Alex Ruus, portfolio manager at Arrow Capital Management 
Focus: North American equities
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MARKET OUTLOOK

The end of 2017 and beginning of 2018 will likely see a continuation of the slow global economic recovery we have witnessed over the last several years, driven by growth from the world’s largest economies, the USA and China, and now even strengthening growth coming from Europe. Offsetting the solid economic growth somewhat will be more gradual tightening of monetary policy by the central banks. Continuing partisan politics in the U.S. is impeding progress in implementing the president’s desired policy implementation, but despite this the U.S. economy is continuing to grow solidly. Net-net, the overall economic backdrop should provide a good atmosphere for well-run leading companies like we own in the Leaders fund to continue to build shareholder value. We look forward to another profitable year ahead of us.

TOP PICKS

MICROSOFT (MSFT.O)
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 trades at over a six per cent free cash flow yield and a two per cent dividend yield. Last purchased February 2, 2016 at $53.51/share.

ANTHEM (ANTM.N)
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 16x next year's earnings. Last purchased October 18, 2017 at $191/share.

FREEHOLD ROYALTIES (FRU.TO)
A leading owner of Canadian oil and gas royalties. One of the lowest cost producers of energy in Canada that pays a sustainable 3.9 per cent dividend and trades at a discount to its intrinsic value. Last purchased March 9,  2017 at $13.86/share.

 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MSFT Y Y Y
ANTM Y Y Y
FRU Y Y Y

PAST PICKS: FEBRUARY 21, 2017

MAGNA INTERNATIONAL (MG.TO)

  • Then: $59.89
  • Now: $67.95
  • Return: 13.45%
  • Total return: 15.56%

ELEMENT FLEET MANAGEMENT (EFN.TO)

  • Then: $14.03
  • Now: $9.66
  • Return: -31.11%
  • Total return: -29.51%

UNITED PARCEL SERVICE (UPS.N)

  • Then: $107.72
  • Now: $113.70
  • Return: 5.55%
  • Total return: 7.97%

TOTAL RETURN AVERAGE: -1.99%
 

DISCLOSURE PERSONAL FAMILY PORTFOLIO/FUND
MG Y Y Y
EFN Y Y Y
UPS Y Y Y

FUND PROFILE
Exemplar Leaders Fund - Class F
Performance as of: October 31, 2017

1 Month: 5.01% fund, 2.73% index
1 Year: 16.04% fund, 11.48% index
3 Year: 7.53% fund, 6.22% index

*Index: S&P/TSX Composite Total Return
*Returns based on reinvested dividends and net of fees

TOP HOLDINGS AND WEIGHTINGS

  1. Freehold Royalties: 6.54%
  2. Anthem: 6.37%
  3. Microsoft: 5.26%
  4. Element Fleet Management: 4.17%
  5. Magna International: 4.12%


TWITTER: @ArrowCapital
WEBSITE: www.arrow-capital.com