Canadian Value Momentum Fund Reports

May 2018 | Caldwell Canadian Value Momentum Fund Commentary

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May Recap: 

 

The Fund gained 2.3% in May versus a gain of 3.1% for the S&P/TSX Composite Total Return Index ("Index”). The Index's performance was driven by strong performance in Technology (+7.8%), Industrials (+6.7%) and Materials (+5.5%) while yield-sensitive sectors continued to feel the pressure: Utilities (-1.9%) and Telecom (-0.6%). We suspect that there are many Canadian investors that are still under-water in their portfolios year-to-date, especially those that were sold on the 'safety' of dividends. While the Index is essentially flat year-to-date, the Utilities sector is -10.4% (think Transalta, Fortis and Algonquin Power), the Telecom sector is -7.7% (led by BCE, down 10.5%) and the Consumer Staples sector is -6.1% (led by market darling Alimentation Couche-Tard Inc. (“ATD.B”), down 17.5%).

 

Top CCVMF performers in May were BRP Inc. (“DOO”: +16.3%) and ATS Automation (“ATA”: +15.4%). BRP reported a knock-out quarter on May 31st with broad-based strength in sales (+19% y/y) as new products continue to perform very well. Gross margin was 160 bps higher y/y and FY guidance was raised on both the top and bottom lines. The stock saw strength going into the earnings release as channel-checks indicated strong product positioning and share gains. ATA also reported a very strong quarter, posting a 3rd straight quarter of double-digit revenue and triple-digit margin expansion. Bookings were strong with the backlog now sitting at record levels. The new CEO seems to be executing very well and re-iterated the target for 500 bps of margin expansion. The trend of automation seems to be accelerating as companies confront rising wages, scarcity of low-wage labor and regulatory increases in quality control.

 

One stock was added to the portfolio in May: Yangarra Resources (“YGR”). Yangarra is an oil and gas company with an operational focus on light oil development in the Cardium formation in West Central Alberta. The company is a low-cost organic growth story; production has increased from 2,000 barrel of oil equivalent per day (“boe/day”) in 2015 to 7,500 boe/day currently through innovative drilling and completion techniques that have allowed the company to access parts of the Cardium that were previously inaccessible. The company's costs rank amongst the lowest in their oil-weighted peer group (with full cycle returns amongst the highest), while the balance sheet is strong and valuation is in line with peers. We expect the company to continue releasing good results as they make their way to a 15,000 boe/day production target by 2019.

 

The Fund held a 29.3% cash weighting at month-end which is down to 17% at the time of writing. As previously discussed, we expect cash balances to move lower as we progress through the CCVMF's investment process. In the meantime, 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 information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

April 2018 | Caldwell Canadian Value Momentum Fund Commentary

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April Recap:

 

The Fund was flat in April versus a gain of 1.8% for the S&P/TSX Composite Total Return Index ("Index”). The Index's performance was driven by Energy (+6.8%) while yield-sensitive sectors continued to feel the pressure of rising interest rates: Utilities (-1.8%), Consumer Staples (-1.4%) and REITs (-0.4%).

 

Top CCVMF performers in April were WSP Global (WSP: +7.1%) and North American Construction Group (NOA: +7.1%). While there was no specific news related to WSP, the company is coming off a solid earnings report in March and Ontario and Quebec budgets released at the end of March suggest that infrastructure spending is still a focus for governments. There is also chatter that WSP is in a position to possibly do a larger, transformational type of acquisition as it continues to consolidate the industry. NOA's positive momentum continues as its guidance for 15% CAGR in revenue and ebitda for 2018 and 2019 is starting to look conservative. The company is benefiting from a successful renewal of oil sands long term service agreements and Suncor's Fort Hills mine is providing incremental demand. NOA also has good line of sight into heavy construction projects for the summer of 2018 after a 4 year drought and commodity price strength is providing additional opportunities.

 

One stock was added to the portfolio in April: Methanex (MX). Methanex is the largest producer of methanol in the world, accounting for ~15% of global capacity. Methanol is a chemical used to manufacture many consumer and industrial products and is also a clean-burning alternative fuel source. The company is benefiting from very strong methanol pricing and, while there are many moving parts, it seems that supply/demand fundamentals will remain favorable through the end of the year. Demand is being driven by new consumption from methanol-to-olefins (MTO) plants in China and longer term demand drivers from marine fuel, industrial boilers and fuel-blending show significant potential. Analysts have modeled methanol prices to retreat from recent highs so any sustained tightness would be positive. The company is aggressively buying back shares with excess cash flow as capital spending remains minimal for the next 18 months.

