February 2024 | Caldwell Canadian Value Momentum Fund Commentary

February Recap:

For the month of February, the Caldwell Canadian Value Momentum Fund (“CVM” or “Fund”) outperformed its benchmark, the S&P/TSX Composite Total Return Index (“Index”), by 1.9%, with a return of +3.7% versus a return on the Index of +1.8%. At the sector level, Healthcare, Industrials, and Consumer Staples were relative outperformers, whereas, Communication Services, Utilities, and Materials underperformed.

Top performers in the month of February were Celestica (“CLS”), Hammond Power Solutions (“HPS”), and MDA Ltd. (“MDA”). CLS rerated higher as investors continued to appreciate the company’s strategic repositioning to focus on higher value growth markets offering longer lifecycles and superior margins. It continues to strengthen its position as a core hardware supplier for Artificial Intelligence (“AI”) infrastructure buildouts. HPS continued to re-rate higher following strong earnings that saw robust growth in both revenues and backlog. We believe sustainable demand trends in key end markets and recent capacity additions will allow the company to outperform over the medium to long term. MDA rerated higher as it continues to see significant growth in its backlog and a strong pipeline of opportunities resulting from structural improvements in the industry as launch capacity has been increasing.

During the month of February, the Fund initiated positions in CCL Industries (“CCL”), CGI Inc. (“GIB”), Docebo (“DCBO”), and RB Global (“RBA”).

CCL is involved in the manufacture and sale of label solutions, consumer printable media products, specialty films, and polymer banknote substrates. The company is experiencing the early stages of a demand recovery as volume growth is starting to pick up against easier growth comparisons from last year. Furthermore, the company is well positioned for growth through mergers and acquisitions as it possesses a strong balance sheet.

GIB is a leading information technology and business consulting firm. An accelerating book-to-bill in its managed services, in addition to the incremental margin gains from its cost optimization program, should support its stock in rerating higher.

DCBO provides a cloud-based SaaS (Software as a Service) learning platform to train and develop internal and external workforces, partners, and customers. The company’s increased focus on larger enterprise markets is driving growth in its average contract size while its cost controls are driving margin expansion.

RBA is the largest industrial equipment auctioneer in the world. It holds auctions for industries such as construction, transportation, agriculture, material handling, mining, forestry, energy, and consumer salvage vehicles. The company is benefiting from volume growth, which has partly been driven by price moderation. Additionally, the company is benefitting from synergies from its acquisition of IAA, a U.S. auto auction marketplace.

The Fund held a 0.3% 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 February 29, 2024:
Caldwell Canadian Value Momentum Fund (Series F): 1 Year: 9.1%, 3 year: 7.7%, 5 year: 9.0%, Since Inception (August 29, 2014): 8.1%.
S&P/TSX Composite Total Return Index: 1 Year: 9.2%, 3 year: 9.0%, 5 year: 9.3%, Since Inception (August 29, 2014): 6.5%.
Actual Investments, first purchased: CLS 1/19/2024, HPS 10/16/2023, MDA 12/14/2023.

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: March 13, 2024.

Want to hear something good?Sign up for updates