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 to determine if our portfolios are on offence or defence at any given time. Currently, the top-down economic indicators have been strong and aren’t showing any sign of economic weakness yet. We see signs of expansion in the ISM Manufacturing and ISM Services indexes; both have been hitting highs last seen over a decade ago. To track the intermediate trend direction, we monitor the Citi Economic Surprise Index (CESI), which we find tends to lead the ISM indexes over the shorter term. The CESI was weak for most of 2018, but during the last few weeks has started to show some improvements. From the cycle analysis that we do, historically when this happens the economic numbers improve in the months ahead. If we see this upturn, we’d expect a push higher for economic numbers, then higher for corporate earnings as well.

We saw improvement in the S&P/TSX and now the NYSE Composite and S&P 500 indexes have also been improving. We had a higher level of cash in our portfolios three months ago and have now moved them towards being fully invested.   

TOP PICKS

TRANSCONTINENTAL (TCLa.TO)

Transcontinental is Canada’s largest printer, with operations in printing, packaging and digital media. The company started a transformation from a traditional printer into packaging in 2014. The management team has made several acquisition and divestitures to reshape the company to a packaging and media company. Last purchase was at $30.39.

FRIDAY NIGHT INC (TGIF.CD)

Friday Night operates marijuana cultivation, processing and extraction in Nevada. They continue to expand their cultivation and process facilities in both the AMA and Infused divisions of the company. Once production facilities are complete, there should be a significant bump in revenue and cash flow. Last purchase was at $0.47.

GRANDE WEST TRANSPORTATION (BUS.V)

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. The latest news with the company is around the state of Georgia and a potential opportunity of up to 200 buses. Last purchase was at $1.55.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
TCLa N N Y
TGIF Y Y Y
BUS N N Y

 

PAST PICKS: JULY 26, 2017

PROTECH HEALTH (PHM.V)
Spinout Viemed (VMD.V), one-tenth of PHM.

  • Then: $0.43
  • Now: $0.11
  • Return: -59%
  • Total return: -59%

SIYATA MOBILE (SIM.V)

  • Then: $0.75
  • Now: $0.46
  • Return: -38%
  • Total return: -38%

AGF MANAGEMENT (AGFb.TO) 

  • Then: $7.26
  • Now: $6.51
  • Return: -10%
  • Total return: -6%

Total return average: -34%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
PHM N N Y
SIM N N Y
AGFb N N N

 

FUND PROFILE

Purpose Canadian Equity Growth Fund
Performance as of: July 23, 2018

  • YTD: -9.37% fund, 2.65% index*
  • 1 Year: 33.60% fund, 10.87% index
  • 5 Years: 15.38% fund, 8.47% index

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

TOP 5 HOLDINGS AND WEIGHTINGS

  1. Stars Group: 3.47%
  2. Kelt Exploration: 3.36%
  3. Enerplus: 3.32%
  4. Transcontinental: 3.21%
  5. Viemed Healthcare: 3.18%

TWITTER: @sc_funds
WEBSITE: www.stonecastlefunds.ca