 

The Fund held a 31.4% cash weighting at month end. As previously discussed, we expect cash balances to move lower as we progress through the CCVMF's investment process. In the meantime, 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 information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

March 2018 | Caldwell Canadian Value Momentum Fund Commentary

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March Recap:

 

The Fund gained 1.6% in March versus a loss of 0.2% for the S&P/TSX Composite Total Return Index ("Index”). The Index's performance was mixed on a sector level, with the strongest performance coming from REITS (+1.7%) and the Gold sub-sector (+6.8%) while Industrials (-2.4%) was the worst performer.

 

One of the core features of the CCVMF is investing in stocks that have the ability to unlock value regardless of the market's underlying performance. The Fund's out-performance this month is telling given its largest sector exposure - Industrials (38% of the portfolio at month end) - was also the market's worst performing sector. Looking at the CCVMF's individual holdings within Industrials, 8/10 (80%) out-performed the Industrials sector while 6/10 (60%) posted a positive return in a down market. This type of performance is the result of a high-conviction portfolio of stocks with strong company-specific catalysts, made possible by a proprietary, bottom-up, investment process.

 

This is the 3rd consecutive month that the CCVMF out-performed the Index in a down market. Since inception (Aug 2011), the fund has outperformed the Index in 23 of 30 down months for a 77% success ratio. The CCVMF's return and down-capture in March led all of its peers in the Canadian Equity category. The CCVMF's down capture in March was actually negative (a good thing) given the Fund posted a positive return in a negative market.

 

Top CCVMF performers in March were Premium Brands Holdings (PBH: +14%) and Stuart Olsen (SOX: +12%). While PBH reported a mixed quarter, issues seem to be temporary and the company continues to progress with its acquisition strategy, having announced 4 acquisitions that will be accretive to current year earnings. The company’s guidance was in-line with the consensus estimate but did not include any contribution from these acquisitions. This suggests upside to the company’s guide and analysts estimates have moved higher accordingly. Stuart Olsen had a very strong quarter with a 14% EBITDA beat driven by higher than expected margins. Leverage and payout positions have improved significantly and the company is making progress on its diversification efforts, evidenced by new contract wins.

 

No stocks were added to the portfolio in March.

 

The Fund held a 29% cash weighting at month end. As previously discussed, we expect cash balances to move lower as we progress through the CCVMF's investment process. In the meantime, 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 information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

February 2018 | Caldwell Canadian Value Momentum Fund Commentary

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February Recap:

 

The Fund fell 0.7% in February versus a more substantial loss of 3.0% for the S&P/TSX Composite Total Return Index ("Index”). The decline in the Index was broad-based, with only the Technology (+5.8%) and Industrials (+1.3%) sectors posting positive returns. Energy (-6.4%), Health Care (-10.1%) and Gold (-11.7%) were the worst performers.

 

This is the 2nd consecutive month that the CCVMF out-performed the Index in a down market. Since inception (Aug 2011), the fund has outperformed the Index in 22 of 29 down months for a 76% success ratio. For the month of February, the CCVMF's down capture was 22.5% which ranks in the top 1% of all Canadian Equity funds.

 

Just a quick reminder that, unlike many Canadian Equity strategies that can have significant exposure to the U.S. and foreign exchange rates, the CCVMF invests entirely in Canadian stocks or cash.

 

Top CCVMF performers in February were North American Energy Partners (“NOA”: +9%) and CGI Group (“GIB.A”: +6.5%). NOA was added to the portfolio last month and significantly out-performed its sector (Energy -6.4%) on the back of a solid earnings report in which the company re-iterated their strong outlook. EBITDA is expected to grow 15% annually through 2019 driven by new project wins, successful service agreement renewals and continued expansion into non-oilsands projects. CGI also had a strong earnings report on an acceleration in revenue growth (constant currency growth moved to 4.9% versus 2.5% the prior quarter). Bookings also set an 8-quarter high as demand for the company's Digital and Intellectual Property “IP” solutions remains strong given increasing IT budgets at CGI's customers.

