August 2023 | Caldwell Canadian Value Momentum Fund Commentary

August Recap:

For the month of August, the Caldwell Canadian Value Momentum Fund (“CVM” or “Fund”) outperformed its benchmark, the S&P/TSX Composite Total Return Index (“Index”), by 0.5%, with a return of -0.9% versus a return on the Index of -1.4%. At the sector level, Energy, Consumer Staples, and Healthcare were relative outperformers, whereas, Consumer Discretionary, Utilities, and Financials underperformed.

Top performers in the month of August were SNC-Lavalin Group (“SNC”, +15.0%), Cameco (“CCO”, +7.9%), and North American Construction Group (“NOA”, +4.5%). SNC delivered strong results and raised its guidance for the remainder of the year based on a robust backlog as well as a strong pipeline of prospects. CCO’s performance was a continuation of its strong performance in the prior month, as the first new nuclear power plant in over three decades began operating in the United States. In addition, the news of three nuclear projects under development in Canada was perceived as an indication of an increased interest in nuclear power in Canada and the U.S. NOA’s strong performance was a continuation from the prior month as the company announced the acquisition of MacKellar Group, an Australia-based company providing heavy earthworks solutions. It was the largest acquisition in the company’s history and is expected to be highly accretive, double NOA’s backlog by year-end, and help diversify NOA geographically and in terms of its commodity exposure.

During the month of August, the Fund initiated positions in WSP Global (“WSP”), Toromont Industries (“TIH”), Parkland Corp (“PKI”), PrairieSky Royalty Ltd. (“PSK”), Athabasca Oil (“ATH”), Maple Leaf Foods (“MFI”). WSP is a leading engineering and consulting services firm operating across approximately 40 countries. It provides services to public and private clients in the fields of transportation, infrastructure, energy, and various industrials. The company is demonstrating strength across its business and the margins are rising. It is also expected to pursue opportunistic acquisitions, which should allow more room for earnings to grow. TIH consists of two operating groups, Equipment and Refrigeration. The company distributes and services Caterpillar equipment and also designs, manufactures, and installs industrial and recreational refrigeration systems. The company is poised to gain from the continued expansion of its rental fleet and to grow product support sales, as the Caterpillar machine population has been increasing. PKI is the largest independent fuel marketer in Canada with operations in Canada, the U.S., and the Caribbean. The company has revised its guidance higher for 2023 and 2024 due to a favourable environment paired with strong execution. Additionally, it noted that it remains focused on deleveraging its balance sheet. PSK is an oil and gas royalty company, which owns the largest non-Crown portfolio of fee simple mineral titles in Canada. The company provides attractive exposure to elevated energy prices, as the cash flows from its royalty portfolio are unhedged. ATH is an oil and gas producer involved in the development of heavy and light oil resources in Alberta. The company is expected to generate strong free cash flows during this and the next year, about 75% of which it plans on devoting to its active share buyback program, which should also help keep the stock well bid. MFI is a prepared meats company that serves wholesale, retail, and food service customers. The company’s margins are starting to show signs of improvement due to increased volumes paired with pricing actions that have helped offset the inflationary pressures.

The Fund held a 5.5% cash weighting at month-end. While we remain mindful of the macro environment, the Fund employs a bottom-up investment approach designed to seek out attractive investment opportunities in any market. CVM has generated substantial value for investors over its long-term history driven by the combination of strong company-specific catalysts and a concentrated portfolio. We continue to look forward to strong results as we progress through 2023 and beyond.

Standard performance as at August 31, 2023:
Caldwell Canadian Value Momentum Fund (Series F): 1 Year: 4.7%, 3 year: 9.2%, 5 year: 7.1%, Since Inception (August 29, 2014): 7.8%.
S&P/TSX Composite Total Return Index: 1 Year: 8.5%, 3 year: 10.4%, 5 year: 7.8%, Since Inception (August 29, 2014): 6.1%.
Actual Investments, first purchased: SNC 3/31/2023, CCO 5/31/2023, NOA 6/21/2023.

The CVM was not a reporting issuer offering its securities privately from August 8, 2011 until July 20, 2017, at which time it became a reporting issuer and subject to additional regulatory requirements and expenses associated therewith.

Unless otherwise specified, market and issuer data sourced from Capital IQ & Morningstar Direct.

The information contained herein provides general information about the Fund at a point in time. Investors are strongly encouraged to consult with a financial advisor and review the Simplified Prospectus and Fund Facts documents carefully prior to making investment decisions about the Fund. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Rates of returns, unless otherwise indicated, are the historical annual compounded 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 unitholder that would have reduced returns. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated.

FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata.

Publication date: September 18, 2023.