The CI Can Am Small Cap (Trades, Portfolio) Fund, part of CI Investments Inc., disclosed it established four new holdings when it released its portfolio earlier this week.
Managed by Joe Jugovic and Ian Cooke, the Toronto-based fund, which releases its portfolio biannually, invests primarily in Canadian small-cap companies to achieve long-term capital growth. It will take positions in foreign securities as well.
Based on these criteria, the fund invested in MSC Industrial Direct Co. Inc. (MSM, Financial), IGM Financial Inc. (TSX:IGM, Financial), Winpak Ltd. (TSX:WPK, Financial) and Westshore Terminals Investment Corp. (TSX:WTE, Financial) during the period ended March 31.
MSC Industrial Direct
The fund picked up 37,490 shares of MSC Industrial Direct, allocating 2.67% of the equity portfolio to the position. The stock traded for an average price of $82.58 per share during the quarter.
The Melville, New York-based company, which is an industrial distributor of tools, hardware, fittings, valves and raw materials, has a $3.84 billion market cap; its shares were trading around $69.20 on Thursday with a price-earnings ratio of 13.24, a price-book ratio of 2.73 and a price-sales ratio of 1.17.
The Peter Lynch chart shows the stock is trading below its fair value, suggesting it is undervalued.
MSC Industrial’s financial strength and profitability and growth were both rated 7 out of 10 by GuruFocus. While the company has issued approximately $266.9 million in new long-term debt over the last three years, it is at a manageable level as a result of comfortable interest coverage. The robust Altman Z-Score of 5.73 also indicates the company is in good fiscal health.
Although the company’s operating margin is in decline, it still outperforms more than 80% of competitors. MSC Industrial is also supported by strong returns, consistent earnings and revenue growth and a moderate Piotroski F-Score of 5, which implies business conditions are stable. It also has a business predictability rank of 3.5 out of five stars. According to GuruFocus, companies with this rank typically see their stocks gain an average of 9.3% per annum over a 10-year period.
Of the gurus invested in MSC Industrial, Jim Simons (Trades, Portfolio)’ Renaissance Technologies has the largest position with 0.11% of outstanding shares. Pioneer Investments (Trades, Portfolio), Murray Stahl (Trades, Portfolio) and John Hussman (Trades, Portfolio) are also shareholders.
IGM Financial
The Small-Cap Fund invested in 79,130 shares of IGM Financial, dedicating 1.76% of the equity portfolio to the holding. Shares traded for an average price of 33.2 Canadian dollars ($25.38) during the quarter.
The Canadian asset management company has a market cap of CA$9.09 billion; its shares closed at CA$37.77 on Wednesday with a price-earnings ratio of 12.13, a price-book ratio of 2.07 and a price-sales ratio of 4.84.
According to the Peter Lynch chart, the stock is undervalued.
GuruFocus rated IGM’s financial strength 3.4 out of 10. As a result of issuing approximately CA$1.1 billion in new long-term debt over the last three years, the company has poor interest coverage. In addition, its assets are building at a faster rate than revenue is growing, suggesting the company is becoming less efficient.
The company’s profitability and growth scored a 4 out of 10 rating, boosted by margins and returns that outperform industry peers. IGM also has a one-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.
The fund holds 0.03% of IGM’s outstanding shares.
Winpak
The Canadian fund purchased 60,490 shares of Winpak, giving it 1.68% space in the equity portfolio. During the quarter, the stock traded for an average price of CA$45.75 per share.
The packaging materials manufacturer, which is headquartered in Winnipeg, Manitoba, has a CA$2.85 billion market cap; its shares closed at CA$43.86 on Wednesday with a price-earnings ratio of 19.41, a price-book ratio of 2.25 and a price-sales ratio of 2.41.
Based on the Peter Lynch chart, the stock appears to be overvalued.
Driven by no long-term debt and adequate interest coverage, Winpak’s financial strength was rated 9.4 out of 10 by GuruFocus. The high Altman Z-Score of 12.14 suggests the company is in good fiscal standing.
The company’s profitability and growth scored a 9 out of 10 rating, boosted by operating margin expansion, strong returns that outperform a majority of competitors, steady earnings and revenue growth and a high Piotroski F-Score of 7, which indicates business conditions are healthy. Winpak also has a 4.5-star business predictability rank. According to GuruFocus, companies with this rank typically see their stocks gain an average of 10.6% per year.
With 1.35% of outstanding shares, the Mawer New Canada Fund (Trades, Portfolio) is the company’s largest guru shareholder. The Leith Wheeler Canadian Equity (Trades, Portfolio) Fund also has a position in the stock.
Westshore Terminals Investment
The fund bought 55,980 shares of Westshore Terminals Investment, expanding the equity portfolio 0.72%. During the quarter, shares traded for an average price of CA$22.87.
The Canadian company, which operates a coal storage and loading terminal in British Columbia, has a market cap of CA$1.42 billion; its shares closed at CA$21.28 on Wednesday with a price-earnings ratio of 11.32, a price-book ratio of 2.25 and a price-sales ratio of 3.93.
The Peter Lynch chart suggests the stock is undervalued.
Westshore’s financial strength was rated 5.5 out of 10 by GuruFocus. Although the company has sufficient interest coverage, the Altman Z-Score of 1.59 warns the company is at risk of going bankrupt.
The company’s profitability and growth fared much better, scoring an 8 out of 10 rating. Although the operating margin is in decline, it still outperforms a majority of industry peers. Westshore is also supported by strong returns, consistent earnings and revenue growth and a high Piotroski F-Score of 7. It also has a 2.5-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 7.3% per year.
The Can Am Small Cap Fund holds 0.08% of the company’s outstanding shares.
Additional trades
During the quarter, the fund also added to its holdings of Element Fleet Management Corp. (TSX:EFN, Financial), ARC Resources Ltd. (TSX:ARX, Financial), iA Financial Corp. (TSX:IAG) and AltaGas Ltd. (TSX:ALA).
CI’s $155 million equity portfolio, which is composed of 36 stocks, is heavily invested in the energy and financial services sectors. According to GuruFocus, the fund declined 15.6% in 2018.
Disclosure: No positions.
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