Performance Recap: September 2015

The last two months were particularly rough on global equity markets, which is not an ideal time to launch a portfolio, other than providing an opportunity to add to positions at lower levels. Overall, our portfolio underperformed in September by a considerable margin, but since its August launch, we have outperformed our benchmark by 9.1 percent in Canadian dollars and 10.1 percent in U.S. dollars.

Canadian Dollar

Aug-2015

Sep-2015

Cumulative

Portfolio Performance1

10.9%

(7.9%)

2.1%

Benchmark Performance2

(4.2%)

(3.0%)

(7.0%)

 

U.S. Dollar

Aug-2015 Sep-2015

Cumulative

Portfolio Performance1

10.7%

(9.1%)

0.6%

Benchmark Performance2

(5.5%)

(4.3%)

(9.5%)

While in absolute return terms, we are unhappy with the performance of the portfolio, we can’t be disappointed overall when compared to the benchmark index exposure. Our September returns were greatly impacted by poor performance among three new additions to the portfolio, High Liner Foods, NextEra Energy Partners and Abengoa Yield PLC. While we believe that these stocks represented good value at the time of purchase based on fundamentals, they have since slipped further. We still remain bullish on all three of these holdings, as we believe they all offer substantial value to investors at current levels.

 

Canadian Dollar Holding Returns

Ticker

1mn

From Coverage Initiation

Dream Global REIT DRG.UN (TSX)

(6.2%)

(11.3%)

Capstone Infrastructure CSE (TSX)

(2.3%)

1.4%

Surge Energy SGY (TSX)

(2.3%)

41.0%

Westshore Terminals WTE (TSX)

(2.8%)

(1.9%)

High Liner Foods HLF (TSX)

(13.0%)

(13.0%)

NextEra Energy Partners NEP (NYSE)

(15.5%)

(15.5%)

Abengoa Yield PLC ABY (NYSE)

(12.8%)

(12.8%)

Average  

(7.9%)

(1.71%)

 

U.S Dollar Holding Returns

Ticker

1mn

From Coverage Initiation

Dream Global REIT

DRG.UN (TSX)

(7.4%)

(12.6%)

Capstone Infrastructure CSE (TSX)

(3.6%)

(1.0%)

Surge Energy SGY (TSX)

(3.6%)

40.0%

Westshore Terminals WTE (TSX)

(4.1%)

(3.3%)

High Liner Foods HLF (TSX)

(14.2%)

(14.2%)

NextEra Energy Partners NEP (NYSE)

(16.6%)

(16.6%)

Abengoa Yield PLC ABY (NYSE)

(14.4%)

(14.4%)

Average  

(9.1%)

(3.2%)

1 – Our portfolio performance is calculated based on the return that would be experience by an investor in either Canadian or U.S. dollars if they held an equally weighted basket of our buy recommendations, rebalancing monthly and upon any new initiated coverage. Individual security returns are based on their primary exchange listing in their home currency and returns (including dividends) are translated at the month end Bank of Canada noon-day USDCAD rate into the currency of the investor for the purpose of calculating the returns.

2 – Our benchmark returns are a weighted average of the monthly total returns on the S&P 500 and S&P TSX Composite indexes. These two benchmarks are adjusted for the impact in the change in the value of currency, and weighted based on the month end composition of the portfolio between Canadian and U.S. stocks. For example, if the portfolio contains 60% Canadian listed and 40% U.S. listed stocks, the benchmark is weighted 60% to the TSX Composite and 40% to the S&P 500.

Initiated Coverage: Abengoa Yield PLC (ABY)

On September 21, 2015, we published a report with Seeking Alpha PRO entitled “Abengoa Yield PLC: Diversified YieldCo with Attractive Dividend and Upside Potential.” This marks the initiation of our coverage of Abengoa Yield PLC, an British domiciled, Spanish managed owner of several renewable power projects, a gas facility and energy and water infrastructure assets with long-term, stable cash flows. This firm is traded under the symbol ABY on the New York Stock Exchange.

The Seeking Alpha article can now be found at: http://seekingalpha.com/article/3523416-abengoa-yield-plc-diversified-global-yieldco-with-attractive-dividend-and-upside-potential

Abengoa Yield PLC’s stock price closed on September 20, 2015 at $19.34/share.

