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March 2008 Newsletter
Saturday, March 01, 2008
CANADIAN ADVANTAGE FUND
The Canadian Advantage Fund finished the month up 1.5% while the commodity fuelled S&P TSX Index rose 3.1%. We continue to see narrow leadership with the material and energy sectors contributing all of the gains to the TSX Index last month. We saw steady gains from Shoppers Drug Mart, Saputo and WestJet after they reported solid quarterly earnings. Most of our energy holdings saw strong returns with Cameco Corp and Nexen rising 13.4% and 6.8% respectively. Record earnings from construction equipment provider Finning International helped propel shares higher by 9% as infrastructure construction continues to add to their solid earnings foundation. We continue to focus on adding companies that are industry leaders with attractive valuations, which at this point have been largely ignored in midst of this commodity boom. We see the greatest potential for long term growth coming mainly from non-commodity sectors which offer better risk/reward profiles.
US ADVANTAGE FUND
The US Advantage Fund ended the month down 0.9%, while the S&P 500 Index fell 3.5%. The fund continues to outperform the index, 3.1% year to date, with multinational large cap stocks providing the best leadership. We saw strength from the consumer staple and utility sectors with shares of Procter & Gamble, PepsiCo and Constellation Energy rising 13.4%, 8.5% and 9.0% respectively. On the economic front, data continues to point to weakness in consumer spending, economic growth and rising unemployment. The Federal Reserve is expected to cut rates again this month in order to prevent a full blown recession. At this point it may be unavoidable given credit and housing difficulties; however, the aggressive cuts should help bolster a recovery in growth and earnings in the second half of the year. We continue to find an ample selection of exceptional opportunities within the US market which have great prospects regardless of the direction of the US economy. 
EURO ADVANTAGE FUND
The Euro Advantage Fund rose 1.9% last month while the S&P Euro fell 1.5%. A strong 3.4% out performance led mainly by large capitalization companies as well as some mid cap companies that were oversold from January's correction. The industrial, energy and telecommunication sectors led the strength while the financial sector led the weakness. Some of the winners last month were Abertis infraestructuras, MAN AG and Viscofan SA rising 9%, 8.5% and 13.4% respectively. The economic picture remains mixed with Italy and Spain seeing signs of weakness while France and Germany remain buoyant. The European Central Bank will most likely hold again on interest rates in March as inflation and employment have yet to ease. This month saw shares of Anglo Irish Bank sold while a position was established in information technology provider Indra Sistemas SA. 
Van Arbor Asset Management is an independent Asset Management company dedicated to creating wealth using a disciplined, proprietary investment strategy with an emphasis on preserving capital while generating superior long-term returns.
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