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

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MARKET OUTLOOK

We follow top-down economic and market indicators to help us determine if our portfolios are on offence or defence at any given time. Currently, the top-down economic indicators have been strong and improving. We track short-term economic trends by watching the Citi Economic Surprise Index (CESI), which we find tends to lead the ISM indexes. We then use technical analysis on the CESI to give us a sense of direction of the trend. Currently the CESI is in a declining trend, but approaching the level where we typically see trend changes. 

The top-down market technical indicators that we follow have been mixed lately. The short and intermediate-term indicators are showing some weakness, while the longer-term indicators are still positive. Sentiment was at historical high levels back in January, but has now moderated to a more normal level. We’re watching the market technical indicators to see if the longer-term indicators will begin to show some signs of deterioration or if the short and intermediate-term indicators begin to improve. This will lend help us to positive our portfolios back on offence or move them more towards defence. 

Each month, we host a regular monthly webinar where we update investors on the indicators and whether we are on offence or defence with our portfolios. The next webinar is March 15 at 4:30 p.m. (EST). To register, contact: info@stonecastlefunds.ca

TOP PICKS

Bruce Campbell's Top Picks

Bruce Campbell, president and portfolio manager at StoneCastle Investment Management, shares his top picks: Reliq Health Technologies, Bewhere and Grande West Transportation.

RELIQ HEALTH TECHNOLOGIES (RHT.V)
Last purchase was at $0.70.

Reliq Health is a software technology company that provides automated patient monitoring in the home. Their two-way voice technology allows for monitoring and medical data collection that’s transmitted in real time between the patient, family and the care team. The company charges a monthly subscription free for the service.

Reliq is officially forecasting to have 30,000 patients by year-end, but based on the last few months they could exceed this level, which would generate higher revenue and cash flow numbers. Each patient generates $50 per month in recurring revenue in what is a high margin business.

BEWHERE (BEW.V)
Last purchase was at $0.48.

Bewhere is in the asset tracking industry, with low-powered “beacons” that can be attached to any object needing to be tracked.

Their initial move into the asset tracking sector was via Bluetooth-connected devices. Recently they moved into the low-power wide-area network (cellular) devices, where they’ve announced partnerships with Bell and Huawei. The devices are just being rolled out in the U.S. over several of the cellular networks.  The back half of 2018 should be strong as the networks sell devices to various end-clients. 

GRANDE WEST TRANSPORTATION (BUS.V)
Last purchase was at $2.38. 

Grande West manufactures mid-sized heavy-duty buses for transit authorities and commercial enterprises. The company recently got their U.S. certification and we should start to see an increased sales volume during 2018.

Management has been focusing on increasing the production numbers to meet their backlog. Their focus is to have 10 per cent of the overall heavy-duty bus market when at full run rate. Management owns 40 per cent of the outstanding shares which, is always comforting.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
RHT Y Y Y
BEW N N Y
BUS N N Y

 

PAST PICK: MARCH 10, 2017

Bruce Campbell's Past Picks

Bruce Campbell, president and portfolio manager at StoneCastle Investment Management, reviews his past picks: Patient Home Monitoring, OrganiGram and CCL Industries. *StoneCastle does not own Patient Home Monitoring but does own Viemed, which was spun out of PHM.

PATIENT HOME MONITORING (PHM.V)
We don’t own Patient Home Monitoring, but do own Viemed, which was spun out of the company.

  • Then: $0.28
  • Now: $0.11
  • Return: -39.46%
  • Total return: -40.31%

ORGANIGRAM (OGI.V)

  • Then: $2.37
  • Now: $3.81
  • Return: 60.75%          
  • Total return: 62.92%

CCL INDUSTRIES (CCLb.TO)

  • Then: $58.81
  • Now: $64.15
  • Return: 9.08%
  • Total return: 9.90%

Total return average: 10.83%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
PHM N N N
OGI N N Y
CCLb N N Y

 

FUND PROFILE

Redwood Equity Growth Fund
Performance as of: Feb. 23, 2018

  • Year-to-date: -2.33% fund, -3.52% index
  • 1 Year: 37.28% fund, -0.90% index
  • 5 Year: 18.30% fund, 4.25% index

* S&P/TSX Composite Index.
* Returns include all distributions and are net of all fees.

TOP 5 HOLDINGS AND WEIGHTINGS

  1.  Cash: 38.8%
  2. Reliq Health Technologies: 4.74%
  3. Hiku Brands: 4.10%
  4. Bewhere Holdings: 2.89%
  5. Shopify: 2.87%

WEBSITE: stonecastlefunds.ca