Investing With Conviction

Investment Philosophy

Our investment philosophy guides our approach, which is rooted in understanding the major forces that drive the market over a complete cycle. We examine monetary and economic conditions, earnings growth, valuations, investor sentiment, and technical market indicators. Among these, monetary conditions—the amount of liquidity in the system—are the most crucial, as they influence the market’s long-term direction. By continuously monitoring these factors, we can navigate short-term volatility, which often unnerves investors and prevents them from remaining objective. At the same time, if these conditions change, we must re-evaluate our assumptions and outlook.

Understanding investor behaviour and overcoming biases to improve decision-making are also central to our investment philosophy. Emotional processes, mental mistakes, and personality traits can complicate investment choices. Therefore, investing involves more than merely analysing numbers and determining whether to buy or sell securities based solely on fundamental analysis. Neglecting or underappreciating this concept can negatively impact portfolio performance.

Investment Strategy

We are active portfolio managers who focus on achieving absolute rates of return rather than relative returns compared to a stock market index. This approach helps us deliver consistent risk-adjusted returns for our clients.

The investment goal is to create a diversified portfolio of Canadian and U.S. securities, primarily focusing on large-cap companies, that offers superior return potential over the next three to five years. Depending on our outlook, we tactically adjust the proportion of U.S. to Canadian stocks between 30 to 70 percent to take advantage of long-term market and currency trends.

We follow a growth at a reasonable price (GARP) investment approach and adhere to a disciplined buy-and-sell strategy.

Our universe of securities provides ample diversification across sectors, industries, and geographies. This enables us to capitalize on market conditions, such as cyclical versus defensive and domestic versus international trends.

We believe a more concentrated, non-benchmark portfolio will achieve appropriate risk-adjusted returns. Typically, the portfolio comprises 40 to 60 securities with an annual turnover of approximately 10 to 20 percent.

Buy and sell discipline

We scan our universe of securities daily, looking for technically strong companies — improving relative strength, an established uptrend, or starting a bottoming process. This process helps us identify new securities to add to our monitor list as stocks often begin a new uptrend before the fundamentals improve. We then develop a focus list of securities to perform a growth at a reasonable price (GARP) analysis. We have started using data analytics and machine learning to help identify opportunities and manage risks more effectively.

When to buy

Select thoroughly analyzed securities from our monitor list.
Identify securities with improving earnings growth rates and a catalyst expected to drive long-term growth.
Ensure the security has bottomed, a new upturn has started, or the long-term trend is still constructive.
Initiate the buy program in thirds to smooth out volatility.

When to sell

If a security exhibits weak relative strength over an extended period or breaks down technically, we will sell the entire position.
If a security is grossly overbought, we would take partial profits and add back when oversold.
Excessive valuations or trading at an upper historical range would prompt us to sell.

We adhere to a strong buy and sell discipline.

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