Bruce Campbell, President & Portfolio Manager, StoneCastle Investment Management
Focus: Canadian equities
Top Picks: Condor Energies, AGF Management, Definity Financial
MARKET OUTLOOK:
From our perspective, the message from the market remains constructive. Our top-down indicators continue to keep us on offence, and importantly, our early warning indicators are not flashing any signs that would suggest we need to become more defensive.
One of the biggest themes we’re watching is sector rotation. Earlier this year, precious metals became extended after a very strong advance and have since spent time consolidating those gains. We’re now seeing a similar pattern emerge in parts of the technology sector. Rather than viewing that as a negative, we see it as a normal and healthy rotation within an ongoing bull market.
Canadian small-cap stocks have been under pressure through much of the summer, creating what we believe are some attractive opportunities as earnings momentum begins to improve.
Our base case remains that economic growth stays resilient, inflation remains supportive of corporate earnings, and, based on the indicators we follow, the seasonal period from September through January continues to set up well for equities.
Unless our indicators begin to deteriorate, we remain positioned on offence.
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TOP PICKS:
Condor Energies (CDR:TSX)
An energy company operating in Uzbekistan and Kazakhstan. There are two key drivers for the business, but the market appears to be focused on only one. The first is production growth in Uzbekistan, which is expected to increase by roughly 60 per cent by the end of the year. That growth is attracting attention and is already reflected in the share price.
The second, and in our view more overlooked, opportunity is in Kazakhstan. The company is developing an onshore LNG business, with its first facility expected to be completed by late 2026 and operational in early 2027. Once operating, that project should begin generating cash flow and could support the development of additional LNG facilities over time. We believe the market is underestimating the long-term value of this second growth engine.
AGF Management (AGF.B:TSX)
An independent Canadian asset manager with a diversified business across multiple verticals. The company is experiencing strong growth across its businesses, with particularly strong momentum in its alternatives and private markets division. It generates substantial free cash flow, which supports both a growing dividend and ongoing share buybacks. Despite this, the stock continues to trade at a meaningful discount to both its peers and recent transactions in the Canadian asset management industry.
Definity Financial (DFY:TSX)
A property and casualty insurer with operations across multiple insurance lines. Management has been integrating the Travelers Canada acquisition in phases, allowing the company to capture synergies while maintaining strong execution. Investors have become increasingly positive on the stock as the integration has progressed better than expected and large catastrophe losses have come in below expectations.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CDR TSX | N | N | Y |
| AGF/B TSX | N | N | Y |
| DFY TSX | N | N | Y |
PAST PICKS: AUG. 18, 2025
MDA Space (MDA:TSX)
Then: $46.36
Now: $44.15
Return: -5%
Total Return: -5%
Tenaz Energy (TNZ:TSX)
Then: $21.33
Now: $50.99
Return: 139%
Total Return: 139%
Anaergia (ANRG:TSX)
Then: $1.46
Now: $2.23
Return: 53%
Total Return: 53%
Total Return Average: 62%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| MDA TSX | N | N | Y |
| TNZ TSX | N | N | N |
| ANRG TSX | N | N | Y |
