Equity income manager Barry Morrison recalls investing in Northland Power Income Fund, a Canadian income trust, in 1997, when it had EBITDA of $26 million. Morrison’s initial interest was driven by the independent power producer’s 20-year contracts, which brought in predictable income, with inflation increases built in, and an IPO yield of 9.25%. The inflection point at which a very good investment became a great investment came in 2009, when Northland Power Income Fund merged with its development company, Northland Power Inc. (NPI). In 2020, NPI, which develops green power facilities, is estimated to have EBITDA of $1.2 billion.
“In talking to the management over the years, asking questions, it’s apparent that it’s an incredibly well-managed company,” says Morrison. He noted that the federal government’s ruling in 2006 that effectively banned the use of the royalty and income trust tax structure left many excellent, dividend-generating businesses available at good prices – an income investor’s dream.
Barry Morrison works closely with his partner Michael McNabb, overseeing some $250 million in LOGiQ equity income funds and $300 million for pension clients, private clients, trusts and foundations, and third-party mandates. While the team focuses on dividend yield, growth in earnings and dividends, it spends most of its time analyzing and monitoring the management of each investment to make sure that the “trust in management” factor remains intact. They have a multi-cap orientation, and their insights into company management have helped them to generate excess returns for all of their clients.