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

MARKET OUTLOOK

Markets are slightly off their all-time highs, while under the surface we are seeing significant rotation of money flow into different sectors. Growth and value rotation trades have been the focus of investors and we continue to see what worked best in 2020 lose momentum to what underperformed. Sentiment continues to be extended and the latest mutual fund flow in the U.S. confirms retail investors are getting invested at a record pace.

Our Asset Leadership Model continues to favour domestic and international equities over cash or fixed income. This is the strongest position for equity investments going forward. There is strong positive seasonality heading into April, May and June which could provide a tailwind for the S&P/TSX.

We have seen significant rotation into energy and financials this year and just recently we have started to see rotation favouring consumer staples and utilities. We will have to watch this trend closely to assess when a more defensive approach is warranted.

We review top-down market indicators and assess the sector rotation in our monthly webinars. The next webinar is scheduled for April 13. To receive an invitation to the webinar, please send an email to info@stonecastlefunds.ca and we will add your email to our invite list.

TOP PICKS

Avanti Energy (AVN TSXV)

Avanti was formed by a group of oil and gas veterans to pursue opportunities in the helium market in the western regions of Canada and the U.S. Helium markets continue to expand with uses in MRI machines, electronics production, fiber optics and space exploration. Due to a limited supply in stable jurisdictions, the price of helium has been appreciating the last few years. Regulator reform in the U.S. later this year will change the overall market dynamics and provide an opportunity for Avanti to capitalize. Last purchase was $1.

Bragg Gaming Group (BRAG TSX)

Bragg is in the online gaming sector offering their clients casino platforms primarily in Europe. The company has been growing organically and via acquisition and is positioning to enter the lucrative U.S. online gaming market. Bragg has recently strengthened their management team with seasoned and successful industry veterans. The stock trades at attractive multiples to peers. Last purchase was $2.43.

BBTV Holdings (BBTV TSX)

BBTV is a media tech company that helps media influencers become more successful increasing viewership and making more money monetizing views. The company went public last year and has little following from investors. BBTV has a five-year compounded revenue growth of 63 per cent and is adjusted EBITDA positive. Last purchase was $9.85.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
AVN Y Y Y
BRAG N N Y
BBTV N N Y

 

PAST PICKS: APRIL 27, 2020

CloudMD Software (DOC TSXV)

  • Then: $0.45
  • Now: $1.72
  • Return: 282%
  • Total Return: 282%

Lightspeed POS (LSPD TSX)

  • Then: $22.00
  • Now: $74.70
  • Return: 240%
  • Total Return: 240%

Viemed Healthcare (VMD TSXV)

  • Then: $9.89
  • Now: $11.47
  • Return: 16%
  • Total Return: 16%

Total Return Average: 179%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
DOC N N Y
LSPD N N Y
VMD N N Y

 

Twitter: @sc_funds
Website: www.stonecastlefunds.ca