FOCUS 2026: Against the crowd: Finding opportunities in a concentrated market

Hugo Lavallée: [00:00:01] Hello, thanks for being here, thanks for still being here. Happy Cinco de Mayo if you celebrate. Did I say that right, Diana? I didn't offend anybody, thank you. If you're online or in person I appreciate you being here. Hopefully, this will be the second best session you've had. The best one was my manager this morning. The world has changed, unfortunately. Things are different than before and we have to adapt. I think we've had three significant events. We've had COVID, we've had the election of President Trump and we had the Ukraine invasion. I think in that new world it's important to pick the right thematics. Thematics guide us to how should we invest our capital. I'm gonna name you a few thematics that I believe in, in no particular order. Defence, national security, energy security, sovereignty, onshoring, kind of back to manufacturing, back to renewables, commodity hoarding, I think those are big thematics that I'm focused on.

[00:01:32] I think that leads us to Canada, frankly. I'm bullish on Canada. If you were sitting here in Arizona in November I talked about that. I still think it's super relevant. I think after a tough 10 years I think Canada is back. I think we have a good plan, regardless of who you voted for we have a Prime Minister that is more focused on the economy. The plan is good and we just need to execute on it. Hopefully, our federal government can execute on. Hopefully, we won't fight too much among provinces, including the one I live in. I don't want to sound too dramatic but if we don't do it, if we pull together maybe somebody else will do it for us. I think it's really important we have really good plan. We're lucky, we have energy, we have uranium, we have fertilizers, we have copper, we have gold, we have our intellectual brain power, but we have a lot of stuff to sell to the rest of the world. We don't talk to the Prime Minister, we don't talk to their Cabinet.

[00:02:56] For 10 years we didn't grow our real GDP per capita in Canada and I think now it's going to grow again. I think we have stuff to sell to the world. When conflicts arise, like the Strait of Hormuz and Iran conflict, it just shows that we can be there to provide others. I think that's really, really important. I'm really, really focused on that. It's a big change. It's a big, big change to how we invested the previous 10 or 15 years. At Fidelity we don't try to cure cancer, we just try to follow the money. If you can be there a little sooner with a little bit more conviction than others I think we can do really well.

[00:03:41] What am I invested in? In some sort of order from lowest quality to highest quality, commodities. I was on a call earlier today with a sell side analyst. We're talking methanol, we're talking fertilizers. In an Iran conflict world what does it mean? Really focus on commodities. Probably the best contrarian thing I've done the last six months is buying Canadian energy, buying energy in general. Six months ago we're sitting somewhere on Camelback Road, we're talking about energy and there was no reason to own it. We were oversupplied into '26, why would you care, energy is $60.

[00:04:33] Two things were happening. It's a changing world so it's unpredictable, and the other thing is if you put $70 or $80 in our models on our energy companies they look really cheap. You kind of had a free option call. It's probably the best thing I've done from a contrarian standpoint the last six months is buying energy in the portfolio. Energy is about 15% of Greater Canada, it's about 20% of Canadian Opportunities. I'm bullish on the rerating of energy molecules in Canada. Long life, quality assets, there's less places in the world for that. If we can help bring our molecules through tidal water, our Canadian government is focused on that, I'm bullish on that. We haven't seen that trade in 20 years. It's happening right now and I think it makes sense and Greater Canada and Canadian Ops are invested into that.

[00:05:30] A notch above we have construction companies. Construction companies, a lot of them took a lot of losses on contracts previously. They're changing how they're writing contracts. Companies are rerating, they're rerating really fast, actually, but construction companies, if we're gonna build infrastructure, we're going to build things, I own some construction companies. Then it's back to renewables, and I'll double-click with that a little later with Kathryn. In a world that is energy starved, and not everybody is lucky like North America and is blessed with energy, the world is energy starved and there's pain points for a lot of countries. Some of them will try to resolve some of that problem with renewables.

