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Model Portfolio

Portfolio Manager’s April Comment For Q1 2021

The performance of equity markets continued its upward trend following the beginning of the vaccination campaign and the anticipation of the complete reopening of the economy.

In Q1, The S&P/TSX Total Return Index rose by 8.1%, the S&P 500 expanded by 6.2% while the MSCI ACWI ex. USA increased by 3.8%.

In Q1, NQICA returned 9.4% leading to a 1-year return of 48.5% versus the S&P/TSX composite which returned 44.2% on an annualized basis.

In Canada, the best Q1 sectors were Health Care up 38.1%, Energy up 28.2% and Financials up 12.7%. The worst sectors were Materials down 7.3%, Info-Tech up 1.0%, and Utilities up 2.4%.

In Q1, the best performers in NQICA were TFI International (TFII), Richelieu Hardware (RCH) and Equitable Group (EQB) up 44.2%, 25.4% and 25.3% respectively.  On the other hand, the worst performers were Kirkland Lake Gold (KL), Alimentation Couche-Tard (ATD.B) and Parkland Corp. (PKI) down 18.9%, 6.6% and 5.8% respectively.

Portfolio Manager’s March Comment for February Results

The S&P/TSX Total Return Index expanded by 4.4% in February and the S&P 500 grew by 2.8% while the MSCI ACWI ex. USA increased by 2.0%. At February end, the 12-month S&P/TSX Total Return Index rose 14.7% behind the S&P500 gain of 31.3% and higher than the MSCI ACWI ex. USA who nevertheless rose by 26.7%. The markets grew on the back of strong company results.

In February, NQICAT increased by 3% while it climbed by 12.9% on an annual basis.

The best TSX sector for the month of February was Energy up 22.4%, followed by Consumer Discretionary up 8.7%, and Financials up 6.7%. At the opposite, the worst performing sectors were Utilities down 5.7%, Material down 4.5% and Consumer Staples down 0.9%.

The best performers in February were Equitable Group up 31.1%, CCL Industries up 14.2% and National Bank up 12.5% due to impressive results.

On the other hand, the weakest contributors were Kirkland Lake Gold down 15.3% as gold prices fell 6.1% during the month. Hydro one was down 8.8% due to rising long-term interest rate and Metro was down 4.3% as investors continue to focus on cyclical stocks and expect lower revenue growth.

Portfolio Manager’s February Comment for January Results

The S&P/TSX posted a negative return for the month of January. The outcome took place in an environment where volatility peaked as GameStop (GME) rose rapidly at the end of the month. The S&P/TSX fell mostly at the end of the month, investors were potentially chilled by the speculation.

Last month, The S&P/TSX declined 0.3% while the S&P500 was down 1% and the MSCI ACWI ex USA increased by 0.2%. On an annual basis, the S&P/TSX was up 3.5%, the S&P500 soared 17.2% while the MSCI ex USA rose 14.4%.

The best TSX sector for January was Health Care up 34.8% followed by Utilities up by 2.6% and Information Technology up 1.5%. The worst sectors for the month were Consumer Staples down 4.2%, Materials down 3.5% and Consumer Discretionary down 2.6%.

The NQICAT was up 0.2% in January. On an annual basis, the NQICAT was up 0.7% while the S&P/TSX was up 3.5%.

The NQICAT’s best performers were Transforce (TFII), Richelieu Hardware (RCH) and Telus (T). TFII was up 30.1% due to a favorable reaction from the acquisition of UPS operations. RCH increased by 13.4% due to an excellent quarterly report. T was up 5.9% in the anticipation of the Telus international spin out (TIXT).

The worst performers in the NQICAT were Alimentation Couche-Tard (ATD.B) and Canadian National Railway (CNR). ATD.B dropped 10.1% based on the acquisition of Carrefour which was negatively perceived by investors. CNR fell 7.4% due to a weak outlook given by the management.

2 stocks were sold and bought in the strategy in January. We sold Great-West Lifeco (GWO) because the model recommended a shift from the financial sector to the material sector. It had one of the lowest scores of our financials. GWO has been replaced by CCL Industries (CCL.B) as the company had the highest SP score in the material sector.