 

Two stocks were added to the portfolio in February: ATS Automation “ATA” and New Flyer Industries “NFI”. ATS is a leading provider of automated manufacturing solutions and serves a diverse set of clients across the Healthcare/Life Sciences (49% of revenue), Transportation (27%), Energy (13%) and Consumer Products (12%) industries. Demand trends are strong with rising wages, re-shoring, scarce low-wage labour, and higher quality control leading companies to turn to automation. Particularly noteworthy secular demand drivers are in healthcare, where manufacturers face increasingly stringent regulations, and in transportation, driven by electric vehicles. ATS also has a robust M&A pipeline that should provide additional growth opportunities. Lastly, the company has a new CEO that is looking to drive 5% of margin expansion by driving a culture of process-driven improvement. New Flyer was sold from the portfolio in late 2017 as the stock hit our sell signals. We re-initiated the position after another attractive acquisition and the company's investor day, which highlighted continued strong demand trends and further runway for product line growth and margin expansion. NFI's leadership position in electric buses has also become more clear, which removes a source of negative sentiment on the stock.

 

The Fund held a 36% cash weighting at month end. As previously discussed, we expect cash balances to move lower as we progress through the CCVMF's investment process. In the meantime, 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 information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

January 2018 | Caldwell Canadian Value Momentum Fund Commentary

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January Recap:

 

The Fund fell 0.8% in January versus a more substantial loss of 1.4% for the S&P/TSX Composite Total Return Index ("Index”). Last month's out-performance of traditionally defensive sectors reversed in January with Consumer Staples (-1.9%), Telecom (-4.5%%) and Utilities (-4.5%) under-performing in a down month. Technology was the best performing sector in the market (+5.4%). 

 

Top CCVMF performers in January were BRP Inc. (+9.4%) and Ag Growth International (+6.6%). BRP was out marketing in January and pointed to continued strength in end markets and continued runway in penetrating new product categories. Meanwhile, Ag Growth seems to be picking up after drifting lower in a seasonally weaker period. We are encouraged to see renewed buying interest in the stock as there has been no change to the company's significant growth opportunities tied to the build-out of agricultural infrastructure. 

 

Two stocks were added to the portfolio in January: North American Energy Partners (NOA) and Stuart Olsen (SOX). NOA has done a very good job of improving its business through balance sheet and margin improvements and end market diversification. The company invested through the down-cycle and is now well-positioned to take advantage of an up-tick in activity. Stuart Olsen is expected to benefit from infrastructure spending coming out of Canada's 2015 federal election, which is only now starting to hit the market. The stock trades at a significant discount to peers and we expect this gap to narrow as activity picks up and operating metrics improve. 

 

The bigger story is the market's behavior once February started. We will have more color in next month's note but we are pleased with how the CCVMF has navigated the market's volatility thus far. Specifically, the fund continues to exhibit defensive qualities on the down-side while, at the same time, retaining strong participation in the market's upside. 

 

The Fund held a 33.8% cash weighting at month end. As previously discussed, we expect cash balances to move lower as we progress through the CCVMF's investment process. In the meantime, 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

Peer Comparison

The information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

December/Full Year 2017 | Caldwell Canadian Value Momentum Fund Commentary

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December Recap:

 

The Fund gained 0.6% in December versus a gain of 1.2% for the TSX Total Return Index. The Index finished 2017 with a strong commodity and 'risk on' rally with the Materials and Industrials sectors up 3.4% and 2.0%, respectively, in December, while traditionally defensive sectors were all in the negative: Telecom (-2.1%), Utilities (-1.2%), Gold (-0.4%) and Consumer Staples (-0.2%). Top CCVMF performers in December were Cargojet (CJT: +11%) and Imvescor Restaurant Group (IRG: +8.5%). We suspect that CJT moved higher on the back of strong online retail sales through the holiday season. The CCVMF sold its position in IRG following a take-out offer by MYT Group which implied a 2017 EBITDA multiple of 13.8x. The IRG trade was a successful one for the CCVMF with the stock +70% since the initial purchase on February 2, 2016 versus 38% for the TSX Total Return Index. Gains were a function of both multiple expansion and earnings growth - IRG was trading at 8.6x trailing EBITDA at the time of purchase and EBITDA grew over 20% through our holding period.

