What are we looking at?
What the fund pros are buying.
This is our final look this week at the top holdings of various mutual funds that have performed strongly. Today, we look at the BluMont Exemplar Leaders Fund at blumontcapital.com.
The $23-million Canadian-focused equity fund has been run by Alex Ruus of Northern Rivers Capital Management Inc., since 2007. The fund, which can invest up to 50 per cent in foreign stocks, focuses on small to mid caps and was known as Northern Rivers Conservative Growth until last year.
Exemplar Leaders posted a 36.4-per-cent return for the year ending June 30 compared with 28.8 per cent for the S&P/TSX Completion Total Return. Over three years, it is up 2.4 per cent versus 5.4 per cent for that index.
A value investor, Mr. Ruus said he looks for North American companies that are leaders today and others that could be leaders tomorrow. He is bullish on energy stocks, which make up 30 per cent of his fund, and on the U.S. health care space, where he sees many bargains.
Within energy, he is upbeat on the oil sector and expects the price of petroleum to stay in the range of $80 (U.S.) to $120 a barrel. But he believes the current glut of natural gas means prices for that commodity will "continue to be relatively tame."
Mr. Ruus said he is not concerned by the International Energy Agency's move on June 23 to release 60 million barrels of oil a day over 30 days from strategic government stockpiles in order to push down fuel prices and help the global economy.
"It's more of a political game they are playing," he suggested. "They are taking oil out of the strategic reserves right now, but then they are going to have to inject [it] back into reserves some time later this year or next year. So it's really a zero sum game."
What did we find?
Triple-digit returns from Canyon Services Group Inc. and Horizons North Logistics Inc. - both energy services stocks - and Neptune Technology & Bioresources Inc., a biotechnology play.
Shares of Canyon Services, a provider of hydraulic fracturing services, still has more upside because it is part of a growth industry focused on the drilling of oil and gas from shale, Mr. Ruus said.
"People still haven't realized how big the market opportunity is for these guys," he suggested. "We expect 20 to 30 per cent earnings and revenue growth annually over the next several years." His one-year target is $22 (Canadian) a share.
Mr. Ruus also likes Horizon North Logistics, which provides camp, catering and executive lodging for employees of remote resource firms. "The biggest area of operations is north of Fort McMurray and servicing the oil sands build-out," he said.
"Most of the locations have been leased up by the major companies on multi-year contracts so they have a very secure source of cash flow, and are in the midst of bidding on many new contracts," he said. His one-year target on this stock is $7 a share.
Gilead Sciences Inc., the world's largest provider of HIV (human immunodeficiency virus) medications, also has more potential with the growing global population of HIV patients, Mr. Ruus said. It has a "fairly deep pipeline" of HIV and other kinds of products in development, he added. The stock could hit $60 (U.S.) a share within two years, he said.
TOP HOLDINGS OF EXEMPLAR LEADERS FUND AT JUNE 30
|Company name||Ticker||$ Price (July 20)||52-wk high $||52-wk low $||YTD % price chg||1-yr % price chg||P/E||Yield %||Market cap ($-mil)||Volume|
|Canyon Services Group||FRC-T||15.50||15.92||4.20||43.0||261.3||12.7||0.7||941||3,013,371|
|Horizon North Logistics||HNL-T||4.70||5.13||1.53||58.3||199.4||18.8||3.4||496||191,841|
|Philip Morris International*||PM-N||68.19||71.75||49.20||16.5||34.7||16.7||3.8||122,546||5,556,282|
|Neptune Tech & Bioresources||NTB-X||3.96||4.13||1.16||62.3||202.3||396.0||0.0||168||108,272|
|*In U.S. dollars. Source: Globe Investor|
© 2007 The Globe and Mail. All rights reserved.
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