May 2017 1 Year 3 Year 5 Year Since Inception*
Caldwell CDN Value Momentum Fund “CCVMF” 0.6% 16.6% 6.8% 14.4% 11.8%
S&P/TSX Composite Total Return Index -1.3% 12.3% 4.7% 9.1% 6.5%


*Compounded Annual Return since August 15, 2011.

 

May Recap:

Accredited Investors Only

 

The Fund gained 0.6% in May versus a loss of 1.3% for the S&P/TSX Composite Total Return Index (“Index”). This is the 19th time since inception that the CCVMF outperformed the Index in a down month for a success ratio of 76% (19/25). It is also the 11th time that the CCVMF posted a gain when the Index declined, a testament to the strong downside protection of the strategy.

 

Top CCVMF performers in May were Boyd Group (+13.3%) and Sleep Country (+10.5%). Boyd moved higher on the acquisition of Assured Automotive, Canada’s largest non-franchised collision repair company. The deal is expected to be immediately accretive to earnings per share and adds 68 locations, more than doubling Boyd’s Canadian footprint. Sleep Country moved higher on a strong Q1 earnings report that included a very impressive 12% growth in same store sales and over 100 basis points of margin expansion. Recent acceleration of troubles at Sears suggests additional market share opportunities and the potential for meaningful earnings per share growth.

 

Four stocks were added to the portfolio in May: Savaria Corp (SIS), Colliers International (CIGI), Cogeco (CGO) and People Corp (PEO). Savaria is a North American leader in accessibility solutions for the elderly and physically-challenged. Its products include wheelchair lifts, stair lifts, residential and commercial elevators and vehicle accessibility devices. It recently acquired Span-America which adds specialty mattresses, beds and related products to the portfolio and enhances their distribution into the long term care and acute care markets. The company is seeing strong demand drivers as the population ages, people live longer, and as the world increasingly accommodates those with physical disabilities. Colliers is a global leader in commercial real estate services with over 85% of sales outside of Canada. The company is benefitting from institutional investors increasing portfolio allocations to real estate as a means of generating yield in a low interest rate environment, and the preference by these institutions to partner with a large, multi-national provider over multiple local players. Cogeco is a cable and internet provider that is seeing improved execution and strong growth momentum in the U.S. market. We expect the discount to peers to narrow. Lastly, People Corporation provides employee group benefits consulting, third-party benefits administration services, and pension and human resource consulting to Canadian companies. The business has high recurring revenue (90%+) with attractive retention metrics and is benefitting from health care cost inflation. The company is consolidating a sleepy brokerage industry where it is seeing opportunities to accelerate sales (introducing sales targets and hiring new brokers) and reduce costs through back office synergies. This story also fits our ‘under-covered’ category with only 3 sell-side analysts covering the name.

 

The Fund held a 2% cash weighting at month end. We look forward to tracking the progress of the portfolio’s holdings as we see a meaningful and diverse set of catalysts to drive continued growth.

 

We thank you for your continued support.

 

The CCVMF Team

 

The Fund is available on a private placement basis only to residents of Canada who are qualified “Accredited Investors” as defined under National Instrument 45-106 Prospectus Exemptions and who are resident in Canada. This material is for information purposes only and does not constitute an offering memorandum or an offer or solicitation in any jurisdiction in which an offer or solicitation is not authorized.

Please read the Fund’s Offering Memorandum before investing. Prospective investors should rely solely on the Offering Memorandum which outlines the risk factors in making a decision to invest.

The indicated rates of return are historical annual compounded total returns net of fees and expenses paid by the Fund, including changes in unit value and reinvestment of all distributions, but do not take into account sales charges or income taxes payable by any securityholder that would have reduced returns. Investments in the Fund are not guaranteed, their values change frequently and past performance may not be repeated. Investment losses do and may occur, and investors could lose some or all of their investment in the Fund.

The information herein does not consider the specific investment objectives, financial situation or particular needs of any prospective investor. No assurance can be given that the Fund’s investment objective will be achieved or that investors will meet their investment goals. Prospective investors should consult their appropriate advisors prior to investing.

Information presented herein is obtained from sources we believe reliable, but we assume no responsibility for information provided to us from third parties. Caldwell Securities Ltd. and Caldwell Investment Management Ltd. are wholly-owned subsidiaries of Caldwell Financial Ltd. Officers, directors and employees of Caldwell Financial Ltd. and its subsidiaries may have positions in the securities mentioned herein and may make purchases and/or sales from time to time.

This information may not be reproduced for any purpose or provided to others in whole or in part without the prior written permission of Caldwell Investment Management Ltd. All information and opinions indicated herein are subject to change without notice. Inception date: August 15, 2011.