a subsidiary of Purpose Investment Inc.

Remember Canada!? Redwood Equity Growth featured in Globe

The Canadian equity market has been largely forgotten from a fund flows perspective in the past two years as it has underperformed the S&P 500, an index that has been on a tear.

In today’s Globe and Mail, the Redwood Equity Growth Fund, managed by Stonecastle Investments was highlighted as a recent strong performer in the Canadian equity space.

Fifteen equity funds riding market momentum

Bruce Campbell, Stonecastle’s PM, utilizes an earnings growth model, similar to the one popularized by Synergy Asset Management in the 1990s and 2000s, seeking out companies with above average earnings growth, and positive change in the company’s fundamentals.

His approach differs as he uses market indicators to decide when to be on offense (ie fully invested) and when to be on defense (holding cash to dampen volatility.)

Here’s a link to Bruce explaining his process… CLICK HERE

Bruce’s portfolio differs from many Canadian equity funds, as his process leads him to invest in lesser known, higher growth mid-cap companies.  A quick review of his 35 portfolio names, reveal that none of his current holdings are in the S&P/TSX 60.

We believe that this provides an opportunity for investors to gain exposure to Canadian mid-cap companies, that are growing their earnings faster than the market, in a definable, repeatable and predictable process.

Here are the top 10 holdings in the fund:

Cash
RMP Energy Inc.
Methanex Corporation
AutoCanada Inc.
Raging River Exploration Inc.
Xtreme Coil Drilling Corporation
Air Canada Class B
Redknee Solutions Inc.
Linamar Corporation
Element Financial Corp.

Stonecastle produces bi-weekly reports outlining their current positioning and market indicators.  Feel free to contact us to receive those reports.

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