 

One stock was purchased in December: Rocky Mountain Dealerships (RME). The company owns and operates agricultural equipment dealerships with over 35 locations across Alberta, Saskatchewan, and Manitoba. After several years of weak equipment sales, the market cycle seems to have bottomed and the company is well positioned to benefit from a multi-year up-cycle. Cost and inventory reductions should lead to strong profitability as the company looks to enter a fragmented U.S. market. The CCVMF ended the year with a 38% cash position. As noted last month, we expect the cash balance to move lower as we progress through our due-diligence process on new opportunities. 

 

Full Year 2017 Recap:

 

2017 was another successful year for the CCVMF as it once again significantly out-paced its benchmark. The Fund gained 13.8% in 2017 versus a gain of 9.1% for the TSX Total Return Index for out-performance of 4.7%. *Please see below for standard performance data.  Gains in the Index were broad-based with only the Energy sector (-10%) showing a decline. Looking into the CCVMF's performance, success in 2017 was driven by both sector allocation (i.e. being in the right sectors) and security selection (i.e. being in the right stocks), with the former accounting for 2/3 of the out-performance versus the Index. 

 

Top contributors from a sector standpoint included:

  1. Security selection in Consumer Discretionary stocks, driven by Martinrea, Cogeco and BRP Inc;
  2. The CCVMF being over-weight the Industrials sector, which out-performed the broader market;
  3. The CCVMF being under-weight the poorly performing Energy sector. 

Top detractors included:

  1. Security selection in Technology stocks, driven by Celestica and Wi-Lan;
  2. The CCVMF being under-weight the Financials sector, where the fund missed out on the strong performance of the banks;
  3. Security selection in the Energy sector - although the CCVMF was under-weight energy stocks, the stocks it did own - Enerflex, North American Energy Partners and High Arctic Energy - under-performed. 
Top and Bottom CCVMF Contributors

As Table 1 shows, the top individual stock contributors out-paced the bottom contributors by a factor of 2.3x. The CCVMF also added to its winning streak of out-performing in months when the TSX Total Return Index was negative. Specifically, the Index posted negative returns in May, June and July and lost 2.1% over this three month period. Meanwhile, the CCVMF out-performed the Index in both May and June - including posting a positive return in May - and only declined 0.8% over the three month period. Since inception, the CCVMF has out-performed the Index in a down-month 20/27 times (74% success ratio) and posted a positive return 11/27 times (40% success ratio). 

Growth of $10,000

The strong result in 2017 puts the CCVMF in the top 4% of our Morningstar Canadian Equity peer group. The CCVMF's success is a function of a concentrated portfolio of 15-25 stocks where each position has a strong set of catalysts to increase its value. We continue to look forward to strong results as we progress through 2018 and beyond.

 
We thank you for your continued support.
 
The CCVMF Team

The information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

November 2017 | Caldwell Canadian Value Momentum Fund Commentary

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November Recap:

 

The Fund gained 0.2% in November versus a gain of 0.5% for the S&P/TSX Composite Total Return Index ("Index”). Traditionally defensive sectors such as Consumer Staples (+3.7%), Telecom (+2.4%) and REITs (+1.7%) out-performed the more cyclical sectors. Industrials (-1.5%), where the CCVMF has its largest exposure, was the worst performing sector in the market; however, security selection was strong as the fund’s weighted average return across its Industrials stocks was +1.5%.

 

Top CCVMF performers in November were Martinrea (+21.5%) and Empire Group (+11.2%). Martinrea moved higher on the back of a strong earnings report in which the company raised its long-term operating margin guidance. Martinrea is on track to double its margin level over the 2013-2019 period on the back of operational improvements, better pricing discipline and product mix. Empire moved higher on a third consecutive quarter of food inflation after 11 months of deflation. While this is positive for all grocers, Empire is also benefiting from company-specific catalysts as it announced details on a round of spending cuts that are part of a broader restructuring plan.

 

No stocks were added to the portfolio in November.

The CCVMF has significantly outpaced its benchmark over its 6+ year history and we were recently asked how we do that: what is our edge?  Our answer is that it's a combination of two things. First, our proprietary factor model helps us identify companies with strong catalysts. There are very good things happening at these companies to drive their share prices higher. The second important piece is that we own a concentrated portfolio of these high-catalyst names. One can think of the CCVMF in terms of a steak versus a sausage. There is no 'filler' in the CCVMF. The combination of owning a concentrated group of only high-catalyst names results is a portfolio with the ability to significantly out-perform the market.

