Category

Model Portfolio

Portfolio Manager’s December comment For November Results

The Canadian stock market realised another month of positive returns in November. This positive outcome unfolded as reported quarterly results were coming in line with investors expectations and in a context of diminishing international trade tensions.

The S&P/TSX Total Return Index rose by 3.6% in November and the S&P 500 also rose by 3.6% while the MSCI World produced a 0.9% positive return. At November end, the 12-months S&P/TSX Total Return Index gain was 15.7% nearly in line with the S&P500 gain of 16.1% and higher than the MSCI World 12-month increase of 11.8%.
The best TSX sector for the month of November was Information Technology up 8.6%, followed by Consumer Staples up 5.8%, and Consumer Discretionary up 5.5%. On the contrary, the worst performing sectors were Health Care (-2.8%), Real Estate (-1.0%) and Material down (0.1%).

Looking more specifically at INOC, the fund was up 5.4% and the best performers in November were Gildan Activewear (+16.4%) the t-shirt manufacturer, Parex Energy (10.1%) an oil producer with assets in Colombia, and Alimentation Couche-Tard. (+10.0%), the Canadian convenience store operator with a global footprint.
On the contrary, the weakest contributor to INOC was Norbord, which was down 4.1%, on after a strong showing in October. The negative contributors were Equitable down 4.1% and TD Bank down 1.8%. All the other constituents of INOC had a positive performance for the month of November.

Portfolio Manager’s November Comment For October Results

The S&P/TSX Total Return Index declined by 0.9% in October, the S&P 500 rose by 2.2% and the MSCI ACWI ex. USA rose by 3.5%. At October end, the YTD S&P/TSX Total Return Index was up 18.1% which was lower than the S&P500 23.2% increase but higher than the MSCI ACWI ex. USA return of 16.0%.

The market made new highs in October as trade disputes concerns were dissipating and Q3 financial results were coming in line to better than expected. At month’s end, the US 10-year treasury yields were firming up in both the US and Canadian markets. The best TSX sector in October was Materials up 2.9%, followed by Industrials, up 1%. On the contrary, the worst performing sector was Health Care principally due to the poor performance of the Cannabis sector.

Looking more specifically at INOC, the best performers in October were Norbord (+19.7%), the Canadian manufacturer of wood-based products and leading producer of Oriented Strand Board. The next best performer was Equitable Group (+9.2%), %), a Canadian bank with the bulk of its business involved in the residential mortgages sector.

The NASDAQ Inovestor Canadian Equity Index YTD and Yearly returns stood at 20.2% and 14.7, ahead of the S&P TSX TR corresponding figures of 18.1% and 13.2%.

The Inovestor strategy was rebalanced in October. We increased exposure to the Industrials with the addition of Ritchie Bros Auctioneers Inc. (RBA) and Evertz (ET). We also added Parkland Fuel Corporation (PKI) as their results are strengthening now that their strategic acquisitions are being successfully integrated.

We exited Bell Canada (BCE), Canadian Imperial Bank of Commerce (CM) and Linamar Corp (LNR). These were the holdings with the weakest economic value added (EVA) figures in their respective economic sector.

StockPointer® Canadian Equities Model Portfolio Transactions – October 2019

We have rebalanced the Nasdaq Inovestor Canadian Index based on our Canadian Model Portfolio, which will be effective on October 18th after market close. Here are the details:

In:

1. Ritchie Bros Auctioneers Inc. (RBA) – Market Trend. Increase in the Industrial sector as seen in the Top 100 index.

2. Evertz (ET) – Market Trend – Increase in the Industrial sector as seen in the Top 100 index.

3. Parkland Fuel Corporation (PKI) – Market Trend – Increase in the Energy sector as seen in the Top 100 index.

Out:

1. Bell Canada (BCE) – Market Trend. Decrease in the Telecommunications Services sector as seen in the Top 100 index.

2. Canadian Imperial Bank of Commerce (CM)- Market Trend. Decrease in the Financial sector as seen in the Top 100 index.

3. Linamar Corp (LNR) – Market Trend – Decrease in the Consumer Discretionary sector as seen in the Top 100 index.

Portfolio Manager’s Q3 Commentary

The S&P/TSX Composite Total Return Index increased by 2.5% in the third quarter. This adds to this years’ gains for a YTD return of 19.1%. During Q3, the S&P500 produced a 1.2% return for a YTD rate of 18.7% and the MSCI ACWI ex USA posted a 1.1% return leading to a 16.6% YTD total return.

Over the 3rd quarter, most company results were inline or better than expected. Interest sensitive sectors such as Utilities and REITS performed the best due to lower long-term interest rates.

In addition, the FED confirmed its dovish stance by reflecting the FED meeting minutes that were perceived to be accommodating. The FED had hinted that they would be open to reduce rates further if economic slowdown was visible. As a result, the Financials sector had the strongest sector rally in the month of September compared to the rest of the market.

