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We seek to outperform the S&P/TSX Capped Composite Index over a full market cycle by adding value through active stock selection while controlling portfolio risk.

We seek to build a diversified portfolio of 55-85 stocks that are undervalued relative to their growth potential, based on bottom-up, fundamental research. Valuations are conducted on a relative basis within each industry. The strategy is designed to be transparent and disciplined with the primary goal of delivering consistent performance.

The investment decision-making process is a disciplined, research driven, bottom-up process, which leverages the network of GE resources±.Our investment process begins by screening the universe of Canadian companies with market capitalizations greater than C$100 Million. We conduct quantitative analysis focused on P/CE Ratio, Cash Earnings Growth, and Yield. Other key metrics we evaluate include P/E, ROE, Reinvestment Rate, Earnings Revision, Earnings Momentum and Earnings Surprise. Detailed, fundamental company analysis, industry competitive analysis, and a macro-environment review further narrows the list of potential buy candidates. The analysts then seek a catalyst for each stock that will unlock the future potential of the company. The catalyst may be that the company is doing business in new markets, the introduction of a new product with excellent earnings potential, a new management team or acquisition. Generally what are believed to be the best ideas with the highest level of conviction are purchased for the strategy. This step yields a list of approximately 55-85 companies. The size of each position (subject to the described limits) is based on strength of conviction, the stock's liquidity, and potential of the idea.

Other Equity Strategies
The strategy is managed by Christian Langevin, CFA with support from a team of research analysts located in Montreal and other GEAM offices in Stamford, London and Tokyo. Sector coverage and research is structured on an international basis to best align with the globalization of world markets.
High Quality Companies
  • Undervalued based on cash earnings growth potential
  • Industry leadership
  • Strong financial characteristics
  • Good transparency and corporate governance
  • Management track record
  • Positive fundamental momentum
  • Porter competitive analysis
Research
  • Company visits/management meetings
  • Wall Street/proprietary modeling
  • GE Global Network
Focus on undervalued growth opportunities and catalyst supported by research analyst's portfolio
  • Relative valuation
  • Confidence quotient
  • Recognized catalyst
Buy Discipline
  • Analyst's weightings
  • Price-to-cash earnings-to-growth
  • Qualitative analyses
Sell Discipline
  • Valuation relative to target
  • Shift in fundamentals assessment
  • Management/strategic direction change
Sector Limits
  • Economic sectors(10): ±4%
  • Industry groups(23): ±4%
  • Industries(59): ±4%
  • Sub-industries: ±4%
Stock Constraints
  • Holdings: 55-85
  • Weightings: Minimum 0.25%
  • Maximum 15% Relative ±3%
Liquidity and Quality:
  • S&P/TSX 60 Index: ±20%
  • S&P/TSX Mid Cap Index: ±15%
  • S&P/TSX Small Cap Index: ±10%
  • Max.of 10%Not in S&P/TSX Capped Composite Index
Predicted Tracking Error:
  • Lower than 5%

*GEAM does not seek material, non-public information from the GE Global Network or any other source and would take appropriate action were such information to be received.
 
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