by Scott Ronalds
If you own units of the Steadyhand Small-Cap Fund, you own a unique collection of businesses, many of which you’ve probably never heard of. But don’t be thrown off by obscure sounding names such as Spin Master, New Flyer, Oshkosh, Middleby, Intertape Polymer Group and Brick Brewing — for these companies may play an important role in your day-to-day.
The above stocks, while small in market capitalization relative to companies such as Apple, Starbucks, and Toyota, are innovative businesses that produce industry-leading goods and services, which like your iPhone, vanilla latte and Highlander, help make your day better, smoother and safer. And the added beauty of small-cap stocks is that they’re often better positioned to grow their revenues faster than their larger peers.
To illustrate, consider a day in the life of Evan Parubets, our Toronto-based Investor Specialist.
At the crack of dawn, Evan’s woken up by his young son, Elan. Not in the mood yet to jabber with a one-year old, he quickly looks for something to keep the little man entertained. Pups to the rescue! He grabs the PAW Patrol toy on the floor and hands it to Elan. Problem solved.
- The PAW Patrol brand of lovable rescue dogs is owned by Spin Master, a large holding in the Small-Cap Fund. Spin Master also owns Hatchimals, Etch a Sketch and Meccano, among other brands. The stock has been a standout performer in the Fund; the toys and books have been lifesavers for parents everywhere.
Evan’s got an early meeting so he’s quick to get out the door and hop on the bus to get to the office. The time on the bus gives him an opportunity to log on to Amazon and reorder some diapers, and maybe another PAW Patrol toy. He’s had his eye on Chase’s tow truck for a while. It’s a sweet ride.
- One of the Toronto Transit Commission’s suppliers is New Flyer. The Winnipeg-based company is a leader in manufacturing transit buses and motor coaches, and related parts. New Flyer recently won an order from the TTC for a fleet of zero-emission battery-electric transit buses. They’re sure to make Evan’s ride to work smoother and cleaner. New Flyer is a top 10 holding in the Small-Cap Fund.
It’s a busy construction day in the downtown core and traffic is moving slowly, so Evan gets off the bus a stop early and power walks the rest of the way to the office. He notices some slick aerial work platforms and a few concrete mixers. “Cool machines,” he thinks to himself.
- Both the JLG aerial work platforms and London Machinery concrete mixers that Evan admires on his walk are manufactured by Oshkosh. The Wisconsin-based company builds specialty vehicles including fire trucks, broadcast & communications vehicles, tow trucks, and airport vehicles. Indeed, not far away at Billy Bishop and Pearson airports, a number of Oshkosh’s vehicles stand ready. The stock is a new addition to the Fund.
Evan’s morning meetings run late and he’s pressed for time before his 1:00pm prospect meeting. His stomach is growling though, so he zips down to the food court at Brookfield Place to grab a footlong at Subway. Toasted, of course.
- Subway uses convection ovens manufactured by Middleby. The company is a leader in commercial cooking equipment. In fact, its products can be found in one of every three restaurants around the world, including quick serve and fine dining establishments. Middleby also owns the Viking range of appliances. The stock is the second largest holding in the Fund (as of June 30th).
After a hectic day, Evan gets home to find a fresh shipment from Amazon (this whole same-day shipping thing really is amazing). The packages are quickly torn open to appease Elan, although dad gets first dibs on the tow truck. After putting the little guy to bed, Evan gets to spend some quality time with his wife. It’s a hot night, so they decide to retire on the patio with a cold margarita. They’re too exhausted to get the blender out though, so it’s a good thing these ones come in a can.
- The packages which were so quickly opened were held together with adhesives manufactured by Intertape Polymer Group. The company makes tapes, films and packaging systems for retail and industrial use, and has been a beneficiary of the growth in e-commerce. IPG is a core holding in the Fund. As for those margaritas in a can, they came courtesy of Brick Brewing. Brick makes beer and related beverages under the Waterloo, Landshark, Margaritaville and Seagram labels. The stock has been a top performer since its addition to the Fund in late 2016.
These are just a few examples of the businesses you own as an investor in the Small-Cap Fund (or the Founders Fund, which holds a position in the Small-Cap Fund). The portfolio includes 18 or so other companies carefully selected based of their sustainable competitive advantages and promising growth prospects. They’re firms that you may not have heard of, but you likely know in one way or another. It’s a small world after all.
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