A Stockhouse article from the PI guy:

As Vancouver brokerage firm PI Financial eyes a share of Ontario’s wealth management business, its CEO says a balanced portfolio is the key to navigating choppy markets.

Resource stocks remain a key focus for PI Financial Corp., a Vancouver brokerage firm with a long history of underwriting mining exploration companies.

But PI Chairman Max Meier is also a player in the renewable energy sector via Western Wind Energy Corp. (TSX: V.WND, Stock Forum), which is gearing up to generate 150 megawatts of power next year from wind turbines in California.

During an interview with Stockhouse on Thursday, Meier said he likes the fact that Western Wind has obtained $249 million in financing from Manulife Financial Corp. (TSX: T.MFC, Stock Forum) (NYSE: MFC, Stock Forum) and other large lenders, and is expected to have $40 million in free cash flow next year, thanks to incentives from the U.S government.

“That is a stock that I personally own and I buy it for most of my clients,’’ Meier said.

An investment banker from Zurich, Switzerland, Meier launched PI back in 1982 with help from John Eymann, a former heavy equipment dealer, who remains the firm’s vice chairman. (Together, they bought a small brokerage called Douglas J. Hall and renamed it Pacific International Securities Inc. The company is now known as PI Financial Corp).

A 25%-owned affiliate of National Bank of Canada (TSX: NA, Stock Forum), PI is one of the largest and most profitable (Meier says) brokerages in Vancouver’s infamous Howe Street district.

The company made headlines in the late 1990s when two of its former brokers were arrested by the FBI for allegedly helping a U.S. promoter manipulate the price of a stock which traded on the over-the-counter bulletin board in the U.S.

But after a long-running investigation, the British Columbia Securities Commission failed to prove allegations that the brokerage and most of its senior officers and directors had allowed the firm to be used as a vehicle for illicit activity.

PI has since bounced back after beefing up its compliance procedures. Trading in U.S. OTC Bulletin Board stocks now accounts for only about 1.5% of the firm’s stock trading business, down from 30% in the late 1990s.

At 64, Meier says he spends 75% of his time looking after client accounts, leaving the running of day-to- day operations to others. But he still keeps a close eye on commodity markets and strongly believes that the price of gold will continue to rise, albeit with some setbacks along the way.

“I also buy Goldcorp Inc. (TSX: T.G, Stock Forum) (NYSE: GG, Stock Forum) and the Claymore Gold ETF (TSX: T.CGL, Stock Forum) on the blue chip side,’’ said Meier.

“I think [gold] is on the way to US$2,000.’’

It is therefore not surprising that PI has been an underwriter for a raft of mining companies. Recently, they include Osisko Mining Corp. (TSX: T.OSK, Stock Forum), Roxgold Inc. (TSX: V.ROG, Stock Forum), West Kirkland Mining Inc. (TSX: V.WKM, Stock Forum), Sandspring Resources Ltd. (TSX: V.SSP, Stock Forum), Amarillo Gold Corp. (TSX: V.AGC, Stock Forum) and Great Basin Gold Ltd. (TSX: T.GBG, Stock Forum).

Several of PI’s investment advisers are involved in Atac Resources Ltd. (TSX: V.ATC, Stock Forum) a front runner in the rush to find gold in the Canadian Yukon.

“We have substantial positions. Not myself, but several of my top brokers,’’ he said.

Still, PI is steering clear of TSX-listed Chinese companies following reports that regulators in Ontario and British Columbia are investigating fraud allegations at Sino Forest Corp. (TSX: T.TRE, Stock Forum) and Silvercorp. Metals Inc. (TSX: T.SVM, Stock Forum) (NYSE: SVM, Stock Forum).

“Luckily we had next to no positions in Sino Forest,’’ said Meier, adding that as far as he is aware, PI investment advisors had no sizeable positions in Silvercorp either.

Meier said the company had looked at financing two Chinese companies (in the consumer goods area), but has since withdrawn from the due diligence process.

“If you want to do a deal there, the securities commissions are adding a whole level of additional due diligence that makes it not worthwhile,’’ he said.

As head of one of Canada’s smaller brokerage firm, Meier is keeping a close eye on the bid by Maple Group to buy TMX Group Inc. (TSX: T.X, Stock Forum), which owns and operates the Toronto Stock Exchange and TSX Venture Exchange.

“We are not in favour, as a smaller firm, particularly because presumably it would involve the takeover of CDS (The Canadian Depository for Securities Ltd.) and we are worried that if CDS is part of it and becomes a for profit company then the fees for smaller firms would go up drastically,’’ said Meier.

CDS is the clearing house that settles all the trades for all of the brokerage firms, while ensuring that money raised from the sale of shares gets into the right hands.

Meier said the settlement fees are reasonable now. But he said the smaller firms are concerned that since Maple Group is comprised of the large bank-owned brokerages, it will eventually award itself volume based discounts.

Meier said he doesn’t think that the Maple Group bid will necessarily be successful. “I hope not,’’ he said. “There are a lot of discussions among various parties.”

While watching developments on the TMX front, PI has launched a Toronto office where the focus will be on managing the portfolios of high net worth individual clients. The Toronto branch is headed by Paul Wylie, a former senior vice-president and branch manager with TD Waterhouse.

“This will make us a more rounded company with revenue from all across the country,’’ Meier said.

PI derives 60% of its revenue from wealth management and 30% from capital markets, including underwriting, corporate finance, and 10% from other sources. (“Other” includes interest, foreign exchange and trading). Underwriting is still the most profitable part of PI’s business.

Looking ahead, Meier says he expects North American stock markets to remain choppy.

“But I’m an eternal optimist and I think that if you have a well diversified portfolio, you don’t have to watch the market every day.”

Typically, client portfolios are 30% weighted in bond ETFs, and preferred shares, 50% in blue chip dividend-paying Canadian stocks, 5% growth stocks, 5% Gold ETF (CGL) and senior gold stocks (mostly Goldcorp and up to 10% in more speculative stocks.

“So in the days when things look troublesome in Europe or the U.S., the gold stocks or gold ETFs and bonds go up, and the blue chips go down,’’ he said.

“It’s a good balance to be in bonds and gold [on one side] and blue chips on the other.”

Meier said he did well for his clients during the 2008-2009 crash by refusing to panic and electing to stick with quality stocks. “While the portfolios went down during that time, they invariably came back to previous levels,’’ he said.

“That is why I’m not too worried about the present situation.”