Update on Caldwell Canadian Value Momentum Fund August 2016
*Compounded Annual Return since August 15, 2011
The CCVMF Celebrates 5 Years! The CCVMF reached the 5 year milestone at the end of August. Before getting into our regular note, we highlight 5 reasons to celebrate:
#1 – Turning 5 is a Big Deal!
Five years is considered a coming of age in the investment industry. It speaks to a successful history of decision making and a proven and repeatable investment process.
#2 – We Spent the last 5 Years Doubling the Market Return!
Over the past 5 years, the CCVMF has generated an annualized return of 11.9% versus the Index return of 5.9%.
#3 – We Perform Better When Markets Decline!
Out of 24 months that the Index has declined in value in the last 5 years, the CCVMF has performed better in 18 of those months. That’s a 75% success ratio.
#4 – We Own What’s Working!
Our exclusive screening process identifies companies that are creating significant value for investors. As an example, the CCVMF owned 3 of the top 10 best performing stocks in the Index in 2015!
#5 – Our Clients Get All Steak, No Filler!
The median equity mutual fund in Canada owns 60 stocks. Our portfolio of 15-20 stocks means our clients’ money is focused on owning only the best opportunities the market has to offer.
A special thanks to all of our investors who have been with us since the beginning!
August Recap: The Fund gained 3.9% in August versus a gain of 0.3% for the S&P/TSX Composite Total Return Index (“Index”). Gold, which has contributed to much of the Canadian market’s gains this year, declined 17% in August alone. While owning commodities can be thrilling as they go up, August serves as a reminder of just how volatile they can be. We note that the CCVMF is outperforming the Canadian market thus far in 2016 even without exposure to the volatile commodity group. This is a great testament to the Fund’s ability to own catalyst-rich stocks that are growing in value.
Top CCVMF performers in August were IBI Group (+27%) and AGT Food & Ingredients (+14%). IBI group reported earnings that continue to exceed expectations. The company saw broad-based growth from every segment and geography and solid margin expansion. Committed work increased 15% since last quarter and gives the company a solid backlog of activity. AGT regained lost ground from last month [recall last month’s note that outlined investor concerns around supply constrains, which we viewed as temporary], as the company generated better than expected earnings and provided a positive outlook. Margins are expected to be stronger in the second half of the year on the back of a robust crop, higher utilization and positive product mix.
Sleep Country Canada was added to the portfolio in August. The company is a leading mattress retailer in Canada and only specialty mattress retailer with a national footprint. It has strong brand recognition (you know the jingle!) and numerous catalysts to continue driving shares higher. These include a growing accessories business and continued market share gains from i) store redesigns, ii) new store in-fills and iii) marketing/cost leverage from its national scale. We also see some incremental growth in margins as a result.
The Fund ended August with a cash balance of 5%. We look forward to tracking the progress of the portfolio’s holdings as we see a meaningful and diverse set of catalysts to drive continued growth.
Wishing you and all of our investors continued success,
The CCVMF Team