The CI Can Am Small Cap (Trades, Portfolio) Fund, part of CI Investments Inc., disclosed that it established one new position and exited another when it released its semi-annual portfolio on Monday.
Managed by Joe Jugovic, the fund invests primarily in Canadian small-cap companies to achieve long-term capital growth. It will take positions in foreign securities as well.
The fund established a position in Macy’s Inc. (M, Financial) and closed its Varian Medical Systems Inc. (VAR, Financial) holding.
Macy’s
The fund invested in 260,660 shares of Macy’s for an average price of $26.98 per share, allocating 4.96% of its equity portfolio to the position.
The Cincinnati-based retailer has a market cap of $12.04 billion; its shares were trading around $39.30 on Tuesday with a price-earnings ratio of 7.47, a price-book ratio of 2.06 and a price-sales ratio of 0.48.
The Peter Lynch chart below shows the stock is trading well below its fair value, suggesting it is undervalued.
GuruFocus ranks Macy’s financial strength 6 out of 10. While the company’s interest coverage meets Benjamin Graham’s minimum of 5, its Altman Z-Score of 2.29 indicates it is under some financial pressure. The department store chain’s profitability and growth scored a 7 out of 10 rating. Although the operating margin is in decline, it still outperforms 70% of competitors. In addition, it has a strong Piotroski F-Score of 7, which indicates good business operations, and a business predictability ranking of one out of five stars. According to GuruFocus, companies with this rank typically see an average gain of 1.1% per year.
Of the gurus invested in Macy’s, Jim Simons (Trades, Portfolio)’ Renaissance Technologies has the largest position with 1.3% of outstanding shares. Mario Gabelli (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Manning & Napier Advisors, Richard Snow (Trades, Portfolio), Dodge & Cox and David Dreman (Trades, Portfolio) are also shareholders.
Varian Medical Systems
The fund sold its 33,185 remaining shares of Varian Medical for an average price of $119.22 per share. The trade had an impact of -2.05% on the equity portfolio. GuruFocus estimates the fund has gained 64% on the investment since the first quarter of 2013.
The radiation technology manufacturer, which is headquartered in Palo Alto, California, has a market cap of $10.64 billion; its shares were trading around $116.61 on Tuesday with a price-earnings ratio of 80.78, a price-book ratio of 7.31 and a price-sales ratio of 3.82.
According to the Peter Lynch chart below, the stock is overpriced since it is trading higher than its fair value.
Varian’s financial strength was rated 7 out of 10 by GuruFocus, which is supported by a sufficient level of interest coverage and a high Altman Z-Score of 5.33, indicating it is financially stable. The company’s profitability and growth was rated 8 out of 10. While the operating margin is declining, it still outperforms 71% of industry peers. The company also has a strong Piotroski F-Score of 8 and a one-star business predictability ranking.
With 5.15% of outstanding shares, First Eagle Investment (Trades, Portfolio) is the company’s largest guru shareholder. Renaissance, Columbia Wanger (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Pioneer, Lee Anslie, John Hussman (Trades, Portfolio) and Bridgewater also own the stock.
Other trades
In addition, the portfolio manager added to several of the fund’s positions, including Williams-Sonoma Inc. (WSM, Financial), Cominar Real Estate Investment Trust (TSX:CUF.UN, Financial) and Atco Ltd. (TSX:ACO.X, Financial), among others.
It also trimmed its holdings of Ritchie Brothers Auctioneers Inc. (TSX:RBA, Financial), Leon’s Furntiture Ltd. (TSX:LNF, Financial), Labrador Iron Ore Royalty Corp. (TSX:LIF), Canadian Western Bank (TSX:CWB), PrairieSky Royalty Ltd. (TSE:PSK) and Domtar Corp. (TSX:UFS).
The fund’s $201 million equity portfolio, which is composed of 37 stocks, is largely invested in the energy and financial services sectors. According to its fact sheet, CI Can Am returned -1.4% in 2017.
Disclosure: No positions.
