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Number Cruncher

Castlerock looks to winners for more gains Add to ...

What are we looking for?

What the pros are buying.

Checking out the top holdings in their funds is a way to get investment ideas or research a fund. Today, we look at Castlerock Canadian Growth Companies Fund. (castlerockinvestments.ca)

More about the fund

The $9.1-million Canadian equity fund has been run by Brandon Snow of CI Investments Inc. since February, 2011. It posted a one-year return of 17.1 per cent versus a loss of 9.8-per-cent for the S&P/TSX Total Return Index.

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Mr. Snow, an investor who looks for both value and growth stocks, sees the recent Canadian stock market correction as a “healthy pullback.” There is “so much uncertainty” because of slower emerging market growth, the euro-zone debt crisis and sustainability of the U.S. economic recovery, he said.

Despite market volatility, he still expects a positive return by year-end. “The big-picture question is China, and whether it can continue to grow like it has,” he said, referring to Canada’s resource-oriented economy.

What did we find?

Robust double-digit returns in some stocks over the past year, and two energy companies still in the red.

Mr. Snow is still upbeat on convenience store operator Alimentation Couche-Tard Inc. despite its gain. “I like the management team, who own a lot of the company,” and the firm has no debt, he said. The company can still grow through acquisitions, but if the opportunities are not there, it will return capital back to shareholders through dividends and share buybacks, he said.

ATS Automation Tooling Systems Inc., which makes factory automation systems, also has more upside, he added. Current management has turned around the company operationally, and gotten rid of the troubled solar unit in France, he said. “The next leg of the story is mergers and acquisitions. They have no debt and about $100-million of cash on the balance sheet.”

He is also a fan of Brick Brewing Co., saying the latest management team has turned around the operations of the beer company. The brewery could be a takeout candidate if it can double its market share to about 10 per cent in Ontario, he added.

 
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