Month End Recap:
For the month of August, the Caldwell Canadian Value Momentum Fund (“CVM” or “Fund’) declined -0.2% versus a gain of 1.2% for the S&P/TSX Composite Total Return Index (“Index”). From a sector standpoint, Information Technology, Real Estate, and Financials were relative outperformers, whereas Consumer Staples, Healthcare, and Industrials underperformed.
Top performers in the month of August were NFI Group (“NFI”), Element Fleet Management (“EFN”), and Chartwell Retirement Residences (“CSH.UN”). NFI delivered strong quarterly results reflecting improving production rates and pricing. Margins were constrained by legacy contracts; however, the company has mostly fulfilled these contracts, which should allow for a step-up in margins going forward. EFN delivered strong earnings and its acquisition of Autofleet was well received by investors as it should enable the company to accelerate its digitization and automation plans, which unlock access to new revenue streams. CSH.UN performed well as its retirement portfolio’s occupancy rates continued to improve. Additionally, its leading indicators, such as initial contracts, signed leases and tours also trended in the right direction, suggesting continued strength for the company going forward.
During the month of August, the Fund initiated positions in Aritzia (“ATZ”), Hammond Power Solutions (“HPS.A”), Primo Water (“PRMW”), and TerraVest Industries (“TVK”).
ATZ is a vertically integrated omni-channel apparel retailer targeting upper-middle class women aged 15-45, with over 100 stores across North America. The company has managed to work through most of its excess inventory, which had been a concern for investors recently. Furthermore, it still has a significant runway for growth ahead through its U.S. expansion.
HPS.A is the largest manufacturer of dry-type transformers in North America, serving industries such as oil and gas, mining, steel, waste and water treatment, commercial construction, data centers, and wind power. The company’s margins should continue to be supported by the recent price increases and improving scale, in the near-term.
PRMW is a leading service-based company specializing in the expanding categories of bottled water and filtration solutions, with distribution mainly through direct-to-consumer channels and retail outlets throughout North America. The company is set to merge with BlueTriton, which should drive significant route density as well as revenue and cost synergies.
TVK is a diversified industrial company that manufactures and sells goods and services to a wide range of end markets including energy, agriculture, mining, and transportation. The company has the potential to enhance its organic growth by continuing its successful acquisition strategy, as its management is currently tracking over 300 potential acquisition targets, with a proven history of making two acquisitions per year and achieving significant cost synergies.
The Fund held a 20.6% 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 2024 and beyond.
Standard performance as at August 31, 2024:
Caldwell Canadian Value Momentum Fund (Series F): 1 Year: 11.0%, 3 year: 4.1%, 5 year: 8.6%, Since Inception (August 29, 2014): 7.7%.
S&P/TSX Composite Total Return Index: 1 Year: 18.8%, 3 year: 7.6%, 5 year: 10.6%, Since Inception (August 29, 2014): 9.4%.
Actual Investments, first purchased: NFI 12/1/2023, EFN 5/26/2022, CSH.UN 11/2/2023.
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.
Publication date: September 25, 2024.