Canadian Value Momentum Fund Reports

May 2017 | Caldwell Canadian Value Momentum Fund Commentary

 

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.

April 2017 | Caldwell Canadian Value Momentum Fund Commentary

 

March 2017 1 Year 3 Year 5 Year Since Inception*
Caldwell CDN Value Momentum Fund “CCVMF” 2.7% 20.3% 7.4% 12.6% 11.9%
S&P/TSX Composite Total Return Index 0.4% 14.9% 5.1% 8.1% 6.8%

 

*Compounded Annual Return since August 15, 2011.

 

April Recap:

 

Accredited Investors Only

The Fund gained 2.7% in April versus a gain of 0.4% for the S&P/TSX Composite Total Return Index (“Index”).

Top CCVMF performers in April were Calian Group (+9.9%) and Ag Growth International (+9.6%). Ag Growth moved higher on a sizable acquisition that is immediately accretive to earnings per share. The acquisition hits many key attributes, including bringing on a complementary product and geographic footprint, and significant potential for sales, manufacturing and other cost synergies. While we saw no specific news on Calian, we see this as an attractive 20% ROIC business with a focused growth plan and a compelling valuation. The company is under-covered with only 3 analysts currently following the name and we expect shares to continue moving higher as the story hits more investors’ radars.

 

Two stocks were added to the portfolio in April: Martinrea (MRE) and BRP Inc (DOO). Martinrea supplies auto parts to OEMs with a focus on metal forming (both steel and aluminum) and fluid management. The company is in an attractive position where it can grow revenue and margins without the need for overall industry volume growth as low margin contracts roll off, aluminum plants ramp up production and they execute their backlog. BRP is a leading global manufacturer of powersport vehicles and propulsion systems, including ATVs, SSVs, snowmobiles and watercraft, and operates under the Ski-Doo, Lynx, Sea-Doo, Rotax, Can-Am and Evinrude brands. The company is executing a plan of double-digit revenue and EPS growth through new product launches and category penetration, the expansion of its dealer channel and margin improvements. The stock trades at a sizable discount to its primary competitor despite much better operational performance.

 

The CCVMF is a great way for investors to participate in the best the Canadian market has to offer. This involves owning a focused portfolio of the right stocks at the right time. While our proprietary process helps us identify the most attractive stocks to own, our quantitative signals also point us to the stocks we should be selling. The nice thing about quantitative signals is that they provide discipline to the investment process. This served CCVMF investors well on our recent sale of AGT Food & Ingredients. While there are many things to like about AGT’s business, the stock hit our sell signal and the longer a stock stays in a ‘sell’ status, the more we grow uncomfortable with it remaining in the portfolio. The stock drifted lower on what we thought were temporary events, but ultimately failed to respond to positive news, prompting us to sell the position. This saved our investors from a negative pre-announcement and sizable earnings miss that took the stock down by 16% in 2 days.

 

The Fund held an 8% 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.

March 2017 | Caldwell Canadian Value Momentum Fund Commentary

March 2017 1 Year 3 Year 5 Year Since Inception*
Caldwell CDN Value Momentum Fund "CCVMF" 3.6% 16.5% 7.4% 12.1% 11.6%
S&P/TSX Composite Total Return Index 1.3% 18.6% 5.8% 7.8% 6.8%

*Compounded Annual Return since August 15, 2011.

March Recap:

Accredited Investors Only


The Fund gained 3.6% in March versus a gain of 1.3% for the S&P/TSX Composite Total Return Index ("Index"). 

Top CCVMF performers in March were Transcontinental (+21.5%), Premium Brands (+20.6%) and ZCL Composites (+13.0%), all of which moved higher on strong earnings results and positive outlooks. Transcontinental is making good progress on its initiative to diversify into packaging and gave a positive outlook with plans for double digit organic growth and opportunities for additional acquisitions. The company’s core printing business also showed resiliency with a service agreement renewal with Rona and a new agreement with Lowe’s. These multi-year agreements demonstrate that flyers continue to be a valued marketing tool for retailers. Premium Brands saw an uptick in organic growth and additional margin expansion. The company also gave a positive outlook that suggests its strategy in the specialized food manufacturing and distribution has much more room to run. Lastly, ZCL announced a special dividend of 65 cents (this works out to an ~8.6% annualized yield) and a 50% increase to its dividend. The company has made great progress over the last several years of improving margins and profitability and demand for its petroleum tanks continues to be robust on the back of new construction and replacement demand. 


Celestica (CLS) was added to the portfolio in March. We know this story very well given it has been a long time holding in the Caldwell Balanced Fund. Despite the stock nearly doubling the TSX Index return over the last twelve months, we see continued upside in the name. The company has now posted 5 straight quarters of top line growth and sees continued organic growth opportunity, particularly in its diversified/industrials segment as industrials manufacturing is still largely in-sourced. We expect margins to continue to grind higher and the company has hinted at additional acquisitions to build up its diversified offering. Meanwhile, shares continue to trade at a substantial discount to the market and its peer group. 


The Fund held a 14% 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.

February 2017 | Caldwell Canadian Value Momentum Fund Commentary

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January 2017 | Caldwell Canadian Value Momentum Fund Commentary

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Caldwell Canadian Value Momentum Fund Commentary – Full Year 2016

 

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Caldwell Canadian Value Momentum Fund Commentary – November 2016

 

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CCVMF Commentary – October 2016

CCVMF_201610_Commentary.pdf

 

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CCVMF Commentary – September 2016

CCVMF_201609_Commentary.pdf

 

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CCVMF Commentary – August 2016

CCVMF_201608_Commentary

 

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