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




Liis Palmer, Cassels Investment Management Inc.

Global Balanced Fund

Last week the MSCI World Index was flat (0.0 percent). The C$ was up 0.7 percent against the US$.  The Marquest Global Balanced Fund A units closed at $17.59 ($17.68 including the monthly distribution) compared with $17.75 the previous week.

Significant contributors to performance were Whirlpool (up 9.7 percent), Aetna (up 8.3 percent) and AMC Networks (up 4.9 percent).   Whirlpool and Aetna were last week’s laggards.

Laggards were Westshore Terminals (down 20.3 percent), CVS Health (down 5.0 percent) and DR Horton (down 5.5 percent).

Westshore operates a coal storage and loading terminal at Roberts Bank, BC. The terminal operates on a throughput basis and is paid a handling charge by its customers when the coal is loaded on a ship. Westshore does not take title to the coal it handles under its customers’ contracts.  The company announced lower throughput guidance and a dividend cut ($0.33 to $0.25 per quarter).  The Jim Pattison Group is the majority shareholder and has effective control over the company’s strategic direction.  The dividend cut is a very conservative move.  The company has $270 million in capital projects and no debt ($59 million cash).  The Board decided to maintain minimal debt in this environment.

CVS Health pared their outlook for 2016 because of costs associated with keeping competitive in the drug retailing business.  This is a regular dynamic of the business.  The stores have to look fresh.  CVS’s combination of the Drug Retailing business and Pharmacy Benefit Management (“PBM”) business offers an advantage in drug distribution.  CVS has decided on a long term strategy of targeting the health plan business which has lower margins at the onset of contracts but opportunities to sell additional services as clients mature.

DR Horton and the homebuilders’ share prices were brought down in part due to the release of weaker than expected housing data in the US.

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