Greg Dean, principal and portfolio manager at Cambridge Global Asset Management
Focus: small and mid-cap stocks

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MARKET OUTLOOK

The return of volatility is going to be a very good thing for our clients in the long run. In the short run it will take some re-getting used to, but it’s normal, healthy and quite helpful to creating wealth in the stock market. It’s hard for a team of bottom-up stock pickers like us to add much value when markets are expensive and volatility is low. We’re much more comfortable when others are uncomfortable.

Trying to predict the market is not something my team or I spend a lot of doing. We’re bottom-up stock pickers trying to identify high quality and undervalued businesses.

We’re late cycle in the economy, so it’s a time to be cautious given the economic data looks good, interest rates are on the rise and investor sentiment is quite high in general. Client sentiment is also very high and that’s something that worries me; historically, clients haven’t been able to be greedy and fearful at the right times, so I pay attention to this closely.

We feel confident in our team and our ability to execute over a multi-year period and think there continues to be great opportunities to allocate capital to thus create value for our clients.

TOP PICKS

MIDDLEBY CORPORATION (MIDD.O)
Last purchase at $119.43 on Feb. 28.

Middleby is a high-quality company that generates very strong returns and free cash flow. Despite their near-20 years of success and size, it’s still underfollowed and underappreciated. I think some of the short-terms issues their customers have had will lead to faster organic growth than the market expects. We acquired it at an attractive valuation with a multi-year view.

BK BRASIL (BKBR3.BZ)
Last purchase at 15.9 reais on March 29.

This is the recent IPO of the master franchisee of Burger King in Brazil. We’re very impressed with its management and their track record. The company has a long runway to continue growing Burger King, but I think they aspire to multiple restaurant concepts in multiple geographies in Latin America, so it’s still early days. We bought it at an attractive valuation with a multi- year view.

KEYERA (KEY.TO)
Last purchase at $32.62 on March 5.

Keyera is one of Canada’s most successful midstream companies. Having seen a lot of negative sentiment and commodity price pressure in energy ,we hunt for quality on sale. They don’t make flashy and expensive acquisitions, so they’re relatively underappreciated. Very strong organic growth backlog and at locked in returns north of 10 per cent. We will continue to compound cash flow for many years.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MIDD N N Y
BKBR3 N N Y
KEY N N Y

 

PAST PICKS: AUG. 2, 2016

COMPUTER SCIENCES CORP (CSC.N)
Acquired in April, 2017 by DXC Technologies.

  • Then: $47.59
  • Last trading day, March 31, 2017: $69.01
  • Return: 45%
  • Total return: 46%

WALGREENS BOOTS ALLIANCE (WBA.O)

  • Then: $78.95
  • Now: $63.36
  • Return: -20%
  • Total return: -17%

SIGNATURE BANK OF NEW YORK (SBNY.O)

  • Then: $117.98
  • Now: $137.66
  • Return: 17%
  • Total return: 17%

Total return average: 15%

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/
CSC N N N
WBA N N N
SBNY N N Y

 

FUND PROFILE

Cambridge Growth Companies Corporate Class
Performance as of: April, 2018

  •  1 Month: -2.5% fund, -2.8%% index
  • 1 Year: 8.5% fund, 11.1% index
  • 3 Year: 10.9% fund, 10.2% index

* Index: MSCI World Small Cap (CAD)

TOP 5 HOLDINGS AND WEIGHTINGS

  1. Middleby Corp: 5.5%
  2. Tourmaline Oil Corp: 4.1%
  3. Auto Trader Group PLC: – 4.1%
  4. BK Brail: 4%
  5. Athene Holding LTD : 3.9%

WEBSITE:  www.ci.com