The Canadian Small Cap Equity strategy is a diversified, actively managed portfolio that aims to provide long-term capital growth by investing in common shares of small cap Canadian corporations. To achieve the strategy’s objectives, the PH&N Canadian Equity team focuses primarily on growth companies that have superior management teams, leadership positions in their industries, high levels of profitability compared to their peers, and strong earnings potential. The strategy is managed by a research-intensive, bottom-up investment process, complemented by the use of proprietary tools.
Strategy Overview
- Small cap Canadian equity portfolio, primarily growing businesses.
- Emphasis on identifying companies creating long-term value through quality growth opportunities.
- Fundamental research presents risk/reward outlook for stocks, guiding conviction, and positioning.
- Defines small cap companies as those where the market value of free floating shares.
- The team integrates material ESG factors into its investment decisions.
- Experienced team of sector specialists led by two portfolio managers.
Our Approach
Investment Philosophy & Style
- The PH&N Canadian Equity team’s investment philosophy is centered on their belief that the best long-term returns come from the stocks of companies who create value for shareholders through long-term growth when bought at reasonable prices.
- Research-intensive, bottom-up investment process.
- Integrates material ESG factors into its investment decisions.
- Experienced team of sector specialists led by two portfolio managers
Investment Process
- The PH&N Canadian Equity team’s research process is facilitated by a number of proprietary tools, including their templates, sector playbooks, and dashboard guides.
- In addition to identifying investment opportunities, a related function of the team’s research process is to develop conviction in those opportunities.
- The team has developed checklists to assist them in establishing conviction around the quality of businesses as well as the drivers of the returns that they expect.
- The resulting conviction establishes a risk/reward outlook and helps guide their positioning in individual holdings.
- Integrates material ESG factors into its investment decisions.
Portfolio Construction
- The objective of the PH&N Canadian Equity team’s portfolio management process is to translate the research findings into a portfolio. It can be thought of as comprising two components: portfolio construction and risk management.
- The team builds the portfolio to optimally blend 1) taking enough risk to meet the objectives for value added, 2) ensuring that their highest conviction investment ideas are expected to have the biggest impact on performance, and 3) measuring and monitoring risks for deliberate calibration.
- As with the team’s research process, portfolio management decisions are assisted by proprietary fundamental and quantitative tools.
- ESG considerations are a component of the team’s overall fundamental analysis. The team engages with companies’ management and boards to better understand potential ESG risks and opportunities, as well as the underlying processes the companies have in place to manage these risks and opportunities.