Institutional Investors

Equity Strategies

Our equity strategies use bottom-up, fundamental research to invest in companies trading at discounts to their business value, as defined by the present value of their sustainable free cash flow. Our equity investment team believes that stocks purchased at a significant discount to business value have an inherent margin of safety. This approach, combined with a focus on high-quality, growing companies with strong balance sheets, helps avoid the possibility of capital loss.

The objective of the research process is to identify high quality, liquid companies whose management teams have successfully built shareholder value over extended periods of time. A common characteristic of these companies is their ability to generate sustainable free-cash flow, which provides the financial flexibility to support organic growth and profitability, make strategic acquisitions, buy back shares and pay dividends.

All of our equity strategies incorporate a process-driven approach to risk management. All research activity must include the following strict research elements:
  • Investment thesis
  • Description of the company and its industry
  • Competitive position
  • Company’s strengths and weaknesses
  • Profitability and cash-flow analysis
  • Balance sheet assessment
  • Business valuations
  • Replacement value
  • Trading liquidity
  • Potential investment risk
  • ESG considerations
We have very high hurdle rates for any new position for a Beutel Goodman strategy and a simple, elegant, rules-based repeatable process designed to take emotions out of critical investment decisions. For example, in our large-cap strategies, the required return prospect over three to four years is 50%. In addition, when a stock exceeds our upside target, we automatically reduce the position in the portfolio by one-third. (For our Canadian small cap strategy, the target return is 100% and the automatic sale is one-quarter.) The primary analyst then conducts a review to determine whether there is sufficient remaining upside, the appropriate portfolio weight is determined based on risk-reward parameters relative to other opportunities. Conversely, stocks that breach our downside target are automatically reviewed by a different member of the team to either confirm or revise the primary analyst’s original thesis and determine a course of action.

Canada and Canada-Plus Equity

Inception date: October 1, 1988

Style: Large Cap Value

Benchmark: S&P/TSX Composite Index

Lead Portfolio Manager(s): Pat Palozzi and James Black

Objective: The Fundamental Canadian Equity strategy seeks to maximize returns over the long term through the application of a disciplined value-investing approach that emphasizes capital preservation and a focus on absolute risk and return.

Composition: The strategy is a concentrated portfolio of 20 to 45 high-conviction mid- to large-cap stocks. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification.

Vehicles:

Segregated accounts

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

Inception date: January 1, 1985

Style: Large Cap Value

Benchmark: S&P/TSX Composite Index

Lead Portfolio Manager(s): Pat Palozzi and James Black

Objective: The Canadian Equity strategy seeks to maximize returns over the long term through the application of a disciplined value investing approach emphasizing capital preservation and a focus on absolute risk and return.

Composition: The strategy combines a concentrated portfolio of 20 to 45 high-conviction mid- to large-cap stocks with a complement of small-cap stocks that follow the model of our Canadian Small-Cap strategy. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 

Inception date: February 1, 2003

Style: Large Cap Value

Benchmark: S&P/TSX Composite Index

Lead Portfolio Manager(s): Stephen Arpin and James Black

Objective: The Canadian Dividend strategy seeks to achieve a balance between high dividend income and capital growth by investing mainly in a diversified portfolio of blue-chip Canadian common stocks and, to a lesser extent, in high-yielding preferred shares and interest-bearing securities..

Composition: The strategy is a concentrated portfolio of 20 to 45 high-conviction mid- to large-cap dividend-paying stocks.

Portfolio construction starts with a screening of our Canadian Equity value strategy in order to remove positions that do not pay a significant dividend. Positions in select U.S. and non-North American equities may also be held, up to a total of 30% of equity book value. Candidacy for inclusion in the portfolio is based on the stocks’ discounts to business value, low valuations, sustainable payout ratios, excellent track records, and prospects for dividend growth.

The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 

Inception date: February 1, 1995

Style: Small Cap Value

Benchmark: S&P/TSX Small Cap Index

Lead Portfolio Manager(s): Stephen Arpin and William Otton

Objective: The Canadian Small Cap strategy seeks to maximize portfolio returns over the long term through the application of a disciplined value investing approach emphasizing capital preservation and a focus on absolute risk and return.

Composition: The strategy defines small cap as the bottom 15% of the S&P TSX Composite Index at initial purchase. Mindful of the risk inherent in small-cap investing, the team typically diversifies the portfolio across 30 to 60 high-conviction stocks. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 

Inception date: May 1, 1999

Style: Large Cap Value

Benchmark: 60% S&P/TSX Composite Index and 40% S&P 500 Index

Lead Portfolio Manager(s): Pat Palozzi and Glenn Fortin

Objective: The North American Focused Equity strategy seeks to maximize long term capital growth through the application of a disciplined value investing approach emphasizing capital preservation and a focus on absolute risk and return.

