John Priestman

Manager is adding "very depressed, high-quality common stocks" ahead of mass income trust conversions.

Diana Cawfield 13 November, 2009 | 7:00PM

John Priestman didn't wait for federal tax changes to fully transform the Canadian income-trust universe before making changes to the BMO Guardian funds that he co-manages.

Priestman, whose income-trust-heavy funds include the $446-millionBMO Guardian Monthly High Income Mutual, notes that by this spring many income trusts had already converted to corporations.

Consequently, he and his colleagues at Guardian Capital LP believed it was an opportune time to add dividend-paying common stocks to BMO Guardian Monthly High Income and a very similar fund, the $601-millionBMO Guardian Monthly High Income II.The Guardian Capital team's picks include Rogers Communications Inc. ( RCI.A), Shaw Communications Inc. ( SJR.B) and Imperial Oil Ltd. ( IMO).

The thinking behind adding companies such as these, according to Priestman, was that by 2011 all trusts will have been converted to common stocks. "So why not take advantage of very depressed, high-quality common stocks right now, rather than waiting, when they'll be 30% to 40% higher?"

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About Author

Diana Cawfield

Diana Cawfield  Diana Cawfield is an award-winning writer who has been a regular Morningstar contributor since 2000. Her numerous publication credits include the Toronto StarAdvisor's Edge and Chatelaine, as well as the Canadian Securities Institute's online educational services.

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