Based in Toronto, Canada, our team has a long track record of successfully managing North American equity portfolios. We invest in the funds we manage alongside our clients. Thirteen members of the team were selected as 2020/2021 TopGun Investment Minds of the Year by Brendan Wood International. Stu Kedwell was selected as number one TopGun Investment Mind of the Year.* We’ve been honing our practices and processes since 2002, drawing on lessons from our past and the habits of successful money managers.
- Collegial, systematic, iterative and repeatable
- We are strongly committed to understanding a wide variety of outcomes for the stocks we follow, based on scenario analysis leading to favourable risk/reward trade-offs, and delivering strong risk-adjusted results over the long-term
Checklist
We use an initial checklist that rewards characteristics that many good stocks have in common while penalizing those that many likely poor performers share.
Fundamental analysis
We use fundamental analysis to focus on good quality companies with attractive returns on capital and appropriate financial and operating leverage.
Scenarios
We understand a range of fundamental scenarios for each position and avoid anchoring positions around a single forecast.
Technical analysis
We have a strong appreciation for technical analysis, utilizing both absolute and relative strength as a foreshadowing of potential shifts in the stock market.
Construct
We construct the portfolio to reward good stock selection and avoid heavily relying on the correctness of a strong point of view.
Decision-making process
Our decision-making process is ongoing and constantly circling through the process.
Portfolio positioning – structured according to opportunity
We think about companies in three buckets: those with stable cash flow, higher growth than their peers and sensitivity to the business cycle.
We employ scenario analysis to establish a range of fundamental outcomes likely to be realized by a company and then work to understand the degree to which these outcomes may or may not be factored into the current stock price.
If the market is always anticipating future events, then spotting opportunity in the stock market requires thinking about how the future might unfold. While most investors understand that there are more things that can happen than will happen, most still insist on believing in their ability to forecast what will happen. While dampening this instinct is hard, we believe that focusing on what can happen pays large dividends when thinking about stock prices.
The idea of the stock market as a handicapping machine is a powerful one and scenario analysis is a critical tool to assist in successfully calibrating the odds in our funds. It helps to understand when good companies have the potential to be great stocks.
Forward Earnings
Valuation Range
| Below average | Average | Above average | |
|---|---|---|---|
| Optimistic case | Caution | ||
| Base case | Fairly Valued | ||
| Pessimistic case | Opportunity |
Fair value generally grows with passage of time unless buiness is facing structural or competitive decline