SEAMARK POOLED LOW VOLATILITY EQUITY FUND

As of December 31, 2014
SEAMARK POOLED LOW VOLATILITY EQUITY FUND
PHILOSOPHY & STRATEGY
PORTFOLIO MANAGERS’ COMMENTARY
SEAMARK’s bottom-up, fundamental approach to equity
investing seeks to identify companies with superior long-term
investment merit based on proven management, competitive
position, and strong balance sheets. Preference is given to
companies with durable growth prospects.
True to its essence, the Fund significantly outperformed the
S&P TSX Index during a volatile quarter. The most significant
reason was that oil and gas prices experienced a sharp
decline, driven by Saudi Arabia’s decision to stop
constraining the supply of oil, driving stock prices in the
Energy sector significantly lower. Since Energy companies
are significant in the composition of the S&P TSX, the index
had a slightly negative return for the quarter. Moreover, the
Canadian dollar further depreciated by -3.8% during the
fourth quarter, which continued to boost the returns of U.S
dollar denominated assets held in the Fund.
SEAMARK’s focus is on individual companies, rather than on
the stock market. This focus on “buying the company” is
consistent with the objective of owning the company for the
long-term. SEAMARK seeks to invest in companies when
their current market price represents value relative to their
long-term potential, and maintains an investment so long as it
continues to offer attractive return potential.
The Canadian marketplace is predominantly cyclical in
nature. To help reduce the volatility inherent in the TSX, and
allow us to practice as long-term investors, SEAMARK
maintains a ‘benchmark agnostic’ posture. Leading
companies in many attractive industries are held to provide
proper portfolio diversification.
Large capitalization companies will generally account for
approximately 70% of the total portfolio. The weight of a
specific core holding at any time will reflect SEAMARK’s
confidence in the stability and durability of the idea, but will
not exceed 10% of the total portfolio weight. SEAMARK’s
exposure to medium cap stocks will be no more than 30%.
Small cap stocks may, from time to time as valuations
warrant, represent up to 10% of the portfolio.
Slow global growth, hegemonic Russian behavior, fears of
Ebola, and falling commodity prices stoked volatility, and
bears were active in mid-October as equity markets nosedived. However, corporate profits for multinationals remained
strong as, despite economic weakness, the cost of raw
materials kept falling, borrowing remained cheap, and wages
were subdued. U.S. stock prices rebounded while the rest of
the world treaded water.
The return to volatility provided opportunities to write call
options on some of the Fund’s holdings which added income
to the portfolio.
INVESTMENT TEAM Bob McKim CFA
CEO & Chief Investment
Officer
Don Wishart CFA
President
George Loughery CFA
Chief Portfolio Manager
PORTFOLIO ACTIVITY
During the quarter, the Fund bought a new position in European electrical infrastructure manufacturer, ABB. We sold Tim
Hortons as its price jumped due to a takeover, under which it and Burger King become part of Restaurant Brands International.
Similarly, Medtronic was sold into price strength, just before a shareholder vote occurred on re-domiciling the company offshore
by merging with Irish company Covidien, which might have had deleterious tax consequences for Canadian shareholders. We
also sold Imperial Oil, Couche-Tard, Conagra, and Heineken on relative market strength. Sales were offset, for the most part,
by adding to other existing positions.
ASSET MIX
TOP
TEN HOLDINGS (% OF PORTFOLIO)
Bank of Nova Scotia
3.1
Cash & Equivalents 13.6%
Toronto Dominion Bank
2.7
Oil & Gas 13.2%
Verizon Communications
2.7
Metals & Minerals 2.1%
Royal Bank
2.6
Cenovus Energy
2.6
Altagas Ltd.
2.6
Commericial & Industrial 5.9%
Discretionary Goods 3.4%
Staples Goods 17.8%
Pharma & Healthcare 12.9%
Vodafone Group
2.6
Financial Services 10.6%
Inter Pipeline
2.6
Technology Products & Services 4.3% Royal Dutch Shell
2.5
Telecom 10.9%
ABB Ltd.
2.4
Utility Services 5.3%
PERFORMANCE INFORMATION (%)
Inception Date of Fund: August 31, 2012
December 31, 2014
Since
3 Mths
YTD
1Yr
2Yrs
3Yrs
4Yrs
5Yrs
6Yrs
7Yrs
8Yrs
9Yrs
10Yrs Inception
TOTAL PORTFOLIO (CAD$)
3.9
15.3
15.3
19.4
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
18.0
S&P/TSX Composite Index (CAD$)
-1.5
10.6
10.6
11.8
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
12.4
TAKE ADVANATGE OF CAPITAL GAIN DEFERRALS
Our suite of Pooled Funds is in a unique position of offering the possibility to taxable investors to defer capital gains.
Total amount available for the Low Volatility Equity Fund’s capital gain deferrals: $6,097,992*
*Audited Financial Statements, as at December 31, 2013
Performance data is calculated on an actual basis for periods of less than one year, and on an annualized basis for periods of one or more years. Performance data
assumes the reinvestment of all distributions and does not take into account management fees or income taxed (except for withholding tax, if any, on foreign income)
payable by any unitholder that would have reduced returns. Past performance is not necessarily indicative of future returns.
www.seamark.ca 1 (888) 303-5055

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