February 2021 Recap:
The Caldwell Canadian Value Momentum Fund (“CVM”) gained 4.5% in February versus a gain of 4.4% for the S&P/TSX Composite Total Return Index (“Index”)1. The Index saw a wide range of sector returns, with rising interest rates negatively impacting Utilities (-5.1%), Consumer Staples (-1.0%), and Communication Services (-0.9%) and positively impacting Financials (+6.9%). Information Technology (+9.9%) and Gold (-14.0%) were also standouts, while positive momentum in Energy (+9.1%) accelerated.
Top CVM performers in February were Seven Generations (“VII” +36.8%), Secure Energy Services (“SES” +26.8%), and Stelco (“STLC” +20.2%)2.
VII moved higher on stronger commodity prices, an announced merger with ARC Resources, and strong Q4 operating results. VII's merger with ARC will create the largest Canadian Montney producer and Canada's largest condensate producer.
SES moved higher on strength in commodity prices and further rallied in March on a proposed merger with Tervita, which is expected to generate significant synergies.
Stelco moved higher on Q4 results that pointed to a strong outlook for significant free cash flow generation in upcoming quarters.
One stock was added to the portfolio in February: Converge Technology Solutions (“CTS”). The company is a consultant and value-added re-seller of IT solutions with a focus on under-served mid-market enterprises. We see multiple drivers supporting a higher share price, including strong end market demand as mid-sized companies are earlier in their transition to the cloud, M&A, and potential upside from additional analyst coverage. Ten percent ownership interest by management and a valuation discount to peers are also notable.
The Fund held a 20.7% cash weighting at month-end. The CVM has generated substantial value to 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 2021 and beyond.
1See Performance Comparison table (page 2 of the PDF) for standard performance data.
2Actual Investments, first purchased: VII 12/4/2020, SES 1/7/2021, STLC 10/26/2020.
3Return since August 15, 2011 (Perf. Start Date): CVM 10.3%, Index 7.0%. | Returns are annualized for periods greater than one year. | Source: Morningstar
4Categories defined by Canadian Investment Funds Standards Committee (“CIFSC”).
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.
As the constituents in the Canadian Equity category largely focus on securities of a larger capitalization and CVM considers, and is invested, in all categories, including smaller and micro-cap securities, we have also shown how CVM ranks against constituents focused in the smaller cap category. The above list represents 6 of a total of 377 constituents in the Canadian Equity category.
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.
The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. Lipper Leaders fund ratings do not constitute and are not intended to constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity in any jurisdiction. For more information, see lipperfundawards.com. The CVM in the Canadian Equity Category for the 5-year period (out of a total of 74 funds) ending 7/31/2020 with corresponding Lipper Leader ratings of 4 (3 years) and 5 (5 years).
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: March 16, 2021.
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