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 resilient on multiple data points. We’ve started to see some of the leading indicators showing signs of improvements, such as the Chemical Activity Barometer. We will need to watch the shorter-term economic indicators such as the Citi Economic Surprise Index for a trend change to see a reacceleration in the back half of 2019.

Investors have been concerned about the inverted yield curve, but the reality is that the markets can continue to produce positive returns for several months following an inversion.

The top-down market technical indicators that we follow experienced significant weakness during October and November and have since recovered. We did see some weakness during April and May in the market technical indicators that has been repaired in June.

We review the indicators each month in our monthly indicator webinar. To receive an invitation to the webinar, please send an email to info@stonecastlefunds.ca and we will add you to our invite list.

TOP PICKS

INDUS HOLDINGS (INDS.CD)

Indus is a California-based cannabis operator. The company is using a consumer packaged goods (CPG) approach to building a vertically integrated company. Being newly listed through reverse takeover has caused selling pressure on the stock and now it trades at a significant discount to peers as a result. Last purchase was at $6.49.

KIRKLAND LAKE GOLD (KL.TO)

Kirkland is an intermediate gold producer with three mines in Canada and one in Australia. The company’s Fosterville mine in that country has been a big reason for Kirkland’s growth in the last year as they discovered and developed high-grades zones thre. Last purchase was at $55.47.

HERITAGE CANNABIS (CANN.CD)

Heritage operates in the cannabis sector with a focus on extraction and value-added products. The company’s significant extraction experience is a key differentiator from their competition in the sector. Management has a strong business background in other sectors and continues to methodically execute delivering on publicly stated objectives. Last purchase was at $0.47.

PAST PICKS: MAY 10, 2018

GRANDE WEST TRANSPORTATION (BUS.V)

• Then: $1.46
• Now: $0.47
• Return: -68%
• Total return: -68%

CANNEX CAPITAL (CNNX.CD)

• Then: $1.20
• Now: $1.46
• Return: 22%
• Total return: 22%

HEXO (HEXO.TO)

• Then: $4.97
• Now: $7.05
• Return: 42%
• Total return: 42%

Total return average: -1%