July 2023 | Caldwell Canadian Value Momentum Fund Commentary

July Recap:

For the month of July, the Caldwell Canadian Value Momentum Fund (“CVM” or “Fund”) gained +2.0% versus a gain of +2.6% for the S&P/TSX Composite Total Return Index (“Index”). At the sector level Healthcare, Materials, and Energy were relative outperformers, whereas, Communication Services, Consumer Staples, and Utilities underperformed.

Top performers in July were North American Construction Group (“NOA”, +26.6%), Cameco (“CCO”, +11.7%), and SNC-Lavalin Group (“SNC”, +10.2%). NOA announced the acquisition of MacKellar Group, an Australia-based company providing heavy earthworks solutions, which was well received by investors. It is 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. CCO rerated higher 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. SNC saw a gradual increase in its share price after announcing the sale of its Scandinavian Engineering Services business. The transaction is accretive to margins as the business was only marginally profitable, additionally, it helps bring down the company’s leverage.

During the month of July, the Fund initiated positions in BRP Inc. (“DOO”), ARC Resources (“ARX”), and Headwater Exploration (“HWX”). DOO is a leading manufacturer of power sports vehicles and propulsion systems as well as related parts and accessories. The company has a rich history of innovation and enjoys strong customer loyalty through its iconic brands, commanding a market share of 35% globally. The company’s main competitor, Polaris, through its quarterly results, offered insights regarding demand trends, which appeared to be positive and resilient as compared to what was feared. DOO should also benefit from this robust demand, which is likely to be reflected in its next quarterly earnings.
ARX is an oil and gas producer that is about 60% weighted to natural gas. Its operations are primarily situated in northeast British Columbia and Alberta. It is one of the better-positioned exploration and production companies, offering modest growth in addition to a sustainable dividend while maintaining a strong balance sheet. HWX focuses on the exploration, development, and production of petroleum and natural gas in Canada. The company is showing continued success in delineating and exploiting its Clearwater assets, which is expected to continue as a result of its expansion into new analogies through exploration.

The Fund held a 4.9% 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 July 31, 2023:
Caldwell Canadian Value Momentum Fund (Series F): 4.8%, 3 year: 9.3%, 5 year: 7.6%, Since Inception (August 29, 2014): 7.9%.
S&P/TSX Composite Total Return Index: 1 Year: 8.2%, 3 year: 11.7%, 5 year: 7.9%, Since Inception (August 29, 2014): 7.3%.

Actual Investments, first purchased: NOA 6/21/2023, CCO 5/31/2023, SNC 3/31/2023.

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: August 16, 2023.