February 2010 Newsletter
February 1st, 2010
CANADIAN ADVANTAGE FUND
January was a mainly flat month for the Canadian Fund, nudging down 0.23%, while the TSX Index dropped 5.90%, resulting in a net outperformance of 5.67% for the Fund. The main drag on the market last month were the energy and materials sectors, as a strengthening US dollar and monetary tightening in China dampened the appetite for commodities. The Canadian Fund doesn’t currently have much exposure in these areas as we have transitioned to better earning and valuation opportunities in less cyclical areas of the economy. Overall, the current portfolio does not resemble the TSX index very much as our attention has shifted to under owned Canadian companies that offer better rewards relative to the big index movers. Some of the big winners last month were Cogeco Cable (+13.60%), which beat earnings expectations by nearly 50% last month, as well as Loblaw’s (+3.57%) which continues to offer excellent valuations relative to the rest of the market.
WORLD ADVANTAGE FUND
The World Fund started the year off in the green, rising 1.73%, while the MSCI World Index fell 2.5%. The positive month was mostly attributed to our positioning in US dollar priced assets which saw healthy currency gains as well as strong earnings. The two big winners last month were grocer Safeway (+5.45%) and Japanese utility Tokyo Electric Power (+4.28%), both of which benefited from very attractive valuations and improving fundamentals in their sectors. Going forward, we continue to see global opportunities from a company and currency standpoint and believe this offers an opportunity to grow the Fund independently of the overall direction of the general market. This should help the Fund continue to perform well on a relative and absolute basis in the current market environment.
Van Arbor Asset Management is dedicated to creating wealth using a disciplined, value based investment strategy with an emphasis on preserving capital while generating superior long-term returns.
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