Lorne Steinberg Wealth Manager Loads Up on Microsoft, Sees Value in Alimentation Couche-Tard
Michelle Head Kim, vice-president and portfolio manager at Toronto-based Lorne Steinberg Wealth Management Inc., oversees $1.2 billion in assets. Her Canadian dividend growth portfolio has returned 17.1% year to date, up 32.8% over the past year, with a three-year annualized return of 20.1%. The global portfolio has returned 11.4% year to date and 18.2% over the past year, with a three-year annualized return of 16.2%
Kim's investment strategy focuses on 'good, high-functioning companies' with strong balance sheets and cash flow that generate returns over the long term. She says these companies may be out of favor but will eventually rebound.
Kim has been buying more Microsoft Corp. (MSFT-Q) after seeing growth in its cloud business and Copilot AI platform. The company has shifted from a product vendor to a service provider, resulting in a higher-quality revenue stream and reignition of growth. It generates cash flow to fund its spending and underpins annual revenue and profit growth well into double-digit territory.
She also likes Walt Disney Co. (DIS-N), which has been out of favor in recent years but is now profitable after pivoting to streaming. Its new chief executive, Josh D'Amaro, is focused on improving profitability. Kim believes Disney is in a better position for growth than it has been in a few years.
Kim's firm sold Alimentation Couche-Tard Inc. (ATD-T) last year after its proposed acquisition of Seven & i Holdings failed, but bought it back late last year and added to their position this year. They believe the company can continue its exceptional growth despite having only a few percentage points of market share in the U.S.
The firm sold Electronic Arts Inc. (EA-Q) on July 24 after it received an all-cash offer at a 70% premium to the price they first paid for it. The deal closed on August 4, and Kim believes it was the right decision given the company's valuation and potential acquirers.