Bruce Campbell, president and portfolio manager at StoneCastle Investment Management
Focus: Canadian equities

MARKET OUTLOOK

We follow top-down economic and market indicators to help us to determine if our portfolios are on offence or defence at any given time. Currently, the indicators have been strong and resilient on multiple data points. We’ve started to see some of the more sensitive ones such as the Chemical Activity Barometer showing signs of weakness. 

We also apply technical analysis to economic data. This is where things get a little more interesting. Some of the economic data is getting extended and technically getting to levels where the trends may be extended. We will need to watch the shorter-term economic indicators (Citi Economic Surprise Index) for a trend change. Investors have been concerned with the inverted yield curve, but the reality is that the markets can continue to produce positive returns for several months following the inversion.

The top-down market technical indicators that we follow experienced significant weakness during October and November and have since recovered. We do see some very short-term extremes on some technical indicators and short-term sentiment. This may lead to market consolidation or weakness in April.

TOP PICKS

ICC INTERNATIONAL CANNABIS (WRLD_u.CD)
Last purchase was at $0.32.
ICC has been acquiring a cannabis portfolio of companies in several jurisdictions globally. The focus has been on the medical side and CBD. The company is closing a major transaction with Wayland group to acquire these assets. They have a strategic investment from Auxly Cannabis.

PARK LAWN CORPORATION (PLC.TO)
Last purchase was at $25.65.
The company operates funeral homes and cemeteries in North America. Management is targeting $100 million of EBITDA by 2022 via, acquisitions, organic growth and margin expansion. The company has grown revenue at a 67 per cent and EBITDA at a 16.2 per cent compounded rate since 2015. 

NATIONAL ACCESS CANNABIS (META.V)
Last purchase was at $0.93.
The company operates cannabis medical clinics and retail cannabis locations in Alberta, Saskatchewan and Manitoba. They’re the largest retailer by store count with 23 current locations and 135 targeted locations in Canada. Retail is one of the next waves in the cannabis evolution and META would be a nice asset for anyone looking for an established network.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
WRLD_u Y N Y
PLC N N Y
META N N Y

 

PAST PICKS: APRIL 11, 2018

CENTRIC HEALTH (CHH.TO)

  • Then: $0.49
  • Now: $0.29
  • Return: -42%
  • Total return: -42%

ALTAGAS SUBSCRIPTION RECEIPTS (ALA_r.TO)

  • Then: $23.50
  • Now: $17.67
  • Return: -25%
  • Total return: -18%

1933 INDUSTRIES (TGIF.CD)

  • Then: $0.49
  • Now: $0.50
  • Return: 3%
  • Total return: 3%

Total return average: -19%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
CHH N N N
ALA_r N N N
TGIF Y N Y

 

FUND PROFILE

Purpose Canadian Equity Growth Fund
Performance as of: April 1, 2019

  • Year-to-date: 26.6% fund, 14.2% index
  • 1 year: 9.1% fund, 10.1% index
  • 5 years: 10.0% fund, 5.5% index

INDEX: TSX Composite.
Returns are net of fees, distributions and annualized.

TOP 5 WEIGHTINGS AND HOLDINGS

  1. Cash: 18.0%
  2. Cannex Capital: 5.3%
  3. Protech Home Medical: 4.6%
  4. Planet 13 Holdings: 3.8%
  5. C21 Investments: 3.4%

WEBSITE: stonecastlefunds.ca
TWITTER: @sc_funds