[00:06:15] Keep going up the quality scale, on the defence side, drone, counter drone, unmanned, Iron Dome, Golden Dome, Space Force. There's some interesting company there and we'll talk about one later that I own. We keep moving up the quality scale, high quality industrials, valves, pumps, seals, locomotives, Caterpillar dealerships, mining equipment, mining consumables, energy infrastructure companies. A lot of them, they're consolidated businesses, they have pricing power and they're back. They're HALO, heavy asset, low obsolescence. AI's not gonna disrupt a valve company that is used for nuclear or energy play. What's happening now in Iran, it's gonna, it's going to be eyes wide open for a bunch of countries, how do we control our destiny a little bit more on the energy side. For some companies it's actually a short term negative because they're shipping products to the Middle East but eventually it's going to be better order book and then new customers looking to solve their energy needs.

[00:07:39] Finally, at the top end, royalty companies, commodity royalty companies. You know them, I'm not going to name them. I've been investing in them for a while. They weren't amazing last year. They were actually pretty big laggards versus the rest of the commodity space. They're definitely acting better. In a world of inflation they're immune or more immune from inflation. Joel Tillinghast wrote a good note in 2022 about the best stocks in the 1970s. Some of those stocks were royalty companies. You get the inflation on your revenue line, you don't get the inflation on your cost line. I own a lot of royalty companies, I'm quite excited about them.

[00:08:27] To wrap it all up, I think the three funds that I run from Canadian Opportunities, mid-cap, mid-cap plus, invested in Canada. To Greater Canada where I can do a little bit of everything, focus on high quality industrial tied to asset heavy world. To Climate Leadership where there's a bunch of solutions in there that are helping with energy security. I'm pretty excited about my three portfolios. I think the world has changed. I think Canada's doing well, Canada's outperforming. I think there's something there and I'm really, really running with that and spending a lot of time. From construction companies to remote chem companies to locomotives to rail to transport, the whole thing. I'm really trying to be an expert, trying to get there a little bit before others. I think those are thematics that we can believe in. With that, Kathryn, join me on stage please.

Kathryn Black: [00:09:41] So kind of you.

Hugo Lavallée: [00:09:42] You know, it's so funny, I don't know if this was planned or not but that's a song I would have put in if we could still choose walk-up music. You know which band that is? Angine de Poitrine. You haven't heard of them?

Kathryn Black: [00:09:52] No.

Hugo Lavallée: [00:09:53] You should Google them.

Kathryn Black: [00:09:54] Clearly they know you well so...

Hugo Lavallée: [00:09:56] That's so funny. Thank you. Whoever picked that song thank you very much on the other side. Hand of applause.

Kathryn Black: [00:10:01] Great way to end the day. You just covered a lot in those 10 minutes or so that you were up there. Love when you open and just give your thoughts to the audience here about where your head's at because there has been a shift, I would say, over the last six months. You have so much clarity, so much conviction in those areas that you just listed. Commodities, construction companies, renewables, defence, valves, pumps, energy consolidation, royalties, it's exciting to see. It's a very Canadian story, which is excellent. Let's dive into a few of these. You mentioned we'll double-click on renewables, let's start there. Taking it back to renewables, dive into that for us and does that still stand with the conflict in Iran right now?

Hugo Lavallée: [00:10:45] It's more relevant because in a world of $100 oil or whatever some countries, they'll be looking for solutions. With AI data centres and everything else. Just simplistically, I always like to tell stories, since the conflict happened ... Europe is generally energy short, they don't produce a lot of hydrocarbons. The price of electricity in Germany and Italy jumped a lot more than the price of electricity in Spain and France. Why? Because France is 80% nuclear and Spain's some combination of nuclear, wind and solar. The other two countries, they're more exposed. I don't think it's a one solution fits all. For some people it will be maybe importing natural gas from Canada but for a lot of places I think it makes a lot of sense. In Texas solar is really, really strong because there's a lot of data centres going there. They're energy short. So it's one solution amongst many.

[00:11:50] The lines have blurred, just for Climate Leadership the lines have blurred between decarbonization, energy security, national security. The US administration might choose to do nuclear. It's not necessarily for decarbonization but we're in an energy war with China. Other countries might say, hey, I need nuclear as a solution. I think it's a little bit potato potato. I don't really care how it's used. I think that makes sense for Climate Leadership. I think those thematics are really, really strong.

