July 2018 | Caldwell Canadian Value Momentum Fund Commentary

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July Recap: 

The Fund gained 0.1% in July versus a gain of 1.2% for the S&P/TSX Composite Total Return Index ("Index”). The Index was driven by strong performance in Industrials (+4.8%), Telecom (+3.8%) and Financials (+2.2%) while the Materials sector had a rough month (-4.4%) driven by the Gold sub-sector (-8.7%). A quick scan of the stocks underlying each sector shows a wide range between top and bottom performers.

Top CCVMF performers in July were North American Construction Group (“NOA”: +10.6%) and WSP Global (“WSP”: +6.8%). Shares in NOA have been volatile since a very strong Q1 report in May and July saw the upside of that volatility. The company reported another strong quarter subsequent to month end with EBITDA coming in 70% ahead of expectations, a first ever Q2 profit, new contract wins and long-term contract commitments from clients, and a robust outlook that prompted management to raise guidance. WSP continues to execute well and announced the acquisition of Louis Berger, a private international firm focused on transportation, infrastructure, environment and water, as part of its ongoing M&A strategy. The acquisition adds scale to WSP's U.S. platform, doubles exposure to U.S. water/environmental and is expected to be 7% accretive to 2019 EPS.

One stock was added to the portfolio in July: TFI International ("TFII"). TFII provides transportation services across Canada and the U.S. The company is benefiting from a very strong trucking market, which has helped turn around performance in its recently acquired U.S. truckload segment. TFII is seeing strong rate increases across the board along with better utilization rates, which should continue to improve margins. The stock has shown strong performance out of the gate following a very strong earnings report in late July.

The Fund held a 17.8% cash weighting at month-end. 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 current 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.

*  Categories defined by Canadian Investment Funds Standards Committee ("CIFSC")


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