE is an attractive takeover candidate for larger aerospace players such as General Dynamics Corp.