Initiated Coverage: NextEra Energy Partners (NEP)

On September 11, 2015, we published a report with Seeking Alpha PRO, awarded as a “TOP IDEA,” entitled “NextEra Energy Partners: Strong Yieldco with Considerable Upside.” This marks the initiation of our coverage of NextEra Energy Partners LP, an American based owner of several renewable power projects with long-term, stable cash flows. This firm is traded under the symbol NEP on the New York Stock Exchange.

The Seeking Alpha article can now be found at: http://seekingalpha.com/article/3504346-nextera-energy-partners-strong-yieldco-with-considerable-upside

NextEra Energy Partners LP’s stock price closed on September 10, 2015 at $26.20/share.

Initiated Coverage: High Liner Foods (HLF.TO)

On September 9, 2015, we published a report with Seeking Alpha entitled “Fishing for Value with High Liner Foods.” This marks the initiation of our coverage of High Liner Foods, a Canadian seafood processor and distributor with several leading brands. This firm is traded under the symbol HLF on the Toronto Stock Exchange.

The Seeking Alpha article can be found at: http://seekingalpha.com/article/3498076-fishing-for-value-with-high-liner-foods

High Liner Foods stock price closed the day prior to publication, September 8, 2015, at C$17.91/share

Initiated Coverage: Westshore Terminals Inc. (WTE)

On August 28, 2015, we published a report with Seeking Alpha PRO, awarded a “TOP IDEA” entitled “Westshore Terminals: Shipping out Cash Flow to Investors.” This marks the initiation of our coverage of Westshore Terminals., a Canadian coal export terminal located near Vancouver, British Columbia. This firm is traded under the symbol WTE on the Toronto Stock Exchange.

The Seeking Alpha article can now be found at: http://seekingalpha.com/article/3471856-westshore-terminals-shipping-out-cash-flow-to-investors

Westshore Terminal’s stock price closed the day prior to publication, August 27, 2015, at C$26.23/share

Initiated Coverage: Surge Energy Inc. (SGY)

On August 26, 2015, we published a report with Seeking Alpha PRO entitled “Small-Cap Oil Producer is Positioned to Surge with Oil Prices.” This marks the initiation of our coverage of Surge Energy Inc., a Canadian oil exploration firm focused on properties in Alberta and Saskatchewan. This firm is traded under the symbol SGY on the Toronto Stock Exchange.

The Seeking Alpha article can now be found at: http://seekingalpha.com/article/3467936-surge-energy-this-small-cap-oil-producer-is-positioned-to-surge-with-crude-prices

Surge Energy Inc.’s stock price closed on August 25, 2015 at C$2.11/share.

Disclosure: We own this stock.

Initiated Coverage: Capstone Infrastructure Corporation (CSE.TO)

On August 17, 2015, we published a report with Seeking Alpha PRO entitled “Undervalued Power and Infrastructure Company Offers Signficant Upside.” This marks the initiation of our coverage of Capstone Infrastructure Corporation, a Canadian independant power producer and owner of critical infrastructure businesses in the United Kingdom and Sweden. This firm is traded under the symbol CSE on the Toronto Stock Exchange.

The Seeking Alpha article can now be found at: http://seekingalpha.com/article/3444756-capstone-infrastructure-undervalued-power-and-infrastructure-company-offers-significant-upside

Capstone Infrastructure Corporation’s stock price closed on August 14, 2015 at C$3.12/share.

Disclosure: We own this stock.

Initiated Coverage: DREAM Global REIT (DRG.UN/TO)

On August 6, 2015, we published a report with Seeking Alpha PRO entitled “This REIT Could be a Dream for Investors.” This marks the initiation of our coverage of Dream Global REIT, a Canadian managed, German focused office real estate investment trust. This firm is traded under the symbol DRG.UN on the Toronto Stock Exchange.

The Seeking Alpha article can now be found at: http://seekingalpha.com/article/3404605-dream-global-reit-this-reit-could-be-a-dream-for-investors

Dream Global REIT’s stock price closed on August 5, 2015 at C$9.66/share.

Disclosure: We own this stock.