November 2023 | Caldwell Canadian Value Momentum Fund Commentary

November Recap:

For the month of November, the Caldwell Canadian Value Momentum Fund (“CVM” or “Fund”) gained +2.4% versus a gain of +7.5% for the S&P/TSX Composite Total Return Index (“Index”)¹. At the sector level, Information Technology, Financials and Consumer Discretionary were relative outperformers while Energy, Consumer Staples and Health Care underperformed.

Top performers in the month of November were Constellation Software (“CSU”), Stantec (“STN”) and Hammond Power Systems (“HPS”). CSU’s third quarter (“Q3”) earnings exceeded analysts’ expectations as the company continues to make progress restructuring and improving the profitability of its Altera business. The company also continues to execute on its successful acquisition strategy and has recently targeted larger deals. This should bolster the company’s ability to generate industry leading topline growth over the medium term. STN also reported solid Q3 earnings with strong demand in all regions and sectors. The flow-through of infrastructure stimulus funding in major developed economies supports a growing backlog that should drive robust medium to long term growth. Lastly, increasing project starts drive higher utilization which should support better margin performance for the foreseeable future. HPS continued to re-rate higher following strong earnings that saw robust growth in both revenues and backlog. We believe sustainable demand trends in key end markets and recent capacity additions will allow HPS to outperform over the medium to long term.

During the month of November, the Fund initiated positions in Chartwell Retirement Residences (“CSH”), Badger Infrastructure (“BDGI”), SNC Lavalin (“ATRL”), Open Text (“OTEX”) and Boardwalk REIT (“BEI”). CSH is a leading provider of housing for senior citizens in Canada. In addition to positive demographic tailwinds, CSH is benefiting from tighter supply conditions driven by higher interest rates and development costs. When combined with declining agency costs, margins are expected to improve over the next few quarters. BDGI is North America’s largest hydro-excavation (“hydrovac”) service company targeting construction, infrastructure, utilities and oil/gas end markets. The company is benefiting from a strong up-tick in infrastructure stimulus spending, driving higher utilization of their fleet and thus healthy margin expansion. ATRL is a leading global provider of engineering and construction services. The company finally appears to be turning the corner on a long-troubled segment which should improve free cash flow consistency. As investors’ begin to value ATRL as a pure-play engineering services business, we believe shares can re-rate higher given lower earnings volatility and expanded capital allocation options. OTEX is a software provider focused on information management applications. Margins were strong in the company’s most recent earnings results and guidance suggests further improvement from the successful integration of a recent acquisition. A recent divestiture also accelerates deleveraging efforts and increases targeted shareholder returns over the medium term. BEI is a Canadian multi-family REIT with properties in Alberta, Saskatchewan, Quebec and Ontario. A lack of rent controls across key markets has contributed to above-peer rent growth however BEI has raised pricing strategically to ensure a good mix of rate growth and high occupancy rates.

The Fund held a 14.4% 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 November 30, 2023:
Caldwell Canadian Value Momentum Fund (Series F): 1 Year: 2.6%, 3 year: 9.0%, 5 year: 8.5%, Since Inception (August 29, 2014): 7.6%.
S&P/TSX Composite Total Return Index: 1 Year: 2.3%, 3 year: 8.8%, 5 year: 9.2%, Since Inception (August 29, 2014): 6.0%.
Actual Investments, first purchased: CSU 10/16/2023, STN 10/17/2022, HPS 10/16/2023.

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 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 14, 2023.

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