Month End Recap:
For the month of October, the Caldwell Canadian Value Momentum Fund (CVM or Fund) gained 0.6% versus a gain of 0.9% for the S&P/TSX Composite Total Return Index (Index). From a sector standpoint, Healthcare, Energy, and Materials were relative outperformers, whereas Real Estate, Communication Services, and Consumer Staples underperformed.
Top performers in the month of October were Atkinsrealis Group (ATRL), Agnico Eagle Mines (AEM), and Kinross Gold (K). ATRL experienced multiple expansion as the company had been trading at a discounted valuation versus its engineering services peers despite growing operating cash flow, improving margins and delivering a class-leading rate of organic growth. AEM rerated higher as a result of a constructive move in the price of gold, which provides the company with a favourable backdrop to continue deleveraging and becoming nearly debt-neutral by the end of 2024. K also delivered a strong performance given the backdrop of elevated gold prices, which enabled the company to generate a record high free cash flow during the recent quarter.
During the month of October, the Fund initiated positions in Jamieson Wellness (JWEL) and Brookfield Business Partners (BBU.UN). JWEL is Canada’s leading dietary supplements company, specializing in the development, manufacturing, distribution, and marketing of vitamin and herbal products. Serving both domestic and international channels, the company also operates a successful contract manufacturing division for major blue chip health brands. This integrated approach solidifies its position as a key player in the natural health industry. JWEL is poised for significant growth, driven by strong secular demand as aging demographics become more health conscious and Gen Z consumers enter the vitamin and supplement category sooner. Its consistent product innovation has led to growth rates surpassing market averages. Additionally, the company is well-positioned to expand in the Chinese market, which is the world’s second-largest health supplements market. BBU.UN is the private equity arm of Brookfield Asset Management, which focuses on owning and operating real assets to achieve a 15 to 20% return through long-term capital appreciation. Its diversified portfolio, valued at approximately $80 billion, includes businesses across three segments: Business Services, Infrastructure Services, and Industrial Operations. The company’s profit improvement plans are on track as its main portfolio companies are performing well. It is trading at a larger discount to its net asset value relative to historical levels, while optimism regarding emerging monetization is improving, which would enable the reduction of its financial leverage.
The Fund held a 1.7% 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 2024 and beyond.
Standard performance as at October 31, 2024:
Caldwell Canadian Value Momentum Fund (Series F): 1 Year: 14.4%, 3 year: 3.1%, 5 year: 9.0%, 10 year: 9.2%, Since Inception (August 29, 2014): 8.1%.
S&P/TSX Composite Total Return Index: 1 Year: 32.1%, 3 year: 8.0%, 5 year: 11.3%, 10 Year: 8.4%, Since Inception (August 29, 2014): 7.6%.
Actual Investments, first purchased: ATRL 5/16/2024, AEM 4/1/2024, K 9/13/2024.
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.
Publication date: November 20, 2024.