We have performed very well for our investors and owe much of this to our focused investment strategy, which helps us avoid painful losses and participate in areas of strength. Looking forward, we see increasing value in a focused strategy as slowing growth rates in almost every sector and geography in the world will make it very difficult to perform well using a passive, market index or quasi-index strategy.

TOP PICKS:

CGI Group (GIB_A.TO) 

CGI Group manages IT and business process services for clients, including outsourcing and system integration/consulting. We like CGI Group for the following reasons:

Strong secular trend for consulting. As the global environment becomes increasingly competitive and as the technological landscape becomes increasingly complex, companies are increasingly relying on management consulting firms like CGI to stay competitive. We see this as a trend that will continue for the foreseeable future.
Improving growth profile. Organic growth and future bookings have improved in recent quarters. We believe growth will continue to improve on better spending in several markets, with particularly strong demand in digitalization. Furthermore, CGI has winded down much of their lower margin contracts and are replacing these with higher margin contracts.
Potential M&A. CGI has a strong track record of acquisitions. The pipeline remains strong with several large potential deals available and CGI has the means to pursue such acquisitions if they are a good fit. 

ZCL Composites (ZCL.TO)

ZCL is a manufacturer and supplier of fibreglass-reinforced plastic used in storage tanks. We like ZCL Composites for the following reasons:

Oil and gas exposure misunderstood. The bulk of ZCL’s revenue comes from petroleum storage at gas stations (not affected by low oil prices). Their actual exposure to low oil prices has come down considerably over the past few years and is currently only10-15%. We believe their oil exposure is misunderstood and this has caused ZCL to trade at an attractive multiple.
Sustainable growth story. Their fiberglass product is viewed as superior to the steel and concrete alternatives given that it does not corrode. There is a large replacement market opportunity in the petroleum storage market given the general aging of tanks and also an opportunity on the construction side in the water storage market.
Better competitive positioning. There is generally not a lot of competition in the industry and there are substantial barriers to entry. Also, ZCL has scale and operational advantages over existing competitors.

Imvescor Restaurant Group (IRG.TO)

Imvescor operates 227 restaurants, the bulk of which are franchised. They operate under the Baton Rouge, Pizza Delight, Scores, and Trattoria di Mikes brands mainly in Quebec, Ontario, and Atlantic Canada. We like Imvescor for the following reasons:

Turnaround story. A new CEO took over in 2014. He is a strong operator with considerable experience in the restaurant industry. He put a plan in place to return to growth by renovating franchises to create a better dining experience. While they are still in the early innings of this plan, it has been working very well, as renovated restaurants are seeing a big boost in sales.
Strong franchise model. Imvescor is very selective in who they choose as franchisees and have incentives in place to encourage franchisees to renovate their restaurants. This typically leads to better franchise sales and profitability.

Attractive multiple. Imvescor is one of the cheapest restaurant names in the space and their recent return to growth should give them an opportunity for multiple expansion. 

Past Picks: July 17, 2015

Tricon Capital Group (TCN.TO) - Bought June 2015; sold in Nov 2015 (12% loss)

Uni-Select (UNS.TO) Bought June 2015; sold in Feb 2016 (28% gain)

Premium Brands (PBH.TO) Bought July 2015; continue to hold (57% gain)

Total Return Average : +20.42%