Kathryn Black: [00:12:21] So if it's the thematic, though, it has a place.

Hugo Lavallée: [00:12:23] Yeah, exactly.

Kathryn Black: [00:12:23] Excellent. Let's maybe just quickly touch on Climate Leadership since we're there. It kind of goes in tandem with renewables. It's different than some of your other mandates but also has some similarities. Maybe just for the advisors on the call, you know, how you look at Climate Leadership different than Canadian Ops and Greater Canada.

Hugo Lavallée: [00:12:39] Well, 30 seconds on Climate Leadership, when President Trump got elected the fund was getting redeemed because people thought it would be over, and it's probably been my best mandate the last 18 months. The reason is everything we've talked about today where it's an energy world and there's a lot of things in there that contribute to finding solutions to that energy world. I'm really positive on it. There's some stuff that I won't own in it. There was a client the other day asking me maybe you could own some oil and gas in it, and I'm like, no, no, that doesn't fit the mandate. There's some purity, there's some things that I won't buy but just generally I think the lines are blurring and there's so many industrial, I own copper stocks in Climate Leadership, I think they make a lot of sense. The mandate's been good.

Kathryn Black: [00:13:30] Excellent. To pivot from renewables, we had gotten together a couple weeks ago and you said if the Strait of Hormuz is still closed when the show comes we'll talk about this and that's really the shortage concerns. We've been in this war I think longer than maybe some thought, maybe somewhere on the other side of the table, but what's your view on that? Is that something that we should be worried about at this point in time.

Hugo Lavallée: [00:13:56] We can talk about it for an hour but just quickly.

Kathryn Black: [00:13:58] We don't have an hour.

Hugo Lavallée: [00:14:01] You got two parties staring each other down. My understanding, what I've read, is the Americans think they're taking about $400, $450 million a day off cash flow out of the Iranians. The Iranians say, well, we're taking 15%, 20% of the world energy and you're going to blink first. We're in a stare-down contest and it's bad. Every day that it doesn't open there's some consequences to this and there's shortages. We're not used to a world of shortages. I was born in 1979, except for a PS2 shortage, we're not used to shortages. I don't think people fully understand what it means. A shortage doesn't mean you can just pay the price. No, shortage means that maybe your flight's cancelled because there's no aviation fuel. It's not a good outcome. What I'm thinking about it is coming out of this, whenever it happens, there's a short term aspect of it and running the portfolio. I think what's more interesting is coming out of this what are the thematics that matter.

[00:15:13] Again, that energy security. If you're Australia and you're starting to run out of diesel fuel, if you're a bunch of Asian countries and you're running out of aviation fuel. If you are Italy if you have to cancel flights. We're relatively immune in North America, we're in a good spot compared to others, but countries, if you're West Africa and you have offshore energy but you haven't developed it for a bunch of reasons. Canadian nat gas is in a better spot because we couldn't send Canadian nat gas ... it's $2 a unit but sending it fully shipped and everything all in was $7.50 to Asia. Qatar gas was 5.50 and gas over there was 10 so they didn't want our gas because we got Qatari gas. But now gas over there is 25 so all of a sudden having some sort of diversification. I think the most interesting thing out of this is putting Canada again back at the forefront of offering solutions.

Kathryn Black: [00:16:18] That plays into your whole concept of national security and that theme, in that sense.

Hugo Lavallée: [00:16:23] Exactly

Kathryn Black: [00:16:24] On that note, rising costs, constrained supply, I believe in a call we had you referenced we're in a period of stagflation and concerns around policy or what that looks like. Maybe just elaborate on...

Hugo Lavallée: [00:16:37] Yeah, potentially. It's one thing that we're discussing. We're watching inflation expectation maybe creeping up a little bit. That, obviously, has an effect on interest rates. The one thing that's a little bit disheartening that's what's happening the last few days, initially the conflict happens so we're watching the 12-month energy curve, the price of oil 12 months out. Oil was 60, it jumps to, say, 100 but the 12-month goes from 60 to 70. It doesn't go to 100 because people expect some sort of resolution. What's been happening the last few days is 6 months forward and 12 months forward is creeping higher. That's why I've kept my energy stocks and I've struggled to sell them because there's some convexity to them that in 12 months' time if energy is 85 and not 70 they still look really cheap and there's a rerating there. There's some convexity, fancy word for hockey stick up, that you kind of want to keep just in case because it's kind of the only thing that can work. Hopefully, we don't get too much into that world but it's something to think about.

