Mackenzie Minute: January 20, 2017
Graham Meagher, Associate Portfolio Manager on the Mackenzie Ivy Team, explains how the Team’s focus on valuation lends itself to success amidst market overreactions and sensational headlines.
So, the Canadian market has continued to rally over the past couple of weeks based on stronger U.S. economic growth expectations. Headlines have been dominated by speculation around the incoming U.S. administration's tax and trade policies.
Within the Ivy Canadian equity and Ivy Canadian Balanced Funds, we tend to take a more independent approach and we tend to ignore most headlines, which are often sensationalized really to sell advertising. We prefer to focus on things that we believe we do understand and, for us, that's quality and valuation.
Well, over the next few weeks, many companies will report their year-end results and, for us, at Ivy, that's really an opportunity to sort of peak inside the company and reflect on management, culture and financial performance.
In terms of macro events, there's nothing specific that we key on. Certainly, there's a lot of chatter in the market about Trump. But, what we prefer to spend our time on is focusing on the fundamentals of the companies that we do invest in.
Well, as much as we don't try to predict macro events, we do like to pay attention to what the market is thinking and, we do that with our focus on valuation. And, we do like over-reactions in the market. That can provide us great opportunities to buy and sell terrific businesses when they become cheap or expensive and, a good example of that is Couche-Tard, which we added to the funds last year. Couche-Tard, in our view, is a terrific company with a very unique corporate culture. But, we felt that the market over-reacted to the impact of oil prices on its gas station network. And, we felt that that was a temporary event that would have very little impact on the business over the longer term.