The companies that we own :

• Tend to have lower Price-to-Earnings, Price-to-Cash Flow and Price-to-Book Value ratios than many growth stocks
• Demonstrate steady, stable earnings, cash flow or revenue growth
• Can be described as “growth at a reasonable price” (GARP) stocks
• Generate a 10-15% return on equity and a 15-20% return on invested capital
• Have a good balance sheet. We seldom look at turnaround stories

In terms of Size we favour the equity of :

• Small to mid-capitalization Canadian and U.S. Companies
• Companies that have a $50 million to $5 billion in market capitalization
• We will look at larger capitalization companies provided they have the right growth characteristics relative to their current price

Why smaller companies?

While we call ourselves growth stock managers and will look at companies of any market cap range, our “Happy Hunting Ground” is the stocks of small to mid-sized companies. We find we can get better growth for our money with smaller companies than with larger ones. We find it easier to believe that a $100 million in revenue company can double in size more easily than a $100 billion one.

• The portfolio is composed mainly of Small to mid-cap equities, but we will look at large caps if they can demonstrate sustainable, superior growth rates
• Equities that progress to large-cap status will not necessarily be removed from the portfolio.
• The portfolio is composed solely of North American equities and cash, though we may look at international equities from time-to-time
• International securities typically won’t exceed 35% of net assets
• The cash component will range from 0%, up to 25% of the portfolio
• Generally, the portfolio will include a minimum of 15 and a maximum of 30 equities. We will typically have 15 to 20 equities. Again, we value concentration.
• Our model portfolio is 100% RRSP eligible