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MARQUEST WEEKLY COMMENTARY – FEBRUARY 9, 2015

MARQUEST WEEKLY COMMENTARY – FEBRUARY 9, 2015

Liis Palmer, Cassels Investment Management Inc.

Monthly Pay Fund

Last week the TSX was up 2.8 percent. The Marquest Monthly Pay Fund A units closed at $4.58 up from $4.44 the previous week.

Contributors to the Fund last week were TD Bank (up 7.2 percent), Bank of Nova Scotia (up 6.7 percent) and Royal Bank (up 6.0 percent). Last week we noted that brokers had been downgrading the Canadian banks. This is often a contrarian indicator.

Laggards were West Fraser Timber (down 3.5 percent), Goldcorp (down 6.7 percent) and Saputo (down 2.2 percent). West Fraser’s stock price has been climbing fast in the first part of the year and took a much deserved rest. Gold bullion was down 3.9 percent on the week causing Goldcorp’s price weakness. Saputo reported its Q3. Its Australian and US expansions are proving to be solid platforms for growth and diversification.

Global Balanced Fund

Last week, the MSCI World Index was up 2.6 percent. The C$ was up 1.7 percent versus the US$. The Marquest Global Balanced Fund A units closed at $18.36 up from $18.14 the previous week.

Last week in the global equities portion of the portfolio, leading contributors were Walt Disney (up 9.6 percent), Pfizer (up 4.6 percent) and TD Bank (up 7.2 percent). Disney beat expectations for its Q1. The largest outperformance came from the Studio and Consumer Products segments. “Guardians of the Galaxy” and “Frozen” were continuing successes. “Frozen” contributed 5.1 percent of operating income through home entertainment and consumer product sales.

Laggards were AbbVie (down 7.9 percent), Tata Motors (down 7.6 percent) and Novo Nordisk (down 7.0 percent). Humira accounts for over 60% of AbbVie’s revenues and at least 75% of profits, and biosimilar competition is expected in 2017-2018. On Thursday, Amgen reported positive phase-3 from its Humira biosimilar which caused weakness in the stock as investors anticipated competition.

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