Composition: The strategy is a concentrated portfolio of up to 24 high-conviction mid- to large-cap stocks listed in Canada (45%-100% allocation range) and the U.S. (0%-49% allocation range). The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 

Inception date: September 1, 2001

Style: Large Cap Value

Benchmark: 50% S&P/TSX Composite Index, 25% MSCI EAFE Index and 25% S&P 500 Index

Lead Portfolio Manager(s): KC Parker and James Black

Objective: The Total World Equity strategy seeks to maximize portfolio returns over the long term through the application of a disciplined value investing approach emphasizing capital preservation and a focus on absolute risk and return.

Composition: The strategy is a portfolio of 45 to 95 high-conviction mid- to large-cap stocks listed in Canada and abroad. The strategy will hold a minimum of 20 and a maximum of 45 Canadian equity issues and a minimum of 25 and a maximum of 50 global equity issues. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification. Geographic limits are typically in place to ensure appropriate diversification by country. Not more than 15% of the market value will be invested in securities in emerging markets.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 


U.S. Equity

Inception date: January 1, 1985

Style: Large Cap Value

Benchmark: Russell 1000 Value Index or S&P 500 Index

Lead Portfolio Manager(s): Rui Cardoso and Glenn Fortin

Objective: The U.S. Equity strategy seeks to maximize returns over the long term through the application of a disciplined value investing approach emphasizing capital preservation and a focus on absolute risk and return.

Composition: The strategy is a concentrated portfolio of 25 to 50 high-conviction mid- to large-cap stocks listed in the U.S. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

’40 Act Fund [1]

Canadian institutions

 

U.S. institutions

 

Global institutions

 

 


International and Global Equity 

Inception date: October 10, 1993

Style: Large Cap Value

Benchmark: MSCI EAFE Index

Lead Portfolio Manager(s): KC Parker and Stanley Wu

Objective: The International Equity strategy seeks to maximize portfolio returns over the long term through the application of a disciplined value investing approach emphasizing capital preservation and a focus on absolute risk and return.

Composition: The strategy is a concentrated portfolio of 25 to 50 high-conviction, mid- to large-cap stocks listed primarily in international developed markets. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification. The portfolio is invested prudently with respect to geographic concentrations, with a typical maximum of 15% in emerging markets.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 

Inception date: July 1, 1995

Style: Large Cap Value

Benchmark: MSCI World Index

Lead Portfolio Manager(s): Glenn Fortin and Colin Ramkissoon

Objective: The Global Equity strategy seeks to maximize portfolio returns over the long term through the application of a disciplined value investing approach emphasizing capital preservation and a focus on absolute risk and return.

Composition: The strategy is a concentrated portfolio of 40 to 70 high-conviction, mid- to large-cap stocks listed primarily in the U.S. and international developed markets. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification. The portfolio is invested prudently with respect to geographic concentrations, with a typical maximum of 10% in emerging markets.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 

Inception date: December 1, 2007

Style: Large Cap Value

Benchmark: MSCI World Index

Lead Portfolio Manager(s): KC Parker and Colin Ramkissoon

Objective: The Global Dividend strategy seeks to maximize portfolio returns by investing in equities offering a high, sustainable yield or high dividend growth rate as well as the potential for capital appreciation..

Composition: The strategy is a concentrated portfolio of 20 to 50 high-conviction, mid- to large-cap dividend-paying stocks listed primarily in the U.S. and international developed markets. Portfolio construction starts with a screening of our Global Equity value strategy in order to remove positions that do not pay a significant dividend. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification. The portfolio is invested prudently with respect to geographic concentrations, with a typical maximum of 10% in emerging markets.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 

Inception date: July 1, 2005

Style: Large Cap Value

Benchmark: MSCI World Index

Lead Portfolio Manager(s): Stanley Wu and Rui Cardoso

Objective: The World Focus Equity strategy seeks to maximize portfolio returns over the long term through the application of a disciplined value investing approach emphasizing capital preservation and a focus on absolute risk and return.

Composition: The strategy is a concentrated portfolio of 20 to 35 high-conviction, mid- to large-cap stocks listed primarily in international developed markets. The investment team imposes limitations on the maximum weight in any individual security or sector to ensure adequate diversification. The portfolio is invested prudently with respect to geographic concentrations, with a typical maximum of 10% in emerging markets.

Vehicles:

 

Segregated account

Mutual Fund,

Institutional Class

Canadian institutions

Global institutions

 

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