We are managing a very exciting portfolio of predominately Canadian equities that fit our core fundamental investment philosophy. This philosophy is built around owning positions in companies that have: 1) a solid competitive position within an attractive market, 2) strong prospects for growth driven by investment, acquisition or other catalysts, and 3) visible shareholder support. The goal of this philosophy is to identify and own companies which trade today at values that are substantially below what we believe they are worth over a medium term investment horizon.
For those of you that are new to our distribution, let us further highlight our investment philosophy by stating that we are neither long term buy and hold investors, nor are we “twitchy” traders. We are active, nimble and insightful stock pickers within the world of Canadian equities with strong conviction in our ability to value businesses and find attractive investment opportunities. Proof of this conviction is evident in the fact that we, our partners at Aventine, and our respective families, are the largest collective unit holders of the Canadian Equity Fund.
One of our largest gains from our portfolio in April came from Easyhome (EH), a Canadian business which we believe is undervalued, under-followed and that is undergoing an exciting and lucrative transformation. Over the past five years or so, Easyhome has transformed from a home furnishing leasing company (TV’s, cellphone, couches, etc.) into a financial services company, providing higher interest consumer loans to those facing temporary or structural credit constraints through its Easyfinancial division (which has grown to 120 branches). By positioning themselves between payday loan providers – whom have both struggled and faced increased government pressure – and traditional banks and credit card companies, they have been able to build relationships and brand scalability within the Canadian marketplace and are now well positioned to succeed.
Another large gain in our portfolio in April came from Micron Technologies (MU-US), a leading supplier of memory chips used in smartphones, tablets, servers, PC, etc. Like many technology component suppliers, Micron has struggled with the dynamic of having to increase volume while managing the impact of a brutal pricing war, which has impacted profitability. However, recent consolidation in the industry (Micron acquired the assets of Elpida, the fourth largest player out of bankruptcy last year) has improved the supply/demand balance and pricing has stabilized. This has created an attractive environment for companies like Micron (now the second largest global supplier in this space) to generate significant cash flow growth moving forward.