I am an accredited or eligible investor as defined in National Instrument 45-106.




Liis Palmer, Cassels Investment Management Inc.

Last week the Marquest Monthly Pay Fund (A units) closed at $5.34, flat from $5.34 the previous week. The TSX lost 0.1 percent in the same period. Improving economic trends in North America contrast with higher bond yields indicating bearishness on the part of investors. Transportation indicators such as rail carloads are running ahead of seasonal rates; initial jobless claims came in below expectations (297,000 versus 320,000 expected) and the four week trend is improving. Better than expected earnings growth of 4.8 percent in Q1 (against expectations of 1 percent) for 465 of the S&P 500 companies also indicates an improving underlying economy.

Leading contributors in the portfolio were Black Diamond Group (up 5.8 percent), AG Growth (up 4.6 percent) and Algonquin Power (up 2.9 percent). Last week Black Diamond was one of the laggards due to a slightly weak Q1. We added to our position at that time. Algonquin Power was in Toronto marketing with brokers last week.

Laggards in the portfolio were Sherritt International (down 5.5 percent), IGM Financial (down 4.6 percent) and TD Bank (down 1.1 percent). DBRS reduced Sherritt’s debt rating due to the sale of the coal business. Though the sale proceeds will be used to reduce debt, the coal sale will remove a stable Canadian source of earnings and cash flow from the business profile. However, its nickel and cobalt business as well as the oil and gas business are more significant reasons for investors to own Sherritt. For IGM, one of Canada’s biggest mutual fund companies, assets under management reached a record high during the quarter, rising 9.1 percent to C$137.3 billion at the end of March 31, compared with C$125.8 billion a year earlier. Expenses were higher than expected in the quarter, resulting in an earnings miss.

The information above is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed may change as subsequent conditions vary. The information and opinions contained in this paper are derived from proprietary and non-proprietary sources deemed by the author to be reliable. The information is not necessarily all-inclusive and is not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any way for errors and omissions is accepted by Marquest, its officers, employees or agents. This paper may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. We caution you not to place undue reliance on these statements as a number of important factors could cause actual events or results to differ materially from those expressed or implied in any forward-looking statement contained herein. All forward-looking statements are subject to change and are provided in good faith but without legal responsibility. © 2014 Marquest Asset Management Inc. All rights reserved.

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