We sold Fortis (FTS) because its score had decreased and other players with higher scores were available in the same sector. We replaced it with Hydro One (H) which had the highest score in the utilities sector.

 

StockPointer® Canada Portfolio Transactions – January 2021

We have rebalanced the Nasdaq Inovestor Canadian Index based on our Canadian Model Portfolio, effective today, January 22, after market close.

Here are the details:

Ins:

1. CCL Industries Inc. Class B (CCL.B) - Market trend. Increase in the Material sector as seen in the Top 100 index, therefore, increasing our position in the portfolio.

2. Hydro One (H) - Intra-sectoral transaction. In the top of its sector.

Outs:

1. Great-West Lifeco (GWO) - Market trend. Decrease in the Financial sector as seen in the Top 100 index, therefore, decreasing our position in the portfolio.

2. Fortis (FTS) - Intra-sectoral transaction. No longer in the top of its sector.

Portfolio Manager’s January Comment For Q4 2020 Results

Global equities ended the year on a strong finish. The S&P/TSX Composite Total Return Index increased by 9% in Q4 for a total annual return of 5.6%. During Q4, the S&P500 produced a 12.1% return for an annual total return of 18.4% while the MSCI ACWI ex US posted a 17.1% return leading to an annual return of 11.1%.

There was a number of drivers behind this strong finish. Firstly, most company’s results were inline or better than expected. Secondly, central banks have maintained a dovish tone. Finally, the arrival of highly potent anti-COVID vaccines.

In Canada, the best Q4 sectors were Health care up 29.9% and Consumer discretionary up 20.4%. The worst sectors were Consumer Staples down 6.0% and Materials down 4%.

For the year, Info-Tech and Utilities were the top performers up 80.3%% and 19.5% respectively while Energy and Health Care were the weakest down 30.8% and 23.6%

NQICA in Q4 returned 7.3% leading to an annual total return of 2% versus the S&P/TSX TR composite return of 9% in Q4 and 5.6% for the year.

The best performers in NQICA were First National up 8.9%, Equitable Group up 6.6% and Stella-Jones up 4.8% on the back of excellent Q3 results.
On the other hand, the worst performers in Q4 were Richelieu Hardware down 12.6% and Metro down 4.8% on profit taking.

StockPointer® US Model Portfolio Transactions – December 2020

We have rebalanced the Stockpointer® US which is effective now. Here are the details:

Ins:

  1. Amgen (AMGN) – Market Trend. Increase in the Health Care sector as seen in the Top 100 index, therefore, increasing our position in the portfolio.
  2. Humana (HUM) – Intra-sectoral transaction. In the top of its sector.
  3. CDK Global (CDK) – Intra-sectoral transaction. In the top of its sector.
  4. Weight Watchers (WW) – Intra-sectoral transaction in replacement of DNKN. In the top of its sector.


Outs:

  1. AT&T (T) – Market trend. Decrease in the telecommunication sector as seen in the Top 100 index, therefore, decreasing our position in the portfolio.
  2. American Express (AXP) – Intra-sectoral transaction. No longer in the top of its sector.
  3. TransDigm Group (TDG)Intra-sectoral transaction. No longer in the top of its sector.
  4. Dunkin’ Brands (DNKN) – The company has been bought by Inspire Brands in a cash deal.

Portfolio Manager’s December Comment for November Results

Equity markets had a strong positive monthly performance in November. In Canada the performance was particularly strong among Energy and Health Care (cannabis) stocks. In the U.S., the performance was notoriously strong among Energy and Financials stocks. Two of the key drivers behind the performance of this rally were the sucessful results achieved by Pfizer and Moderna clinical trials for their Covid vaccine.

In November, the S&P/TSX rose by 10.6%, the S&P 500 increased by 10.9% while the MSCI ACWI ex USA gained 13.5%. At November end and over a 12-month period, the S&P/TSX returned 4.3% behind the S&P 500 gain of 17.5% and the MSCI ACWI ex. USA increased by 10%.

