Small-Cap Equity Fund

June 30, 2020

Market Context

  • The Canadian small-cap market (S&P/TSX SmallCap Index) gained 38.5% in the quarter. U.S. small-caps (Russell 2000 Index) rose 20.5% in Canadian dollar terms.
  • Resource stocks, gold in particular, fueled the market’s rebound.

Portfolio Specifics

  • The fund consists of 27 companies, ranging from very small (Waterloo Brewing) to medium-sized businesses (Finning). While the majority of holdings are Canadian, there are four U.S. stocks which make up 14% of the portfolio.
  • The portfolio had a strong quarter as small-cap stocks rebounded sharply from their March lows. Not surprisingly, some of the fund’s hardest hit holdings last quarter were its top performers in Q2, including Spin Master (toy maker), Interfor (lumber producer), and Fluor (engineering & construction), which each gained more than 75%. Ag Growth International (fertilizer & grain handling and storage), Sleep Country Canada (retailer of mattresses and sleep accessories), and Cargojet (air cargo) also gained more than 50%.
  • As the pandemic continues to impact economic activity and force some businesses to pivot, the manager (Galibier Capital) has been thinking hard about a key question as it relates to each holding: Is this company’s competitive advantage sustainable in the new world, and are the right people at the helm? Galibier’s assessment led to some portfolio adjustments in the quarter. Alcanna (liquor retailer) and Cardinal Energy (oil producer) were sold while Pason Systems (oilfield data management) was trimmed.
  • Stantec was also sold, but for a different reason. The engineering firm continues to be an excellent business but has gotten expensive and Galibier feels SNC-Lavalin (also an engineering firm) represents a better opportunity from a value perspective. The fund owned SNC earlier in the year but sold it for a healthy profit. The stock was subsequently repurchased after dropping over 40%.
  • Along with SNC, we also repurchased Badger Daylighting (hydrovac services), a business we owned for many years before selling for valuation reasons in 2017. The stock has dropped, presenting an opportunity to buy a great business at a good price.
  • Two other new stocks were added to the portfolio: Boyd Group Services and Torex Gold Resources. Boyd is an auto body and glass repair shop that generates strong cash flow and is well managed. Torex is a low-cost gold producer with operations in Mexico. The precious metal offers a hedge against global uncertainty.
  • The fund currently has a cash position of 3%.


  • The portfolio has a unique composition, with key areas of investment being capital goods, transportation, food & beverage, and engineering services. 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.