Our approach to investing begins with more than 20 years of fundamental research experience. Veritas Asset Management was founded to capitalize on the successful fundamental research of our affiliate Veritas Investment Research (‘VIR’). Throughout VIR’s 20+ years of producing independent research, it has proven that detailed, high-quality fundamental research produces better investment decisions. Our goal is to provide our investors with consistent risk-adjusted returns that beat investment benchmarks over the short and long term.
Our portfolios offer concentrated, high-conviction positions in companies identified through our research and due diligence work, applying a disciplined and systematic selection process. Through our research, we identify opportunities to profit from mispriced securities, either by buying top-quality companies for long-term capital appreciation or through long-short hedging strategies. While our portfolios are primarily focused on Canadian equities, our portfolio managers also consider opportunities beyond Canada.
Exiting the pandemic, we all hoped that the world would get back to normal, and in many ways, it has.
In the investment world, however, the normal we are getting back to may be one that we haven't seen in a while. Markets are still adjusting to inflation pressures; rising wages; positive real interest rates; and narrowing corporate margins. In this update, we outline some of the trends we think are redefining what normal looks like for markets in 2023 and discuss the investment opportunities we see going forward.
In 2022, the NASDAQ was down -32.5%, the S&P 500 was down -18.1% and the S&P/TSX was down -5.8%. Both our funds closed out the year ahead of the three indices, with our Canadian Equity Fund posting a -1.0% return and our Absolute Return Fund returning -5.2% (Performance based on F series).
Bombardier Inc. (TSX: BBD.B) was the largest contributor to Fund performance in December 2022 as its shares continued to re-rate following strong Q3 earnings. With a backlog reaching US$15 billion on September 30 and a return to positive cash flows in 2022, we see further upside. The second and third largest contributors to performance were Shaw Communications (TSX: SJR.B) and Barrick Gold Corp. (NYSE: GOLD, TSX: ABX), respectively.
Next Edge Capital Corp. launched the Veritas Next Edge Premium Yield Fund in June 2022. As sub-advisor, Veritas Asset Management Inc. utilizes the award-winning, independent, and in-depth research of Veritas Investment Research Corporation to formulate a diversified portfolio of equities with a bias toward yield, and capital preservation, and uses a covered option overlay to generate additional yield and further mitigate downside risk and volatility.
Visit Next Edge to learn more about the fund and read the full monthly commentary.