Small-Cap Equity Fund

September 30, 2022

Market Context

  • The Canadian small-cap market (S&P/TSX SmallCap Index) fell 2.5% in the quarter. U.S. small-caps (Russell 2000 Index) gained 4.0% in Canadian dollar terms.
  • Oil companies and real estate stocks were among the weakest performers.

Portfolio Specifics

  • The fund consists of 26 companies, ranging from very small (Hammond Power) to medium-sized businesses (Spin Master). While the majority of holdings are Canadian, there are three U.S. stocks which make up 12% of the portfolio.
  • Small-cap stocks have been especially volatile in 2022, with the third quarter being no exception. While the price swings have been unnerving for investors, they’ve also led to opportunities. Our manager, Galibier Capital, has done more buying than selling of late, and is intrigued by some of the deals they’re finding.
  • Energy companies across Canada struggled in the quarter. The fund is less exposed to oil-related stocks than the market, but wasn’t immune as MEG Energy and Parkland Fuel gave back some of their gains. Galibier was able to mitigate some of the weakness by trimming these positions when the stocks were flying high.
  • Park Lawn (funeral and cremation services) was among our top performing holdings in 2021 but has struggled this year (-40%) as demand for its services has fallen and bulk sales to religious denominations have also slowed. Nonetheless, the company’s operations are sound and its valuation is attractive.
  • Boyd Group Services (collision repair) was our top performer in the quarter (+25%). It has seen steady demand and has been successful in passing along higher supply and labour costs to insurers, which in turn are passing them to customers in the form of higher premiums.
  • Aritzia was added to the portfolio early in the summer. The Vancouver-based fashion house has seen its profile increase with a successful expansion in the U.S. The purchase had an immediate impact on performance as the stock rose on strong earnings. We also added to existing holdings Cargojet and Torex Gold Resources. Both stocks have solid fundamentals and are 20% cheaper than they were at the beginning of the year.
  • Packaging company Winpak was sold after a rebound in the stock. While there is nothing inherently wrong with the company, Galibier feels there are better opportunities in faster-growing businesses, such as recent purchases Aritzia and Enghouse Systems.


  • The portfolio has a unique composition, with key areas of investment being capital goods, 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.