Colin Stewart, CEO and portfolio manager at JC Clark Limited

Focus: North American large caps

MARKET OUTLOOK

Equity markets gained ground in July as investors remained optimistic about modest economic growth and supportive monetary policy. More recently, equities have retreated due to fears over an escalating trade war between the U.S. and China and concerns over falling global bond yields. We continue to upgrade the quality of our portfolios with a focus on solid businesses that hold strong competitive positions and trade at reasonable prices. We are also adding defensive elements to our strategies as we expect market volatility could increase in the months and quarters ahead.

TOP PICKS

Colin Stewart's Top Picks

Colin Stewart, CEO and portfolio manager at JC Clark Limited, shares his top picks: Maple Leaf Foods, Martinrea and Seven Aces.

Maple Leaf Foods (MFI.TO) – Recently purchased at approximately $33 in the last few trading days

Maple Leaf Foods is the industry leader in consumer-based proteins in Canada. The company has a growing business in poultry production, Raised Without Antibiotics (RWA) meats, and Plant Based Proteins (PBP). Aggressive investments into PBP will further solidify Maple Leaf as the industry leader in North America in a rapidly growing business. MFI also represents compelling value, trading at a significant discount to its sum-of-parts value of approximately $45 per share share and a steep discount to its peer group.

Martinrea (MRE .TO) – Recently purchased at approximately $10 in the last few trading days

Martinrea is a Canadian-based automotive-parts supplier. The company is primarily exposed to North American automotive production, and focuses on structural components that benefit from the ongoing “light-weighting” trend in the auto industry. The company recently reported strong quarterly results with improving margins and significant free cash flow generation. Martinrea has a strong balance sheet, growing earnings and a 1.8 per cent dividend yield, yet it trades at only 4x earnings — its lowest valuation in over a decade.

Seven Aces (ACES.V) – Recently purchased at approximately $0.80 in June

Seven Aces is the leading operator of COAM (Coin Operated Amusement Machines) in Georgia. The company has grown aggressively through acquisition with very attractive payback economics. Our positive view is predicated on high barriers to entry, attractive margins, strong free cash flow generation, and a significant growth opportunity. Despite these attributes, ACES trades at only 4x EV/EBITDA, a steep discount to other gaming industry peers.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MFI N N Y
MRE N N Y
ACES Y N Y


PAST PICKS: JULY 23, 2018

Colin Stewart's Past Picks

Colin Stewart, CEO and portfolio manager at JC Clark Limited, reviews his past picks: Fairfax Financial, IBM and Gamehost.

Fairfax Financial (FFH.TO)

  • Then: $725.35
  • Now: $600.50
  • Return: -17%
  • Total return: -15%

IBM (IBM.N)

  • Then: $145.70
  • Now: $134.12
  • Return: -8%
  • Total return: -2%

Gamehost (GH.TO)

  • Then: $11.90
  • Now: $8.80
  • Return: -26%
  • Total return: -20%

Total return average: -12%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
FHH Y N Y
IBM N N N
GH N N N


FUND PROFILE: JC CLARK FOCUSED OPPORTUNITIESE FUND

Performance as of July 31, 2019:

  • 1 year: 4.6% fund, -0.2% index
  • 3 years: 5.2% fund, 4.0% index
  • 5 years: 1.9% fund, 1.4% index

Index: TSX
Returns are based on reinvested dividends, net of fees and annualized


WEBSITE: jcclark.com