CC&L Market Neutral

Investment Objective

• The investment objective is to provide a return between 6% and 8% with a target volatility of 10% per annum over a market cycle and to provide returns that have a low correlation with the equity markets.

Highlights

• Core approach. Diversified and carefully risk managed.
• Fundamental, bottom-up security selection.
• Proprietary database covering 400+ stocks.
• Deep, stable team with long track record.

Investment Philosophy

• Macroeconomic themes influence markets over longer term.
• Opportunities exist when fundamentals vary from consensus expectations.
• Independent bottom-up research is a critical competitive advantage in evaluating smaller cap companies.
• Price attractiveness and valuation are key.
• Risk management is integral component of process.

Investment Process

• Fundamental ranking system: Universe ranked on key factors including financial and management strength, profitability, growth and price attractiveness.
• Independent bottom-up research: Understanding companies’ business models and long-term operating strategies.
• Management interviews: Confidence gauged through management interviews, on-site visits and discussions with customers and competitors.
• Strategic outlook: Each business evaluated in context of its industry and competitive environment.
• Target prices: Price targets established and reviewed weekly to ensure consistent application of buy and sell disciplines.
• Top-down overlay: Historical and current valuations and macroeconomic factors shape sector overweight or underweight decisions.

Portfolio Construction & Risk Management

• Long and short positions in small- to mid-size Canadian companies based on independent fundamental analysis.
• Proprietary database used to rank Canadian stocks on key factors.
• Risk management is part of the investment process, not an afterthought.
• Rigorous analysis of exposure and impact risks ensures process consistency, adherence to goals and portfolio risk parameters.
• Strict position limits on individual security weights.
• Disciplined buy/sell decision-making process focuses on setting price targets and company milestones.
• The strategy will use leverage and borrow securities to facilitate short selling.