[00:17:44] For me, partly is ... and that's an important change for my portfolio because I've talked about what goes in but talked about what went out, just less consumer. I'm known for doing a lot of consumer and historically I've done really well doing consumer. It's been tough, consumer stocks post-COVID, the last 12 months. They look cheap on a relative basis but the puck's not going there. Just simplistically, if you think of a world where it's a hard asset world, it's an inflation world, the capital, the interest rate, that will probably bring yields up a little bit, that's going to crowd out a little more on the consumer side. I still have some. Housing sounds horrible so I have to own some but it can't be a big part of the portfolio because you want to mostly swim with the current in your back, not in your face.

Kathryn Black: [00:18:44] I think most advisors here know that you're a contrarian investor. Is the contrarian play not necessarily in the positioning or the individual stocks, it's more about the theory or the position on these hard assets, is that your contrarian stance right now?

Hugo Lavallée: [00:19:02] I'm a contrarian but I'm not going to look outside and tell you it's negative 20 and it's snowing. I think you have to be even-keeled. I think we've got good thematics and kind of focus on those. Like I said on stage, one thing I'm proud of and I can say is look, I bought the most energy that I've owned the last 10 years last fall, late last year, and it caught a lot of people off guard and it's helped the portfolio. Hopefully, every now and then we can repeat something like that.

Kathryn Black: [00:19:34] Excellent. Something that you've talked about in the past is rails and it being an area of interest for you. Can you give us an update on transportation, how you're seeing that sector specifically and where that plays in the portfolio?

Hugo Lavallée: [00:19:47] Transportation stocks, they finally worked. If you owned my fund thank you for your patience. They bought them literally when we were on stage in Scottsdale in November, the next day. What's happened there? That's why I stopped talking about them because they finally worked a little bit  but they've hockey sticked up the last five, six months. Two things have happened. After three and a half years of PMIs below 50, manufacturing index, the manufacturing index the last four months have gone above 50. Intentions are more positive on the transports, their clients and the investment and transportation just in general. The number one thing that has happened, though, is supply of drivers has been constrained by the US administration. From potentially illegal people in the United States that had driver's licence, to legal immigration crackdown like B1 and B2 visas, to English proficiency, it's really tightened up the TL market, the truckload market, the long distance market, and you're seeing it.

[00:21:04] The pricing on trucking is finally going up. People are noticing. The stocks move so fast, nowadays the stocks move really quick. The stock started moving before the PMIs turned positive.

Kathryn Black: [00:21:42] Excellent. Is that a lesson you've learned maybe over your career is to hold onto your winners a little bit? I know Dan said that in the past. Is that something you're also trying to do?

Hugo Lavallée: [00:21:52] Yeah, it's a lesson I've learned in the past but I think it's even more relevant today. I've talked about this in the past but just really briefly, in a market where us buy side investors are not the marginal buyers of stocks anymore, the market is set by people that are more valuation agnostic. They don't care if the stock is four times earnings or 80 times earnings, they're buying it for the next data point, good or bad. What that's led to is more dispersion, more volatility on both sides. You got a stock and you think $50 is a great price. I just cross my fingers it's going to go to 50 I'm gonna buy a ton of it. Then it goes straight through 50 and goes to 30. Vice versa, you're selling a company at 50 times earnings thinking... 35 times earnings is a great price. A real example, I sold a stock 35 times earnings, nuclear business, how can it possibly be higher? It goes to 55 times earnings.

[00:22:59] I think it's understanding that there's a lot of market participants. In theory it should help us. I feel that it's hurt me the last two, three years, but trying to adapt to that, be a little bit more patient on the way down and more patient on the way up. I think transport's a good example of that. They look expensive at face value nowadays but the party is, hopefully, just getting started.

