What are we looking for?
What the mutual fund pros are buying.
Checking out their top holdings is a way to get investment ideas or to research a fund. We look at Cambridge Pure Canadian Equity at http://www.ci.com.
More about the fund
The $7.7-million Canadian small-to mid-cap equity fund is run by a team at CI Investments Inc. The fund gained 34.3 per cent for the year ended Dec. 31 compared with 2.5 per cent for the BMO Nesbitt Burns Small Cap Index.
The portfolio, which has a sprinkling of larger companies, has 35 names. "We follow the cash," says Greg Dean who co-manages the fund with Brandon Snow and Stephen Groff. "If we have confidence that a business can generate a lot of cash, and that the management team can deploy that cash intelligently, then we are willing to take a 5- to 7-per-cent position in those companies."
Mr. Dean is cautious on the broader Canadian stock market this year, particularly sectors such as the banks and mining. "The way we have positioned ourselves is to find companies that don't need much to go right in the macro-economic environment to really succeed," he said.
What did we find?
A couple of triple-digit gems among an eclectic mix of names.
Shares of DHX Media Ltd. gained almost 119 per cent over a year, but there is still more upside in this children's entertainment company after last year's acquisition of Cookie Jar Entertainment, Mr. Dean said. DHX will benefit from cost savings through the merger, and its expanding higher-margin business to supply content to digital players such as Netflix Inc. His target is $2.50 to $3 a share.
Even though Sylogist Ltd. has gained 123 per cent, he remains upbeat on the software company. "The CEO [Jim Wilson] owns 20 per cent of the company so has skin in the game, and [Sylogist] generates a lot of cash to pursue acquisitions and pay dividends," he said. His 12- to 18-month target is $6 a share.
He is still a fan of convenience-store giant Alimentation Couche-Tard Inc. despite a 75-per-cent gain in its share price. "Forget the stock chart, and look at the cash flow," he said. "It's almost tripled since 2009." Its takeover last year of Norway's Statoil Fuel and Retail ASA is the first step in its European expansion after a successful foray into the United States, he said. "Couche-Tard could be a $75 stock in two years."
TOP HOLDINGS IN CAMBRIDGE PURE CANADIAN EQUITY FUND AT DEC. 31
|52-wk||52-wk||$ Price||% price chg||P/E||Yield||Market cap|
|Company||Symbol||high $||low $||(Feb. 6)||YTD||1-yr.||Ratio||%||($-mil)|
|Brookfield Infrastructure LP *||BIP-N||38.35||28.10||38.26||8.5||34.8||67.1||3.9||7,081.9|
|Brookfield Office Properties||BPO-T||18.48||15.21||16.88||-0.5||-5.4||7.1||3.3||8,509.6|
|Raging River Exploration **||RRX-X||3.44||1.40||3.17||-1.3||N/A||N/A||0||496.9|
|Canam Group Inc||CAM-T||6.70||3.86||6.54||9.4||58.0||0||2.5||284.1|
|*U.S. dollars; **Listed in March, 2012. Source: Lipper, Bloomberg|
© 2007 The Globe and Mail. All rights reserved.
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