Strategies

We have various cash management strategies for when capital preservation or short term needs are paramount. We actively manage convertible bond and fixed income portfolios for clients which we enhance through allocations to best in class third party managers who offer strategies such as credit opportunities, private debt and mortgages. Our fixed income strategies are nimble and opportunistic which has had a dramatic impact on lowering portfolio volatility while keeping our returns uncorrelated from equity markets.

Our internally managed Canadian equity strategy focuses exclusively on undervalued companies in Canada with best in class management teams, wide competitive moats, long history of smart capital allocation and superior return on capital metrics. Our buy and hold strategy is based on a concentrated basket of these companies.  We target turnover of less than 10%. We believe the tax efficiency created by allowing these management teams to compound our investment is a superior long-term strategy. Naturally, given the criteria we use to analyze these businesses most would be considered “dividend growers.”

We believe some of the strongest return potential exists in companies that can successfully transition from being “under the radar” or “under followed” to getting an allocation by large institutional managers. This strategy traditionally has an average market cap in the $1-3 billion range, and we will own companies at various stages of their business plan. We concentrate on ~15 companies so that we can spend the time to understand all aspects of their growth strategy, management team and milestones. While our focus is in Canada, we also hold US positions with similar characteristics. Several companies we have owned have graduated from the all cap strategy to the larger cap Canadian Equity Strategy such as FirstService (FSV-TO), CCL Industries (CCL/B-TO) and Premium Brands (PBH-TO).  This strategy is offered by our pooled fund as well as in our segregated account.

Our US equity strategy focuses on large-cap dividend paying companies listed in the US, and more importantly, companies that can continue to increase their dividends on a regular basis, otherwise known as “dividend growers”. Over the past 20 years a basket of the leading US dividend growers more than doubled the return on the S&P 500 making this a very attractive allocation. We focus our value based fundamental analysis on finding companies with strong balance sheets, ability to generate significant free cash flow and a commitment to total shareholder returns. Given that we own best in class US companies we expect turnover in the portfolio to be very low (10-20%).  This strategy is available as a pooled fund as well as in a segregated account.

We bring together many years of experience as institutional investment consultants and fund managers ourselves to analyze the global alternative fund landscape. We have been early investors in some of the best performing alternative hedge funds in Canada with many receiving multiple awards at the Canadian Hedge Fund Awards. We evaluate managers based on risk adjusted returns, correlation to equity markets, experience through market drawdowns, fee structure, use of leverage and most importantly skin in the game. We also evaluate and opportunistically allocate to several alternative asset classes managed internally such as closed end funds and structured notes.

Our clients get the unique ability to participate in private equity co-investment opportunities through our partners at TerraNova Partners LP. As office mates in Toronto we benefit greatly from our weekly meetings with TerraNova’s experienced team. Many of our clients with a long-term perspective have enjoyed exploring the opportunities and have invested alongside the TerraNova and Aventine partners at attractive terms and with unmatched access. Allocating to private equity provides a differentiated return stream with low correlation to public markets.