Kathryn Black: [00:23:24] Excellent. Let's talk about AI because it's not a session without AI. You have some views but you didn't mention it in your speech earlier. Tell us why. Tell us where your head's at, your spiel on AI.

Hugo Lavallée: [00:23:40] Hopefully, I make it interesting and I don't repeat what others have said. First of all, if you've got kids, teens, pre-teens, or younger kids like you, I think a lot of people are way too negative on my kids have no future because of AI. Teach your kids some liberal arts, some humanities, teach them to look at people in the eyes when they're talking and these kids will rule the world. Have them focus on the we versus the me. I think we got away from that a little bit during COVID, you be you and everything. How can I be helpful to a team because now with AI tools we can do things quicker and faster. I think that's really, really relevant.

[00:24:31] You've got to be careful with AI that it doesn't become a veneer over an ocean of ignorance. I could put AI into Fidelity's research and read it for me but it's not the same as reading 50 pages of research. A lot of people say, oh, summarize conference calls. Okay, great, but a lot of it is in the subtlety of talking to people and listening. What did they say this time that they haven't said the last eight conference calls? I think it can't be a replacement for hard work. How I've been using it, which is not super novel, is to ramp quicker on some concepts. For example, I always like to give examples, last week we're talking to the TransForce CFO and he's mentioning chameleon carriers that were on 60 Minutes 48 hours ago. You can put into AI, you get a nice resume, now I know what a chameleon carrier is, I don't have to listen to the 60 Minute 10 minute clip. If I want to I can do it.

[00:25:38] Another example, February 28, it's Saturday morning, war broke out, let's get up to speed on Iran. What do they produce, make sure we don't miss anything, what's being shipped and things like that. That's helpful. What hasn't worked for me is last year I tried two $20,000, $25,000 a year tools on AI trying to replace kind of my process. I would do my own work on a company and then I would try to prong these expensive tools, I don't know, it's really not there. There's quite nothing like being an expert on understanding why were margins like this in 2016. You kind of get still very superficial answers. I think for our team I think we can run a little leaner. I tell my kids, look, make yourself useful. My son's going to have a summer job in technology. How can I help? You should be able to do things a little bit quicker, a little better. Don't make it a lazy replacement.

[00:26:43] Finally, we have to talk about the stock markets. We talked a lot about it, a lot of thematics. I own some AI exposure into my funds. Steel tanks that are being built to go for liquid cooling for data centres, orders through the roof. There's Caterpillar dealership building metal enclosures, making so much money selling metal enclosures. Optical test and measurement. Data centres, one of the bottlenecks now is maybe the speed, so going from electric to optical, there's companies that provide tools, testing in the lab. That's been a really good stock year-to-date. There's a company in Fort Lauderdale, Florida that provides specialty chemicals that goes into the production of semiconductors. I'm dabbling and I'm there.

[00:27:41] Where I'm not there is semiconductors. I'm sure you've heard about it the last few days so Hugo's one minute speech on semiconductor. If you look at Micron, for example, they've made between $4 a share and $12 a share over the last 10 years. I bought it when they lost $4 share in late 2022, early 2023. The stock was $50 a share.The world's really changed for them but I'm a little bit worried about sustainability of those earnings. I started at Fidelity in 2002 when companies were writing off a bunch of investments that they've made prior. One thing that I'm focused on AI is making sure that the companies that I own that have some AI exposure, they're not adding too much capacity. I think that's going to be the killer.

[00:28:40] There was a Canadian company that told us last week, it's so great we can get a one year payback on our investments. One year payback, 100%. Dollarama doesn't have that, Chipotle doesn't have that, Domino's doesn't that. It's an amazing payback for a company that five years ago they would have struggled to make an eight year paycheck. The problem with one year payback is if you do too many of this eventually you get to the other side of it, and I covered these stocks when they're writing off assets, is not only are your earnings go from maybe $100 a share to $20, you end up losing money and you're taking massive writedowns on your book-to-bill. I'm not there.