NQICA in Q3 returned 3.9% leading to a YTD return of 21.1% versus the S&P/TSX composite which returned 2.5% in Q3 and 19.1% YTD. The one-year return for NQICA is 8.2% in comparison to the S&P/TSX which generated 7.1%.

The worst performers in the NQICA in Q3 were Stella Jones (SJ) with a return of -17.8%, due to the departure of the CEO, and CCL Industries (CCL.B) with a -16.52% return, due to poor quarterly results and increased insider selling. On the other hand, the best performers were Equitable Group (EQB) up 43.46%, due to excellent quarterly results and improvement in the Canadian real estate statistics, and Metro Inc. (MRU) up 19.11% based on great earnings and a positive update on the integration o the Jean-Coutu acquisition.

StockPointer® US and ADR Equities Model Portfolio Transactions – September 2019

StockPointer® US and ADR Equities Model Portfolio Transactions – September 2019

We have rebalanced the Nasdaq Inovestor Global Index based on our US and ADR Model Portfolios, which will be effective on September 20th after market close. Here are the details for the US Model Portfolio:

Ins:

1. Bristol-Myers Squibb Co. (BMY) – Market Trend. Increase in the Healthcare sector as seen in the Top 100 index, therefore, increasing our position in the portfolio.

2. Lamb Weston Holdings Inc. (LW) – Intra-sectoral transaction.

3. Progressive Corp (Ohio) (PGR) – Intra-sectoral transaction.

Outs:

1. Sally Beauty Holdings Inc. (SBH)– Market Trend. Decrease in the Consumer Discretionary sector as seen in the Top 100 index, therefore, decreasing our position in the portfolio.

2. Kroger Co. (KR) – Not in the top performers of its sector.

3. Blackstone Group Inc. (BX) – Not in the top performers of its sector.

Here are the details for the International Model Portfolio:

Ins:

1. Brookfield Infrastructure Partners L.P. (BIP) – Market Trend. Increase in the Utilities sector as seen in the Top 100 index, therefore, increasing our position in the portfolio.

Outs:

1. Unilever PLC (UL) – Market Trend. Decrease in the Consumer Staples sector as seen in the Top 100 index, therefore, decreasing our position in the portfolio.

Portfolio Manager’s September comment For August Results

The Canadian market has been the best performer in August due in part to a strong rally in previous metals (such as gold and silver) and a vigorous GDP of 3.6 versus 3.0 expected. On the other hand, the US GDP was weaker than expected at 2.0 versus 2.3. Global markets were also down as a result from fears of an economic slowdown: Brexit, Hong Kong unrests, inverted interest curve and tariff issues.

The S&P/TSX Total Return Index rose by 0.2% in August, the S&P 500 decreased by -1.8% and the MSCI World by -2.1%. At August end, the YTD S&P/TSX Total Return Index was up 17.1% which was higher than the S&P500 (16.7%) and higher than the MSCI World of 13.5%.

The best TSX sector in August was Information Technology up 7.7%, mainly due to the performance of Shopify, followed by Materials up 5.7%, with gold up 16.7% and silver up 15.4%. On the contrary, the worst performing sector was Health Care (-13%) principally due to the performance of the Cannabis sector.

Looking more specifically at INOC, the best performers in August were Metro Inc. (+9.43%), a Canadian food retailer in Quebec and Ontario, followed by Brookfield Infrastructure Partners (+8.21%), a publicly traded limited partnership involved in the acquisition and management of infrastructure assets globally. Both stocks rallied based on their defensive attributes and as of a result of the inversion of the yield curve.

On the contrary, the weakest contributor to INOC was Parex (PXT), which was down 9.62%, on weak energy prices. The other negative contributors were Linamar (LNR) and CCL Industries (CCL.B) due to disappointing results.

StockPointer® Canadian Equities Model Portfolio Transactions – July 2019

We have rebalanced the Nasdaq Inovestor Canadian Index based on our Canadian Model Portfolio, which will be effective on July 19th after market close. Here are the details:

In:

  1. Telus Corporation (T) – Market Trend. Increase in Telecommunication sector as seen in the Top 100 index therefore increasing our position in the portfolio.

