Jason Donville.
Jason Donville is president and CEO of Donville Kent Asset Management. His focus is growth stocks.
Top Picks:
MTY Food Group (MTY.TO)
Montreal based MTY Food Group consistently earns a return on equity in excess of 20 per cent and delivers performance metrics that are better than most quick service companies in North America. MTY trades at a huge discount to both Cara and Restaurant Brands International yet is growing faster than both companies. MTY trades on 14x 2016 cash earnings. Own it in the fund and personally.
Valeant Pharmaceutical (VRX.TO)
Bill Ackman has described Valeant Pharma as perhaps the next Berkshire Hathaway, and we agree. The company has an excellent track record both as an acquirer and operator of pharma companies and we expect that track record will continue for many years to come. Valeant trades on 14x 2016 cash earnings. Own it in the fund and personally.
CRH Medical (CRH.TO)
I rate CRH Medical to be the most attractive small cap company in Canada and that's why we own 5 per cent of the company. CRH Medical runs GI Clinics throughout the United States and enjoys a cash ROE in excess of 30 per cent, yet trades at just 9x 2016 cash earnings.
Past Picks: October 24, 2014
Cipher Pharmaceuticals (CPH.TO)
Sold the stock earlier this year. (Sell price: $12.50). Acquisition in the U.S. will be punitive to earnings in the short to medium term.
Then: $11.60; Now: $7.69; -33.71%; Total return: -33.71%
CGI Group (GIBa.TO)
CGI is our third largest position, representing 8.1 per cent of our portfolio.
Then: $37.46; Now: $46.26; +23.49%; Total return: +23.49%
Constellation Software (CSU.TO)
Constellation is our second largest position, representing 12 per cent of our fund.
Then: $295.59; Now: $541.54; +83.21%; Total return: +84.82%
Total Return Average: +24.87%
Market outlook:
The volatility of the equity markets over the past three to four weeks illustrates several key issues that investors need to be reminded of and which I will reiterate below:
1. Investors should invest in companies that they are comfortable owning through a market correction.
2. If you sell out at the bottom of a correction, you lose both on the downside and the rebound. If you sell something, park the money in a higher quality stock but stay for the most part invested. Just as you didn't see the correction coming, nor will you see the next rally coming. Don't waste your time trying to time the market. Focus on finding "compounders".
3. "Compounders" are companies that can earn high returns on equity, no matter what the economic environment. Cyclical stocks should represent a small part of your portfolio.
4. The global demographic picture suggests that we have entered a sustained periodic of slow economic growth. But there always have been, and will continue to be pockets of high growth, and investors should focus on these specific areas of growth. For Canadian investors, these pockets of growth tend to be overwhelmingly in a few sectors, which include technology, health and consumer products.