Small-Cap Equity Fund

March 31, 2019

Market Context

  • The Canadian small-cap market (S&P/TSX SmallCap Index) gained 10.7% in the first quarter. U.S. small-caps rose 12.2% (Russell 2000 Index) in Canadian dollar terms.
  • Gains were broad-based, with tech and energy stocks among the top performers.

Portfolio Specifics

  • The fund consists of 24 companies, ranging from very small (e.g. Brick Brewing) to medium-sized businesses (e.g. Stantec). While the majority of holdings are Canadian, there are five U.S. stocks which make up 21% of the portfolio.
  • The fund had a strong start to the year as many holdings bounced back sharply from last quarter. Several investments saw price gains of more than 30%, including Brick Brewing, Stericycle, Ag Growth Int’l., Points Int’l., and Alcanna.
  • The fund’s largest holding, Ag Growth Int’l., was added to the S&P/TSX Composite Index in March, which served to heighten its appeal to a broader range of investors. Ag Growth is a leading food infrastructure company involved in the processing, storing and handling of grain, fertilizer, feed and seed. The business has been growing at a solid pace and recently announced a platform acquisition in India that will expand its presence in a huge market. The manager, Galibier Capital, added to the stock late last year on weakness — a move that is proving fruitful.
  • Galibier has been pleased with the growth and overall operating results of most holdings — Cargojet, Dream Global Reit and Park Lawn to name a few. A couple of investments, however, have disappointed, notably Uni-Select. The auto paints and parts distributor has seen its stock fall over the past year as it lowered its growth forecast and is looking to divest one of its paint divisions. Galibier thinks management is doing the right things, but the company is on a short leash.
  • Two new stocks were added to the portfolio, Sleep Country Canada and Henry Schein. You may have heard Sleep Country’s jingle “Why buy a mattress anywhere else?” and their strong revenues back it up. The company has a good balance sheet and experienced CEO. New opportunities in online sales (it purchased Endy last year and also owns Bloom) and accessories (pillows and sheets) point to an attractive growth runway. Henry Schein is a worldwide distributor of dental and medical supplies. The company has a competitive edge through its powerful distribution network and proprietary software that helps medical practitioners work more efficiently.
  • The fund currently has a cash position of 1%.


  • The portfolio has a unique composition, with key areas of investment being capital goods, transportation, and commercial & professional services. Food & beverage and consumer companies are also important components of the fund. This is in contrast to the small-cap market’s heavy focus on resource companies.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Important information about the Steadyhand funds is contained in our Simplified Prospectus. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.