MARQUEST WEEKLY COMMENTARY – MARCH 30, 2015
Liis Palmer, Cassels Investment Management Inc.
Monthly Pay Fund
Last week the TSX was down 2.4 percent. The Marquest Monthly Pay Fund A units closed at $4.44 compared to $4.48 the previous week. WTI oil was up 3.8 percent to $48.32/barrel due to news of the conflict between Saudi Arabia and Yemen/Iran and the slightly weaker US$.
Significant contributors in the Fund last week were West Fraser (up 8.3 percent), Canadian Natural Resources (up 3.9 percent) and Westshore Terminals (up 2.9 percent). West Fraser is a western based wood products company which is leveraged to improvements in the US housing market. Building permits in the US were up 3 percent to 1.09 million annualized units last month. Analysts anticipate increases in Chinese shipments as well as improved North American housing activity. CNQ, an energy company, was up with the stronger oil price; its share price is up 8.6 percent year to date. Westshore recovered from the previous week’s stock price weakness.
Laggards were Canadian National Railways (down 3.0 percent), TD Bank (down 1.8 percent) and Bank of Nova Scotia (down 1.8 percent).
Global Balanced Fund
Last week, the MSCI World Index was flat (0.0%). The Marquest Global Balanced Fund A units closed at $18.64 compared with $18.84 the previous week. Instability in the Middle East and some disappointing US economic data contributed to weakness in the markets.
Last week in the global equities portion of the portfolio, leading contributors were Novo Nordisk (up 7.5 percent), Keyera (up 2.5 percent) and Westshore Terminals (up 2.9 percent). Novo Nordisk is a pharmaceuticals company focussed on diabetes and obesity. Last week they resubmitted new drug applications in the US for Tresiba and its related drug, Ryzodeg. Tresiba, an insulin drug, is used all over the world and has been approved in Europe for many years but the FDA had required further trials for potential cardiovascular risk before approval. The US launch is expected to be very important because the function carried out by Tresiba is innovative and no competitor drug has managed to achieve this effect. It basically works on the glucose controlling hormone of the body and replicates it within 42 hours. Westshore was recovering from the previous week’s price weakness.
Laggards were Tata Motors (down 6.9 percent), Home Depot (down 7.1 percent) and Wells Fargo (down 4.0 percent). Tata is doing a rights offering to fund expansion in its Indian operations. Home Depot, the world’s largest home improvement retailer, reported a strong quarter last month. Investors may have been doing some end of quarter profit taking last week. The CEO expects that, despite headwinds in the broader economy, customers will be in the stores with extra cash from lower gasoline prices.