March 2021 | Caldwell Canadian Value Momentum Fund Commentary

March 2021 Recap:

The Caldwell Canadian Value Momentum Fund (“CVM”) gained 0.4% in March versus a gain of 3.9% for the S&P/TSX Composite Total Return Index (“Index”)¹. Technology (-9.3%) was a standout as most sectors saw strong gains, led by Consumer Staples (+9.4%).

Top CVM performers in March were BRP Inc. (“DOO” +18.5%), Karora Resources (“KRR” +15.7%), and Stelco (“STLC” +14.2%)².

DOO continued higher after a very strong quarter and 2021 guidance with the company already reaching 2025 targets despite further upside from margin initiatives. Retail demand for power sport equipment remains robust while dealer inventory remains low, creating a strong set up for continued growth.

KRR out-performed the Gold Sub-Sector (+5.4%) after a positive drilling update and earnings results, and Desjardins initiating coverage with a Buy rating and $5.90 price target. While the gold price has been a headwind, we see material upside in the shares with an upcoming growth plan and ongoing drilling results acting as catalysts. Stelco was also a top performer last month, following earnings results that suggest material free cash flow generation in upcoming quarters.

Three stocks were added to the portfolio in March: Auto Canada (“ACQ”), NuVista Energy (“NVA”), and Tamarack Valley Energy (“TVE”).

ACQ is a restructuring story within the Canadian auto dealer industry, led by a new management team. The company is seeing growth well above industry rates and has significant growth runway as it looks to consolidate the industry and expand into used sales and collision repair.

TVE is an industry consolidator given its strong balance sheet and free cash flow. It's focus is on low-decline, quick-payback oil assets from which it drives operational improvements. Through recent acquisitions, TVE has become a major player in the Clearwater, which some have argued is the best oil play in the Western Canadian Sedimentary Basin (“WCSB”).

NVA announced it will reallocate disposition proceeds towards a larger capital spending plan, driving production growth going forward and somewhat bucking the industry trend of spending constraints. Free cash flow yields on both names are significant at spot prices.

The Fund held a 22.6% 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 (or page 2 of the PDF) for standard performance data.

²Actual Investments, first purchased: DOO 4/6/2017, KRR 12/3/2020, STLC 10/26/2020.

³Return since August 15, 2011 (Perf. Start Date): CVM  10.2%, Index 7.3%. | 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 382 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: April 13, 2021