November 2022 | Caldwell Canadian Value Momentum Fund Commentary

November Recap:

The Caldwell Canadian Value Momentum Fund (“CVM” or “the Fund”) gained +2.4% in November versus a gain of +5.5% for the S&P/TSX Composite Total Return Index (“Index”). At the sector level, Materials, Information Technology, and Real Estate were relative outperformers, whereas Utilities, Health Care, and Energy underperformed. The outperformers did well as a result of investors interpreting the lower-than-expected inflation rate as a cue for the Federal Banks to slow down the pace of their rate hikes. In contrast, Utilities and Health Care, which are traditionally regarded as more of the defensive sectors, were left neglected as investors’ risk appetite increased.

Top performers in CVM’s portfolio for the month of November were Shawcor (“SCL”, +25.6%), Uni-Select (“UNS”, +23.2%), and Mullen Group (“MTL”, +12.3%). SCL’s management embarked on a cost and portfolio optimization exercise, which has driven its cost structure down significantly. The company’s price multiples have been expanding from their recently more depressed levels as the market recognizes the improvements in its business model. UNS produced strong earnings resulting from realized synergies from previous acquisitions as well as improved operational efficiencies. MTL continued to benefit from recent pricing initiatives with the backdrop of resilient activity levels. Additionally, its dependence on contract pricing and limited exposure to declining spot pricing has ensured margin strength.

During the month of November, the Fund initiated positions in Descartes Systems Group (“DSG”), Restaurant Brands International (“QSR”), SunOpta (“SOY”), and Teck Resources (“TECK.B”). DSG is a leading software solutions provider for logistics and shipping companies. It is a high-margin business that is strategically well-positioned to exploit the heightened demand for global trade intelligence, and logistical optimization solutions, as the global supply-chain environment remains challenging with increased complexity. QSR is the parent company of Burger King, Tim Hortons, Firehouse Subs, and Popeyes. Its network consists of over 29,000 restaurants spanning over 100 countries. QSR presented a good value opportunity as it was trading at the lower end of its historical valuation range while its Tim Hortons Canada and Burger King international same-store sales showed positive momentum. SOY specializes in sourcing, processing, and production of organic, natural and non-GMO plant-based food and beverage products. The company is well-positioned to leverage the secular tailwinds in the plant-based product demand. TECK.B is the largest Canadian base metals miner with diversified assets including metallurgical coal, copper, zinc, and oil sands mines. It provides good exposure to the presently elevated commodity prices through its diverse asset portfolio located in jurisdictions with lower geopolitical risks.

The Fund held a 12.1% cash weighting at month-end. 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 2022 and beyond.

Standard performance as at November 30, 2022:

Caldwell Canadian Value Momentum Fund (Series F): 1 Year: -2.3%, 3 year: 9.2%, 5 year: 7.8%, Since Inception (August 29, 2014): 8.3%.

S&P/TSX Composite Total Return Index: 1 Year: 2.0%, 3 year: 9.5%, 5 year: 8.2%, Since Inception (August 29, 2014): 5.8%.

Actual Investments, first purchased: SCL 9/12/2022, UNS 9/28/2022, MTL 11/16/2020.

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: December 16, 2022.