NQICAT advanced by 7.6% in November and posted a 12-month return of -1.1%.

The best S&P/TSX sectors for the month were Health Care up 35% followed by Energy up 18.6% and Consumer Discretionary up 16.3%. The worst performing sectors were Materials down 4.8%, Consumer Staples up 2.6% and Utilities up 5.4%.

NQICAT’s best performers in November were Parkland up 22.2% and TD up 19.7%. On the opposite, the weakest contributors were Kirkland Lake Gold down 8.5% and Metro down 3.6% mainly because of sector rotation out of defensive/Covid related stocks.

 

Portfolio Manager’s November Comment for October Results

In October, the S&P/TSX declined by 3.1% the S&P500 decreased by 2.7% and the MSCI ACWI ex USA lost 2.1%. For the 12-month period ending October 30th, the S&P/TSX posted a negative return of 2.3%. Over the same period, the S&P500 surged 9.7% while the MSCI declined 2.2%.

The NQICAT recorded a net loss of 1.3% in October and a 12-month negative return of 3.1%.

The best TSX sectors for the month of October were Health Care up 7.3%, Consumer Dicretionary down 0.3%, and Utilities down 1.3%. The worst performing sectors were Information Technology down 8.7%, Consumer Staples down 7.5% and Energy down 4.7%.

The best monthly performers in the portfolio were First National up 16.1% and Equitable Group up 13.3%. At the opposite, the weakest contributors were Open Text Corporation, which was down 13.0% and Alimentation Couche-Tard down 11.5%.

2 stocks were sold and bought in the strategy in October. For this rebalancing, the model required an higher exposure to the Materials and Telecommunications sector.

The economic profile of two holdings (Magna international Inc and Sun Life Financial) have felt under the minimum threshold in the course of the quarter and needed to be sold.

The 2 purchases were Quebecor Inc. (QBR.B) and Stella-Jones (SJ). Both stocks had the highest EVA score in their respective sectors.

StockPointer® Canada Portfolio Transactions – October 2020

We have rebalanced the Nasdaq Inovestor Canadian Index based on our Stockpointer® Canada model portfolio. These trades are effective as of Friday, October 16th after market close. Here are the details of the trades:

Ins:

  1. Quebecor Inc. (QBR.B) – Market Trend. Increase in the telecommunication sector as shown by the Top 100 index, therefore, increasing our position in the portfolio. The stock is in the top of its sector.
  2. Stella-Jones (SJ) – Market trend. Increase in the material sector. The stock is in the top of its sector.

Outs:

  1. Magna International (MG) – Market Trend. Decrease in the discretionary sector as shown by the Top 100 index, therefore, decreasing our position in the portfolio. Furthermore, the EPI fell under 1.
  2. Sun Life Financial Inc. (SLF) – Market trend. Decrease in the financial sector. Furthermore, the EPI fell under 1.

Portfolio Manager’s October Comment For Q3 2020

In the third quarter, the S&P/TSX Composite Total Return Index increased by 4.7%, the S&P500 total return grew by 8.9% while the MSCI ACWI ex-USA returned 6.4%.

Q3 returns were eye-popping and are pointing to a V-shaped recovery. Growth and technology have continued their outperformance again compared to the rest of the market.

In Q3, NQICA returned 9.8% leading to a year-to-date return of -5% versus the S&P/TSX composite which increased by 4.7% in Q2 and declined 3.1% on a year-to-date basis.

In Canada, the best Q3 sectors were Industrials up 13.2%, Utilities up 9.9% and Materials up 8.8%. The worst sectors were Health Care down 14.4%, Energy down 9.4%, and Telecommunication services up 0.8%.

The NQICA’s worst performers in the third quarter were Constellation Software with a return of -3.4%, Open Text Corporation declined by 2.0% and Magna International with a return of 1.6%.

On the other hand, the best results in the third quarter were Richelieu Hardware with a return of 22.0%, Empire Company with a jump in price of 19.3% while Canadian National Railway share price rose by 18.5%.