[00:29:21] I think I'm really trying to avoid being a turkey going into Thanksgiving. The turkey has a pretty good life, doesn't know when Thanksgiving is happening. That's how I feel a little bit with semis, don't be a Thanksgiving turkey.

Kathryn Black: [00:29:44] Great parenting advice mixed in there. Derivatives, I say unique derivatives on the AI play is what you have, not adding too much capacity and don't be a turkey. Those are my four takeaways from that spiel.

Hugo Lavallée: [00:29:57] Try to make it more interesting.

Kathryn Black: [00:29:57] No, it's great. It's excellent. As kind of a segue on a similar vein because software, AI software have kind of gone hand in hand in the conversation. There's a question here from the audience. It has been beaten up year-to-date. We just heard Dan talk a lot about software this morning but your views.

Hugo Lavallée: [00:30:16] I own less software than Dan and I've jumped in it not as quickly. I bought a little bit year-to-date, a little bit more. The problem is a lot of these stocks were really expensive to start with. They go down doesn't mean they're cheap. Dan is finding some cheap names, and there are some that are out there but just generally for software, some of these names were 10 times sales, now they're 5 time sales, it's like so what, and they abuse stock-based comp. I think we're going to have a transition in sales model, from seed-based to consumption-based. Some will make it. At some point ... Conor and I were talking about this over the weekend, at some point we're gonna have to take the other side of this AI trade and it's probably gonna be some combination of software and some other businesses that people will be... another one that's on my mind is brokerage, like real estate brokerage where, oh, there's going to be so many white-collar jobs gone. We're identifying the targets but for now, for me at least, I think I'm more interested in nailing the two or three or four Canadian energy stocks where I think there's a rerating on their good assets and molecules than owning a ton of software.

Kathryn Black: [00:31:43] Let's pivot back to defence, maybe bringing it back home in the sense of one of your themes. One of your holdings I think that maybe isn't as well-known but is a great example of defence is Teledyne Technologies. Explain to us what do they do and why are they a fit for your style and portfolios,

Hugo Lavallée: [00:32:01] Teledyne TDY, full disclosure because you'll probably listen to the replay of this was Connor Gordon's idea. I like to take the credit unless he finds out. Teledyne TDY, it's many businesses. The biggest division is vision, machine vision. Actually, some of you might remember there was a Canadian company 15 years ago called DALSA in Southern Ontario and Teledyne bought that company. They also bought FLIR. It's high quality machine vision. Now, high quality machine vision, some of it goes into manufacturing processes. The last few years have been tough  but now with PMIs inflicting and onshoring and President Trump trying to focus hard on bring back manufacturing to the United States that could be acting a little bit better. They've seen that getting a little better.

[00:32:54] The reason why we really own it is the other part of the business, those visions are tools that are used in space, in defence, Iron Dome, into small drones, into unmanned, counter drone defence. You can produce drones and they'll say, they're actually one of the producers, there's too many of them, or we can be one of the high quality oligopoly, two or three high quality suppliers to them and their specialty is vision.

Kathryn Black: [00:34:07] Excellent. It sounds like it plays into this conviction that you're having on this theme. We'd be remiss if we didn't talk about gold because gold has gotten quite a hefty exposure within your portfolios. You've been building on it a bit, just your take on the gold placement and how you use that to manage your portfolio.

Hugo Lavallée: [00:34:28] We woke up Saturday, February 28, thinking, okay, Monday energy is going to go up and we're like, okay, what about gold? We're all staring at each other, it's going to go up, right? We think it's going to go up. I think so. Here we are and it's corrected roughly 20% and the stocks are down 25. In the short term it's not that surprising. We had a US dollar rally. Like I explained earlier, North America is more immune to the oil shock that is happening. It was a popular trade. We're hearing that maybe some central bank had to sell a little bit of gold to get their liquidity going. Again, just like we were talking about the Strait of Hormuz previously, I think what's a lot more interesting is what comes out of this. I think what comes of this is, again, people are looking at US dollar, fiat currencies saying I can't transact too much. My security umbrella, I got to take the matters into my own hand.

