Colin Stewart, CEO and portfolio manager at JC Clark Limited

Focus: North American large caps and long/short strategies
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MARKET OUTLOOK
We continue to be encouraged by the improving economic outlook and the potential for more favourable economic policies in the U.S. Tax cuts, deregulation, and strengthening U.S. consumer confidence are a potentially potent combination that could drive corporate profits higher in the coming quarters. Nevertheless, it is clear that at least some of this optimism is now built into stock prices and with historically high equity market valuations and elevated levels of complacency, the risks of being fully invested have risen. As such, we continue to focus our efforts on individual companies and special situations while maintaining some defensive elements in the form of cash and equity hedges. 

TOP PICKS

TRICON CAPITAL (TCN.TO) – Most recent purchase in last couple of weeks at $10.80/share

• Leading real estate investor/developer with focus on U.S. market
• Recently-announced acquisition of Silver Bay realty is transformational and makes TCN the fourth largest public single family rental business in North America
• Single family rental is a highly fragmented market with significant growth opportunities and steady cash flow, and provides a way for investors to participate in recovering U.S. residential real estate

POLARIS INFRASTRUCTURE (PIF.TO) – Most recent purchase in last couple of weeks at approximately $14.50/share

• Renewable energy (geothermal) power producer in Nicaragua
• Strategically important source of power in Nicaragua where renewable energy is a highly accepted source of power
• San Jacinto facility has a long-term PPA with the government resulting in highly predictable cash flow generation
• Trades at large valuation discount to other renewable energy companies (5x versus 9x-10x for peers)
• Attractive dividend (4.5 per cent yield with low payout ratio)

CITIGROUP (C.N) – Most recent purchase a couple of weeks ago at approximately $58/share

• Leading U.S./global bank
• Poised to benefit from rising interest rates, financial industry deregulation, and tax cuts
• Valuation most attractive of large U.S. banks; 11.2x P/E, discount to tangible book value
• Potential for increased capital returns to shareholders in the future; increased dividends and share buybacks
   

PAST PICKS: APRIL 11, 2016

LIQUOR STORES (LIQ.TO)

• Then: $8.44
• Now: $10.81
• Return: 28.08%
• TR: 33.62%

UNI-SELECT (UNS.TO)

• Then: $27.97
• Now: $30.25
• Return: 8.13%
• TR: 9.28%

NEULION (NLN.TO)

• Then: $1.23
• Now: $0.67
• Return: -43.90%
• TR: -43.90%

TOTAL RETURN AVERAGE: -0.33%
 

FUND PROFILE: PRESERVATION TRUST

PERFORMANCE AS OF MARCH 2017:

• 1 year: Fund 10.10%, Index* 15.01%
• 3 years: Fund 2.65%, Index* 5.42%
• 5 years: Fund 7.38%, Index* 7.79%

* Index: S&P/TSX

WEBSITE: www.jcclark.com