Through a dynamic approach, and while continuously seeking superior opportunities, higher growth prospect companies with strong earnings momentum are selected and weighted on a relative basis. Particular attention is paid to valuation, thereby resulting in strong outperformance potential with low active risk.
Quarterly Commentary As at December 31, 2013
The portfolio’s quarterly return was slightly below the market. Our sound stock selection in the financial services and consumer discretionary sectors contributed to the performance. However, the shrinking of select holdings in the energy and IT sectors penalized the portfolio.
More specifically, our holdings in Manulife Financial and Investors Group, as well as our decision to pass on holdings in the Bank of Montreal proved beneficial. We were also rewarded by the growth of Gildan Activewear, whose promising outlook for growth in the retail sector, where Gildan is not broadly present, drove us to increase our holdings.
On the other hand, the portfolio was penalized by the downslide by MEG Energy following the sale of a block of shares by a major shareholder. Our performance was also affected by the slide by CGI, which received bad press following problems with the new website regarding enrolments for the new health insurance program in the United States.
During the quarter, we added Capstone Mining copper company to the portfolio. We also liquidated our holdings in Empire, the company that owns Sobeys, IGA, and Safeway Canada supermarket chains.
Several factors continue to bolster our optimism with respect to the stock market, like the low inflation environment, the rising prices in the residential real estate sector and the improved job market in the US. Finally, most companies hold very little debt, thereby putting them in a good position to inject their cash holdings into investment projects.