Alex Ruus, portfolio manager at Arrow Capital Management

Focus: North American equities
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MARKET OUTLOOK
Following a solid 2016 for both the market and the Leaders fund, we see another profitable year in 2017. The emergence of a business-oriented U.S. president, Senate and House in the world’s largest economy, the U.S. provides the backdrop for another year of global growth this coming year. While we are likely to experience some ups and downs during the year as the President Trump’s actual policy implementation plays out, the overall control of government by pro-growth individuals is likely to help the U.S. economy to another year of positive growth. Offsetting this will be a slow gradual rise in U.S. interest rates over the course of the year. This atmosphere should provide the positive backdrop for the well-run leading companies that we own in the Leaders fund to continue to build shareholder value. We look forward to another year of building investor wealth.

TOP PICKS

ANTHEM INC. (ANTM.N)
Anthem is the leading U.S. health-care insurance provider, strategically positioned to benefit from the need for cost control in the health-care system. The company produces prodigious amounts of free cash flow, which translates into growing dividends and share repurchases to return capital to shareholders. The stock is undervalued at 13 times next year’s earnings. Last purchased on November 4, 2016 at $119/share.

MICROSOFT CORPORATION (MSFT.O)
Microsoft is the world’s largest software company and an emerging leader in commercial cloud services. The market is undervaluing this leader which has significant growth potential driven by the commercial cloud and its move to subscription and recurring revenues. The stock is undervalued, trading at 18 times earnings and yielding a 2.3 per cent dividend. Last purchased on February 2, 2016 at $53.51/share.

FREEHOLD ROYALTIES (FRU.TO)
Freehold Royalties is a leading owner of Canadian oil and gas royalties. It is one of the lowest-cost producers of energy in Canada that pays a sustainable 4.3 per cent dividend and trades at a discount to its intrinsic value. Last purchased on March 9th, 2017 at $13.80/share.
 

PAST PICKS: APRIL 21, 2016

ALARIS ROYALTY (AD.TO)

• Then: $30.62
• Now: $20.07
• Return: -34.45%
• TR: -29.47%

GILEAD SCIENCES (GILD.O)

• Then: $101.74
• Now: $65.95
• Return: -35.17%
• TR: -33.50%

MAGNA INTERNATIONAL (MG.TO)

• Then: $54.91
• Now: $62.54
• Return: 13.89%
• TR: 16.76%

TOTAL RETURN AVERAGE: -15.40%