The Fund held an 33% cash weighting at month end. The relatively higher cash balance is a function of two factors:

  1. There is often a lag between when stocks are sold from the portfolio to when new names are added which creates a cash balance. We executed on a number of sell signals following relatively tepid earnings reports and are now waiting for our proprietary model to produce buy signals and subsequently work through the due-diligence. We expect cash balances to move lower as we progress through this process.
  2. Investors are acknowledging the CCVMF's ability to generate alpha and the fund has started to see significant money flow into it. Our priority is to ensure this money gets wisely deployed into the market.

In the meantime, 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

Peer Comparison

The information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

October 2017 | Caldwell Canadian Value Momentum Fund Commentary

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October Recap:

The Fund gained 4.8% in October versus a gain of 2.7% for the S&P/TSX Composite Total Return Index ("Index”). The Financial sector (+4%) drove the market higher on a 4.5% gain in the Banking Index. The Utilities, Consumer Discretionary, Telecom and Industrials sectors were also strong, each up over 3%, offset by declines in Energy (-0.4%) and Health Care (-0.3%). Strength in the CCVMF portfolio was broad-based with nearly 80% of stocks out-pacing their sector returns and only 4 stocks under-performing the broader market.

 

Top CCVMF performers in October were Calian Group (+16.2%), Martinrea (+11.6%) and WSP Global (+11.4%). Calian announced  a contract renewal with the Canadian Armed Forces, which removed a key overhang on the stock and provides incremental revenue opportunity with an initial four year term totaling $275 million plus an eight-year extension option for an additional $600 million. While there was no company-specific news behind Martinrea's move, strength in auto sales in both Canada and the U.S. are positive for auto-suppliers. WSP moved higher following its Analyst Day in late September. While there were no major changes to the outlook, investors walked away with increasing confidence in WSP's growth and diversification strategy and attractive runway of opportunity.

 

Two stocks were added to the portfolio in October: Chorus Aviation (CHR) and Empire (EMP.A). Chorus is in the businesses of contract flying, aircraft leasing and aviation services.  The contract flying business is dominated by a capacity purchase agreement (CPA) with Air Canada (AC) where Chorus operates scheduled service under the Air Canada Express brand. Now that investors have become comfortable with the economics and cash flow generation of the new CPA signed with AC in 2015, focus has shifted to the opportunities in growing the aircraft leasing portfolio, where Chorus has become a major player in the regional jet market. Demand in this part of the market continues to be robust as the world's fleet of regional jets is only 20-25% leased versus commercial jets at 40%+. Empire is a food retailer operating under the Sobeys, Safeway, IGA and Freshco brands. After years of poor execution following the Safeway acquisition, a new management team has been put in place to execute a turnaround plan that involves accelerating sales growth and extracting meaningful cost savings. Early progress looks promising as the company recently posted its first positive tonnage quarter after thirteen consecutive quarters of negative tonnage, while simultaneously improving margins.

 

One of the key features of the CCVMF is that it is a very complementary portfolio to other Canadian Equity strategies. The Fund's proprietary screening process allows us to identify under-the-radar companies that have tremendous opportunity to grow in value. One such company is Calian Group (noted above), whose CEO, Kevin Ford, was recently featured in the Ottawa Business Journal as the 2017 CEO of the Year. Calian was initially purchased in the CCVMF in February 2016, with the stock up nearly 80% since that time.

 

The Fund held an 11.2% 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

Peer Comparison CCVMF

The information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

September 2017 | Caldwell Canadian Value Momentum Fund Commentary

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September Recap:

The Fund gained 2.8% in September versus a gain of 3.1% for the S&P/TSX Composite Total Return Index ("Index”). Energy (+7.4%) reversed weak year-to-date performance to drive the market higher on the back of a 9.4% increase in the price of crude oil. Consumer Discretionary (+5.5%) was also a strong performer driven by auto parts producers: Magna (+10.8%), Linamar (+9.3%) and Martinrea (+4.0%). While the Index posted an overall gain, traditionally defensive sectors such as Consumer Staples (-0.3%) Materials/Gold (-4.0%/-8.5%), REITs (-0.5%), Telecom (-1.3%) and Utilities (-2.3%) all posted negative returns. This was in sympathy with bond yields continuing to move higher after the Bank of Canada made its 2nd (surprise) rate increase on September 6, 2017. 

