MARQUEST WEEKLY COMMENTARY – FEBRUARY 22, 2016.

Liis Palmer, Cassels Investment Management Inc.

Global Balanced Fund

Last week the MSCI World Index was up 3.5 percent. The TSX was up 3.5 percent. The C$ was up 0.6 percent against the US$. WTI was up 0.7 percent to $29.64/barrel. The Marquest Global Balanced Fund A units closed at $16.39 compared with $15.96 the previous week.

Significant contributors to performance were Freeport McMoRan (up 23.6 percent), Crescent Point Energy (up 8.4 percent) and Keyera (up 8.8 percent). Freeport sold a 13% stake in its Morenci mine to Sumitomo for $1 billion. The proceeds of the sale will be used to pay down debt. The debt level at Freeport had been a major concern prior to this sale. This is likely the first installment of the stated goal of selling $5-10 billion of assets. Keyera reported a solid quarter. It is a premier natural gas midstream operator and NGL marketing company. Despite the current commodity price environment, its gas plant throughputs are steady.

Laggards were Nestle (down 3.8 percent), HDFC Bank (down 2.2 percent) and Arc Resources (down 1.5 percent). Nestle reported mediocre numbers and a mediocre outlook. Management emphasized that the pricing slowdown that they have been experiencing is likely to persist into 2016. Arc released its quarterly earnings and cut its monthly dividend from $0.10 to $0.05 as expected. Arc’s low cost resource in the Montney and clean balance sheet position it well if the oil price tests further downside and if a price recovery materializes in the second half of the year.