Recap & Outlook: End of Earnings… End of year

Michael Rudd, CFA | President, CEO and Portfolio Manager

We wrote last month during the middle of earnings season that based on the companies in our portfolios and the data that we review, there is no obvious problems developing in the collective businesses that we own and follow. Margins remain healthy, growth continues and governments have enacted supportive policy measures that are generally friendly to businesses. Earnings season officially ended for us when the Canadian banks completed their reporting cycle this week. For the most part the finish was as strong as we last reported.

  • Top line growth (i.e. sales) remains robust with strength coming from energy and technology. Figure 1 to the right presents sales growth over the past year and you can see mostly broad-based strength.
    • We also note that even though the data that we look at continues to remain supportive, markets also continue to remain volatile (both positive and negative). This is something that we wrote about to you in the past and while we believe it is natural and somewhat healthy, unfortunately it will be here for a while.

    • We have written before that we believe that there is a fundamental difference between the value of the real businesses we own and what financial markets price them on any given day. As investors, we endeavor to look past the headlines and to look at fundamental business, economies and the people that manage them. This is important to remember during periods of volatility … positive or negative.

  • We will break from the weekly note for the rest of the year to write our year-end review and outlooks. We will return in the first week of the year with a volley of reports from our Large Cap, Small Cap and Real return teams.

    From all of us at Pathfinder we wish you and your family a wonderful holiday season and a very happy and prosperous 2019!

Pathfinder Asset Management Ltd. | Equally Invested™
1320-885 W. Georgia Street, Vancouver, BC V6C 3E8
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Sources: Pathfinder Asset Management Limited

National Instrument 31-103 requires registered firms to disclose information that a reasonable investor would expect to know, including any material conflicts with the firm or its representatives. Doug Johnson and/or Pathfinder Asset Management Limited are an insider of companies periodically mentioned in this report. Please visit for full disclosures.

*All returns are time weighted and net of investment management fees. Returns from the Pathfinder Partners’ Fund and Partners’ Real Return Plus Fund are presented based on the masters series of each fund. The Pathfinder Core: Equity Portfolio and The Pathfinder Core: High Income Portfolio are live accounts. These are actual accounts owned by the Pathfinder Chairman (Equity) and client (High Income) which contain no legacy positions, cash flows or other Pathfinder investment mandates or products. Monthly inception dates for each fund and portfolio are as follows: Pathfinder Core: Equity Portfolio (January 2011), Pathfinder Core: High Income Portfolio (October 2012) Partners’ Fund (April 2011), Partners’ Real Return Plus Fund (April, 2013), and Partners’ Core Plus Fund (November 2014).

Pathfinder Asset Management Limited (PAML) and its affiliates may collectively beneficially own in excess of 10% of one or more classes of the issued and outstanding equity securities mentioned in this newsletter. This publication is intended only to convey information. It is not to be construed as an investment guide or as an offer or solicitation of an offer to buy or sell any of the securities mentioned in it. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor PAML can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment or portfolio assessment or other transaction on the basis of this publication, but should first consult your portfolio manager, who can assess all relevant particulars of any proposed investment or transaction. PAML and the author accept no liability of any kind whatsoever or any damages or losses incurred by you as a result of reliance upon or use of this publication.