 

Top CCVMF performers in September were Enerflex (+17.5%), IBI Group (+11.0%) and Transcontinental (+7.4%). Enerflex moved higher on the strength in Energy.  The company is benefiting from the build-out of infrastructure around natural gas plays and has the ability to grow in value without needing commodity prices to move higher.  IBI Group has been gaining strength after a solid earnings report in mid-August. The company is well positioned to capitalize on infrastructure spend, particularly in transit, and continues to trade at a discount to peers despite attractive organic growth and margins. Transcontinental moved higher on a strong earnings report that beat expectations on both revenue and expenses. Organic growth showed strong improvement and the company continues to execute its transformation plan, using robust and steady cash flow from its printing division to grow its flexible packaging business. 
No stocks were added to the portfolio in September. 

 

The Fund held an 18% cash weighting at month end (cash at the time of writing is 13%).  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 information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Inception Date: August 8, 2011. Principal Distributor: Caldwell Securities Ltd.

August 2017 | Caldwell Canadian Value Momentum Fund Commentary

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Update on the Caldwell Canadian Value Momentum Fund

August Recap:

The Fund was +0.15% vs. +0.4% for the S&P/TSX Composite Total Return Index ("Index”). Energy was a big negative for the market, down 3.5% in August on a nearly 6% decline in the price of crude oil. Year to date, the Energy sector is down 16% which makes it the worst performing sector in the country. While the TSX price index is down slightly year-to-date, only Energy (-16.0%) and Health Care (-13.8%) are in negative territory; all other sectors have produced positive returns. This illustrates the advantage that selective market exposure can give investors, something that CCVMF investors have benefited from since the Fund's inception over 6 years ago.

 

Happy 6th Birthday! The CCVMF celebrated its 6th birthday in August. Since inception, the CCVMF is +11.1% versus the TSX +6.2%, and continues to be one of the top performing Canadian Equity funds in the country. We include a table, below, that shows the performance of CCVMF relative to competing funds in both the Canadian Equity category and the Canadian Small/Mid Cap category. While top-quartile returns are attractive, the CCVMF also performs well on risk metrics, including the up/down capture. In addition, correlation analysis shows the CCVMF as an attractive compliment to other investment strategies available to Canadians. This is important because lower correlations between investment strategies reduce overall portfolio volatility and result in more attractive risk-adjusted returns.

 

CCVMF Peer Comparsions

Top CCVMF performers in August were Premium Brand Holdings. (+9.5%) and Martinrea. (+8.2%). Premium Brands had a very strong quarter driven by organic growth and better than expected margins. The outlook continues to be positive given strong demand and the new sandwich facility tracking ahead of schedule. The strong result prompted analysts to increase the Consensus 2018 EPS estimate by 8%. Martinrea also reported a very strong result with continued progress on margins and new contract awards. The company's progress is leading to increased investor confidence in the company's margin targets, which should help move the valuation higher. 

 

No stocks were added to the portfolio in August. 

 

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 information contained in this document is designed to provide general information related to investment alternatives and strategies and is not intended to be investment or any other advice applicable to the circumstances of individual investors. We strongly recommend you to consult with a financial advisor prior to making any investment decisions. Unless otherwise specified, information in this document is provided as of the date of first publication and will not be updated. All information herein is qualified in its entirety by the disclosure found in the CCVMF’s most recently filed simplified prospectus. Information contained in this document has been obtained from sources we believe to be reliable, but we do not guarantee its accuracy. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing in this product. Unless otherwise indicated, rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. The CCVMF is a publicly offered mutual fund that offers its securities pursuant to simplified prospectus dated July 20, 2017. The CCVMF was not a reporting issuer prior to that date and formerly offered its securities privately as follows: Series F and Series I since March 28, 2014 and Series O since August 8, 2011. The expenses of the CCVMF would have been higher during the period prior to becoming a reporting issuer had the fund been subject to the additional regulatory requirements applicable to a reporting issuer. Principal Distributor: Caldwell Securities Ltd.