June 2019 | Caldwell Canadian Value Momentum Fund Commentary

June Recap:

The Fund gained 1.7% in June versus a gain of 2.5% for the S&P/TSX Composite Total Return Index ("Index”). The Index continued to see wide dispersion in sector performance with Materials (+12.7%), led by Gold (+15.7%), and Consumer Discretionary (+6.6%) showing strong gains while Energy (-2.3%), Communication Services (-2.2%), and Consumer Staples (-1.9%) posted losses. 

Top CCVMF performers in June were Kirkland Lake Gold (“KL”: +20.7%) and Aecon Group ("ARE": +9.6%).

Kirkland continued to benefit from the strength in gold alongside the growing probability of U.S. rate cuts; however, we remind investors that the company also has strong company-specific growth drivers through strong production and discoveries in its world-class mines.

There was no company-specific news on Aecon but it seems that investors are weighing the company's record backlog against negative sentiment across the broader construction group. We expect company-specific fundamentals to ultimately prevail and look for a catalyst in this upcoming Q2 earnings season. 

Two stocks were added to the portfolio in June: Boyd Group ("BYD.UN") and Goeasy ("GSY").

Boyd operates vehicle collision and auto-glass repair centers in the U.S. and Canada (the U.S. accounts for 85% of revenue). The company has tripled its revenue over the past 5 years as it consolidates and brings institutional best practices to these fragmented markets and is looking to once again double its revenue going forward. Same-store-sales were 6.6% this past quarter as industry dynamics remain favourable with auto insurers consolidating vendor relationships and single-store operators struggle to compete with multi-shop peers.

Goeasy is a non-prime Canadian lender. Despite investor caution on the space (GSY trades at 9.9x consensus 2019 EPS estimate), credit trends remain stable and the stock made a new high following the company's investor day in May, in which it walked through the competitive environment and growth runway. From a competitive standpoint, GSY has a leadership position within the non-prime market with a strong brand, branch network and peer-leading performance, while online and payday loan players have struggled to gain traction. The business is highly profitable with a strong growth runway as it broadens its product offerings, distribution channels and geographic reach (GSY revenue is < $1 billion in a $186 billion non-prime market).

The Fund held a 13.0% cash weighting at month-end, down from 45.7% at the end of March. The fund 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 2019 and beyond.

We thank you for your continued support. 

The CCVMF Team

CCVMF - Caldwell Canadian Value Momentum vs Canadian Small/Mid Cap Equity vs Canadian Equity

The Fund 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 CCVMF considers, and is invested, in all categories, including smaller and micro-cap securities, we have also shown how CCVMF ranks against constituents focused in the smaller cap category. The above list represents 6 of a total of 374 constituents in the Canadian Equity category and 5 of a total of 113 constituents in the Canadian Small/Mid 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. Publication date: July 11, 2019.

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.

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

+ posts


Want to hear something good?Sign up for updates