September 2023 | Caldwell Canadian Value Momentum Fund Commentary

September Recap:

For the month of September, the Caldwell Canadian Value Momentum Fund (“CVM” or “Fund”) outperformed its benchmark, the S&P/TSX Composite Total Return Index (“Index”), by 3.4%, with a gain of +0.1% versus a decline on the Index of -3.3%. At the sector level, Energy, Consumer Staples, and Financials were relative outperformers, whereas, Information Technology, Utilities, and Real Estate underperformed.

For the month of September, top performers in the Fund were Athabasca Oil (“ATH”), Parkland Corp. (“PKI”), and Cameco (“CCO”). ATH rerated higher as it was well positioned to benefit from the constructive move in crude oil prices as it is now expected to generate strong free cash flows during the current and the next year, about 75% of which it plans on devoting to its active share buyback program. PKI performed well as the company increased its earnings guidance for this year as tailwinds are driving strong organic growth across most of its business units. In addition, the company’s strong focus on reducing its debt levels has been welcomed by investors. CCO’s performance was a continuation of its strong performance in the recent couple of months, as the first new nuclear power plant in over three decades began operating in the United States. In addition, the news of three nuclear projects under development in Canada was perceived as an indication of an increased interest in nuclear power in Canada and the U.S.

During the month of September, the Fund initiated positions in Whitecap Resources (“WCP”), and MEG Energy (“MEG”). WCP is an oil and gas company that acquires and develops energy properties in Canada. The company is positioning itself to deliver stronger shareholder returns as it expects its leverage ratio to reach its target by the end of this year, which allows for the base dividend to be increased. MEG is a pure-play oil sands company with significant acreage as well as proven and probable reserves in the Athabasca region in Alberta. Strong production and an aggressive debt reduction plan should drive improved shareholder returns once the leverage reaches target levels, which is expected by late 2024. This should allow 100% of the company’s free cash flow to be allocated towards share repurchases.

For the third quarter of 2023, CVM outperformed the Index by 3.4%, with a gain of 1.2% versus a decline on the Index of -2.2%. SNC-Lavalin Group (“ATRL”), Cameco (“CCO”) and Athabasca Oil (“ATH”) were the top contributors to the performance. ATRL’s strong performance was a continuation from the prior month as the company had delivered strong results and raised its guidance for the remainder of the year based on a robust backlog as well as a strong pipeline of prospects. CCO and ATH were discussed in the monthly section above.

The Fund held a 15.6% 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 September 30, 2023:
Caldwell Canadian Value Momentum Fund (Series F): 1 Year: 9.7%, 3 year: 9.6%, 5 year: 6.8%, Since Inception (August 29, 2014): 7.7%.
S&P/TSX Composite Total Return Index: 1 Year: 9.5%, 3 year: 9.9%, 5 year: 7.3%, Since Inception (August 29, 2014): 5.7%.
Actual Investments, first purchased: ATH 8/2/2023, PKI 9/5/2018, CCO 5/31/2023.

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: October 19, 2023.

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