Michael Decter, president and CEO of LDIC Inc.
Focus: Canadian large caps
Markets are reacting positively to the continuing strength of the U.S. economy. The Canadian economy, though weaker, is gaining some advantage from the U.S. moving very close to full employment. Two negative factors overhang equity markets and constitute the “wall of worry” that markets are climbing: rising interest rates and potential for trade battles to become a full-blown trade war.
- We consider JPMorgan to be best positioned large-cap U.S. bank.
- Top-tier management.
- Good business mix, offering diversification.
- Solid balance sheet, with a focus on limiting risky operations.
- Levered to deregulation and rising interest rates, which should help boost margins.
DESCARTES SYSTEMS (DSG.TO)
- Well positioned consolidator in a fragmented industry.
- Allows for synergies through scale of strategic acquisitions.
- Long runway for growth: Descartes has under 2 per cent market share in the $13-billion global digital logistics market.
- Proven track record of growing return on invested capital (ROIC) and margin expansion.
- Sustainable organic growth of 4 to 6 per cent.
BROOKFIELD INFRASTRUCTURE PARTNERS (BIP_u.TO)
22nd largest holding.
- Strong capital allocation strategy, with flexibility to fund through asset sales.
- Management highlighted $1.3 billion of recently announced transactions which are expected to be accretive to funds from operations (FFO) and strong growth potential.
- Potential for an additional $400 million of equity investments in the near-term.
- We like the acquisition of Enercare, which was one of our top 10 holdings prior to the news of the deal. We expect it to compliment Brookfield’s business very well.
- The stock is a good combination of yield and organic growth
PAST PICKS: JUNE 11, 2018
- Then: $67.01
- Now: $70.19
- Return: 5%
- Total return: 5%
- Then: $16.45
- Now: $16.61
- Return: 1%
- Total return: 1%
- Then: $4.15
- Now: $3.98
- Return: -4%
- Total return: -4%
Total return average: 1%
LDIC North American Small Business Fund
The fund invests in a diversified portfolio of small capitalization companies in North America, through debt and equity securities, with an objective to achieve long-term capital appreciation. The manager combines a “top-down” and “bottom-up” approach to the investment process. The “top-down” approach uncovers broad investment themes with the potential for growth. The “bottom-up” analysis utilizes deep quantitative and qualitative due diligence to generate specific investment ideas in high-quality companies with strong or improving fundamentals and with material long-term growth prospects.
Performance as of: July 31
- 1 Month: 0.54% fund, -0.19% index*
- 1 Year: 14.49% fund, 8.55% index
- 3 Year: 21.17% fund 6.04% index
* Index: Benchmark blend is 70% S&P TSX Small Cap Index (CAD) & 30% Russell 2000 Index (USD).
TOP 5 HOLDINGS AND WEIGHTINGS
- Canopy Rivers: 4.1%
- Akumin Inc: 3.6%
- Points International Ltd: 3.4%
- Cargojet Inc: 3.4%
- Information Services Corp: 3.3%