Bruce Campbell, president and portfolio manager at StoneCastle Investment Management
FOCUS: Canadian equities
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MARKET OUTLOOK

The economic indicators that we follow continue to be strong in both Canada and the USA. ISM Manufacturing and Service Indices continue to show a growing economy. We continue to see improvements in the Citi Economic Surprise Index which tends to lead the ISM data by a few months. The ECRI leading economic indicators has pulled back in recent weeks, but continue to indicate the economy is growing. These economic indicators give us comfort that the probability of a recession in the next six months is low based the history of the indicators at these levels.  

The top down market technical indicators that we follow have had us in neutral positioning for a few months now. We have built up a cash position and are watching the indicators closely for changes.  Some of the faster moving indicators have started to show some signs of improvement. We are also seeing some of our leading indicators showing that reflationary sectors are starting to pick up some relative strength. It is still too early to act on those indicators, but now is a good time to build a shopping list and start to allocate partial positions during market weakness. Keep a careful eye on the key indicators to assess the continued strength of the markets for the time to get back fully invested.  
 
Each month we host a regular monthly webinar where we update investors on the indicators and whether we are on offence or defence with our portfolios. The next webinar is September 20th at 4:30pm ET. To register contact info@stonecastlefunds.ca

TOP PICKS

Bruce Campbell's Top Picks

Bruce Campbell, president and portfolio manager, StoneCastle Investment Management discusses his Top Picks: Grande West Transportation, Avigilon, and Westport Fuel Systems

GRANDE WEST TRANSPORTATION (BUS.V)    
Grande West manufactures their heavy duty “vicinity” transit buses in 27.5, 30 and 32.5 lengths. From a proof of concept a few years back the company’s management has executed well and is ramping up orders across Canada and the USA. The company has several catalysts coming in the next two quarters that should continue to improve revenue, cash flow and earnings. Management owns 40 per cent of the company and continues to add a current prices.  Last purchase was $2.98. Funds owned, but none personally or family.  

AVIGILON (AVO.TO)   
The company manufacturers HD video surveillance hardware and software. The company has experienced strong compounded revenue growth over the last five years of 26 per cent.  During the last few quarters the company has been focusing on improved cash flow and profitability. The company has reported five quarters in a row of improved financial results. With strong growth, focus on margins the company trades at a reasonable valuation. The last purchase was $17.44. Funds owned, but none personally or family. 

WESTPORT FUEL SYSTEMS (WPRT.TO)
Following the 2016 merger of Fuel Systems and Westport Innovations the management team has been focused on the sale of non-core assets, and improving the balance sheet. A recent equity raise further strengthened the balance sheet. Management is guiding investors that they will be EBITDA positive in 2018. Investor will become more interested as they move closer to this milestone. Last purchase was $3.10.  Funds owned, but none personally or family.  

 

DISCLOSURE PERSONAL FAMILY  PORTOLIO/FUND
 BUS N N Y
AVO N N Y
WPRT N N Y

PAST PICKS: September 21, 2016

Bruce Campbell's Past Picks

Bruce Campbell, president and portfolio manager, StoneCastle Investment Management discusses his Past Picks: Spin Master, goeasy, Sleep Country Canada

SPIN MASTER (TOY.TO)

  • Then: $33.62
  • Now: $44.15
  • Return: 31.32%
  • Total return: 31.32%

GOEASY (GSY.TO)

  • Then: $23.82
  • Now: $29.47
  • Return: 23.71%
  • Total return: 26.50%

SLEEP COUNTRY CANADA (ZZZ.TO)​

  • Then: $33.21
  • Now: $32.50
  • Return: -2.13%
  • Total Return: -0.20%
     
DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
TOY  N N Y
GSY N N N
ZZZ N N N


FUND PROFILE

REDWOOD EQUITY GROWTH FUND

PERFORMANCE AS OF: SEPTEMBER 11, 2017

YTD: 1.79% Fund, -1.62% Index*
1 Year: 18.06 Fund, 3.04% Index*
5 Year: 11.12% Fund, 4.24% Index*

* S&P/TSX Composite Index.   
* Returns include all distributions and are net of all fees.

TOP HOLDINGS AND WEIGHTINGS

  1. Cash                                        33.41%
  2. Westport Fuel Systems              3.11%
  3. CIBT Education Group               2.72%
  4. Patient Home Monitoring           2.64%
  5. Bank of Nova Scotia                 2.61%                          

TWITTER: @sc_funds
WEBSITE: stonecastlefunds.ca