Out:

  1. IA Financial Corporation (IAG) – Market Trend. Decrease in the Financial sector as seen in the Top 100 index.

StockPointer® US and ADR Equities Model Portfolio Transactions – June 2019

We have rebalanced the Nasdaq Inovestor Global Index based on our US and ADR Model Portfolios, which will be effective on June 21st after market close. Here are the details for the US Model Portfolio:

Ins:

  1. Employers HOLDINGS INC (EIG) – Market Trend. Increase in Financials sector as seen in the Top 100 index therefore increasing our position in the portfolio.
  2. ABBVIE INC (ABBV) – Market Trend. Increase in Healthcare sector as seen in the Top 100 index therefore increasing our position in the portfolio.
  3. EVERCORE INC (EVR) – Intra Sectorial transaction.
  4. CREDIT ACCEPTANCE CORPORATION (CACC) – Intra Sectorial transaction.
  5. PRICE T ROWE GROUPs (TROW) – Intra Sectorial transaction.
  6. TRANSDIGM GROUP INC (TDG) – Intra Sectorial transaction.
  7. GEOPARK LTD (GPRK) – Intra Sectorial transaction.

Outs:

  1. MICRON TECHNOLOGY INC (MU) – Market Trend. Decrease in IT sector as seen in the Top 100 index therefore decreasing our position in the portfolio.
  2. VECTOR GROUP LTD (VGR) – Market Trend. Decrease in Consumer Staples sector as seen in the Top 100 index therefore decreasing our position in the portfolio.
  3. VALERO ENERGY CORPORATION (VLO) – EPI. EPI fell below 1.
  4. CIGNA CORPORATION (CI) – SP Score. No longer within SP score range and not in the top 20 of its sector.
  5. PRINCIPAL FINANCIAL GROUP (PFG) – SP Score. No longer within SP score range and not in the top 20 of its sector.
  6. ALLSTATE CORPORATE (ALL) – SP Score. No longer within SP score range and not in the top 20 of its sector.
  7. THE CHEMOURS COMPANY LLC (CC) – SP Score. No longer within SP score range and not in the top 20 of its sector.

 

Here are the details for the International Model Portfolio:

Ins:

  1. BANCO SANTANDER MEXICO SA (BSMX) – Market Trend. Increase in Financials sector as seen in the Top 100 index therefore increasing our position in the portfolio.
  2. JAZZ PHARMACEUTICALS PLC (JAZZ) – Market Trend. Increase in Healthcare sector as seen in the Top 100 index therefore increasing our position in the portfolio.

Outs:

  1. TAIWAN SEMICONDUCTOR MANUFACTURING (TSM) – Market Trend. Decrease in IT sector as seen in the Top 100 index therefore decreasing our position in the portfolio.
  2. NIELSEN HOLDINGS PLC (NLSN) – Market Trend. Decrease in Consumer Discretionary sector as seen in the Top 100 index therefore decreasing our position in the portfolio.

StockPointer® Canadian Equities Model Portfolio Transactions – April 2019

We have rebalanced the Nasdaq Inovestor Canadian Index based on our Canadian Model Portfolio, which will be effective on April 18th after market close. Here are the details:

Ins:

  1. Great-West Lifeco Inc. (GWO) – Market Trend. Increase in Financial sector as seen in the Top 100 index therefore increasing our position in the portfolio.
  2. Norbord Inc (OSB) – Market Trend. Increase in Materials sector as seen in the Top 100 index therefore increasing our position in the portfolio.
  3. Open Text Corporation (OTEX) –  Market Trend. Increase in Information Technology sector as seen in the Top 100 index therefore increasing our position in the portfolio.

Outs:

  1. The North West Company Inc (NWC) – Market Trend. Decrease in the Consumer Staple sector as seen in the Top 100 index.
  2. Parkland Fuel Corporation (PKI) – Market Trend. Decrease in the Energy sector as seen in the Top 100 index.
  3. CAE Inc. (CAE) –  Market Trend. Decrease in the Industrials sector as seen in the Top 100 index.

StockPointer® Canadian Equities Model Portfolio Transactions – April 2019

We have rebalanced the Nasdaq Inovestor Canadian Index based on our Canadian Model Portfolio, which will be effective on April 18th after market close. Here are the details:

Ins:

  1. Great-west Lifeco inc. (GWO) – Market Trend. Increase in Financial sector as seen in the Top 100 index therefore increasing our position in the portfolio.
  2. Norbord Inc (OSB) – Market Trend. Increase in Materials sector as seen in the Top 100 index therefore increasing our position in the portfolio.
  3. Open Text Corporation (OTEX) –  Market Trend. Increase in Information Technology sector as seen in the Top 100 index therefore increasing our position in the portfolio.

Outs:

  1. THE NORTH WEST COMPANY INC (NWC) – Market Trend. Decrease in the Industrials sector as seen in the Top 100 index.
  2. Parkland Fuel Corporation (PKI) – Market Trend. Decrease in the Energy sector as seen in the Top 100 index.
  3. CAE Inc. (CAE) –  Market Trend. Decrease in the Industrials sector as seen in the Top 100 index.

You can also find the transactions on Inovestor For Advisors, in the Model Portfolios – StockPointer Canada section.

Please contact us for more information.

The Inovestor Team