Peter Imhof, vice president and portfolio manager at AGF Investments
Focus: North American small caps
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MARKET OUTLOOK

I am quite positive on the Canadian market versus the U.S. Market over the shorter to medium term. The Canadian market has underperformed that of the U.S. in six of the last seven years. Valuations in Canada trade at a 2 multiple point discount to that of the U.S. We have not seen such a discount since 2008. In particular, small caps have drastically underperformed larger caps in Canada for six of the last seven years. We seem to be getting out of this underperformance since Labour Day.

The copper price has moved up materially as has the Canadian dollar. The correlation between the copper price and the oil price has historically been .94; we would expect to see the oil price catch up to the move in copper. We have started to see the move over the past week or so. The TSX has a history of outperforming the U.S. when oil and copper prices move up. We had seen a huge selloff in oil stocks for much of the year and have now started to see that reverse with trading volume up materially in the energy names over the past three weeks. As oil stocks go so does the Canadian market.

TOP PICKS

TAMARACK VALLEY ENERGY (TVE.TO)
The stock had been put in a penalty box for the past nine months as they made an acquisition that was not ideally structured. Tamarack trades at a large discount to other oil and gas producers in Canada. Recently they have been having good success at a couple of their plays and have reported their most recent quarter above expectations. In the next six months they should be able to send a signal to the market that their land positions are much more economic than people believe. I particularly like some of their assets that would be in the same play that Yangarra Resources has been having tremendous success in.

SPIN MASTER (TOY.TO)
The company recently put up a monster quarter in the summer. Spin Master has been firing on all cylinders since the IPO a couple of years ago; they're one of the three most successful IPOs in Canada over the past three years. They have had all the hot toys with Hatchimals and Paw Patrol leading the way. First half revenue growth for 2017 was up more than 42 per cent while net income was up 53 per cent. I believe the Christmas season will be quite strong for them as they are coming into the fall and winter with a very strong lineup and a tailwind of recent strong results.

WPT INDUSTRIAL REIT (WIR_u.TO)
A great way to play the growth in ecommerce. One of their larger tenants happens to be Amazon. This is a company you can tuck away and let the story play out. It is not that liquid as we had looked at it a number of times but needed an equity issue to be able to get a position. The management team is conservative and has lots of running room to continue to grow their business.
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
 TVE N N Y
 TOY N N Y
 WIR_u N N Y

PAST PICKS: DECEMBER 20, 2016

MILESTONE REIT (MST_u.TO) - *Taken over by Starwood Capital Group as a cash big

  • Then: $18.79
  • On April 27, 2017*: $22.15
  • Return: 17.88%
  • Total return: 17.88%

YANGARRA RESOURCES (YGR.TO)

  • Then: $1.89
  • Now: $3.80
  • Return: 101.05%
  • Total return: 101.05%

TAHOE RESOURCES (THO.TO)

  • Then: $11.50
  • Now: $6.33
  • Return: -44.95%
  • Total return: -43.98%

TOTAL RETURN AVERAGE: 24.98%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MST_u N N N
YGR N N Y
THO N N N

FUND PROFILE

AGF Canadian Growth Equity Class
Performance as of: August 31, 2017

1 month: -3.7% fund, 0.3% index
1 year: -2.55% fund, 2.24% index
3 year: -3.13% fund, -1.48% index

*Index: S&P/TSX Small Cap Index

TOP HOLDINGS AND WEIGHTINGS

  1. Real Matters: 4.8 %
  2. Royal Bank: 4.7%
  3. Bank of Nova Scotia: 4.3%
  4. Parex Resources: 3.6%
  5. CGI Group: 2.9%

WEBSITE: www.agf.com