[00:35:38] If you look at countries, if you're Canada, for example, asking to bring the money back to Canada, we need the money to invest in our infrastructure. From CPP to IMCO to La Caisse de dépôt, creating a sovereign wealth fund. You can invest in it too which is some sort of financial repression. Just having the money, countries needing their money and their own currency, the hard asset trade, trying to transact commodities and others outside of US denominated assets. That's really the Ukraine War. When Russia invaded you can put US dollar sanctions. I think that leads us over time to central banks across the world owning more gold. Unfortunately, if we're in an inflationary world in the short term gold can be a bizarre asset because, well, if the Fed talks they might raise rates. But if we're late on yields or government bonds or the cost of fiat currency versus inflation I think it can be pretty powerful for hard assets. Look, the gold stocks, if you're plugging in $4,500 or $5,000 gold a lot of them still have really attractive free cash flow yields. They're still a pretty big part of what I do in Ops and Greater Canada.

Kathryn Black: [00:37:01] We spent a lot of time talking about Canada today thus far. Your views, US, international, I know that you do have primarily more Canadian mandates but just views on opportunities outside the borders.

Hugo Lavallée: [00:37:17] The world is ours at Fidelity to try to find opportunities. In mid-March I was in Stockholm for a day and Copenhagen for two, there's a lot of high quality industrial names. Denmark has more healthcare but Stockholm, there's just a lot of companies that are related to mining, related to energy. I'm trying to find some duration place there. To be frank, I think the thematics are more important than the country. The country, like who cares? You just go where the best companies are. Some of them are in the United States. Last Thursday I started buying an American valve company. They had a tough quarter because guess what, it's petrochemical, it's refining. They sell to the Middle East, orders are down. People don't like it, oh, maybe the back half's going to be a little tougher. Stock sells off 15, 20%. I think I can use duration, i.e., time to think about, well, I'm thinking about post the conflict, there's a lot of repair that has to come, and the rest of the world's gonna look at energy infrastructure. I don't think the borders are that relevant. Definitely more Canada than before but I think if the opportunities are ... as long as there's rule of law and you can trust the accounting it doesn't matter where it is. I feel good about finding ideas with the Fidelity research.

Kathryn Black: [00:38:41] Excellent. To get the Fidelity team on these thematics that you're talking about because like you said, it doesn't matter about the border, how do you work with the Fidelity team? We do have global reach, we have global access, how do you approach the team with these new thematics, how do you go out and find those best ideas working with the analysts at your fingertips.

Hugo Lavallée: [00:38:59] Well, back to AI, I'm willing to work tirelessly with the young folks that want to work hard and put their shoulders to the wheel and try to make money for our clients. I'm pretty ruthless with that. It's like, what's his name, is it Jack in Meet the Parents, you're either in the circle of trust or outside the circle at trust. If you're in the circle of trust I'm going to work with you and we're going to talk late at night and early in the morning. If you're outside the circle of trust it's really hard to get back in. I'm trying to teach my kids make sure you get in the circle of trust with people that you like and the jobs that you have.

Kathryn Black: [00:39:40] And your circle of trust keeps giving you good ideas time and time again.

Hugo Lavallée: [00:39:43] Sometimes it's mine but if you surround yourself by good people, like I said earlier, I have no problem giving credit to others.

Kathryn Black: [00:39:51] I love that. Just to end, you have always been a big proponent of Fidelity, of diversity of thought, of the products we have available to investors. Final thoughts to the audience here today for a very robust 40 minutes.

Hugo Lavallée: [00:40:07] Well, the sun is shining. We had a little bit of rain earlier today so let's go and enjoy outdoors a little. If you've been online the last two days thank you for your time. We understand that you have, obviously, choice how you spend your time, choice of firm you can deal with, choice of portfolio managers you can deal with. Hopefully, we presented a quality two days with you. Hopefully, for some of you I'm the ice cream flavour that's the one that you like, otherwise we have other products, other ice cream flavours. Thanks for your time. It's always great to be invited. I like closing. Dan used to close but Dan's too negative. I like closing.

Kathryn Black: [00:40:51] When you end talking about ice cream it doesn't get better than that. Thank you, Hugo, for being here.