Philosophy
The approach we use in managing Canadian small capitalization stocks is primarily based on bottom-up analysis and stock picking. This involves detailed in-house research, including frequent interviews with management. The most important criteria used in selecting small cap stocks is to invest in companies with superior management as evidenced by a strong track record. We target companies with a competitive advantage or profitable niche, which enables them to exhibit strong earnings growth. We prefer companies which have strong balance sheets. Our approach has been consistent over many years of having a team dedicated to this area.
Our overall strategy is to reduce risk by investing in a portfolio which is well diversified across a broad spectrum of TSX industry sectors. We have very low exposure to potential turnarounds and emerging technology stocks, and have a long-term perspective and time horizon.
We believe that this lower risk strategy actually delivers superior relative performance over long periods of time, compared to investing in more speculative companies (which occasionally generates very high returns but is very risky and requires nimble trading).
