The Lato Letter: Volume 5, Issue 7

The Lato Letter: Volume 5, Issue 7

For investors, 2016 is a year that can certainly be described as “unprecedented” (apologies to the other Donald for using one of his favourite words), “surprising” and “rewarding”. Strong moves in stocks came from unusual places and at unusual times. Investors have been rewarded with year to date (Dec. 20th) total returns of 20.9% for the S&P/TSX and 13.5% for the S&P 500.

As with all years, some stocks rise more than the index and other rise less or even fall during a strong year. The trick is always to have more of the former and less of the later. The Padlock Scorecard for the stocks making up Padlock’s Model Portfolio is shown below. The returns are year to date total returns for stocks held at the end of 2015 and the year to date total returns from the time of purchase for stocks added during 2016:

Padlock 2016 Scorecard

Canadian Stocks                                                                                US Stocks

2016                                                                                                        2016                         
Name                                           Symbol             Return                  Name                                Symbol              Return
AGT Food and Ingredients*        AGT                     -0.2%                     Alphabet                                  GOOGL                 4.9%
Aecon**                                        ARE                       4.3%                     Apple                                        AAPL                     13.2%
Canyon Services Group              FRC                      69.8%                    Borg Warner*                          BWA                      14.5%
CCL Industries                             CCL.B                  21.8%                     Corning                                    GLW                       37.5%
Dollarama                                     DOL                     22.4%                    Gilead Sciences                      GILD                      -25.0%
Equitable Group                          EQB                     17.9%                     Goldman Sachs Group          GS                          36.3%
Metro***                                      MRU                    -11.5%                    Hi-Crush Partners                 HCLP                     216.7%
New Flyer Industries                   NFI                       42.8%                      KKR                                          KKR                       12.1%
Parex Resources                          PXT                      69.3%                     Leucadia National**             LUK                        53.8%
Peyto Exploration                        PEY                      39.3%                     NCR                                          NCR                       70.2%
Sleep Country Canada                ZZZ                      68.6%                     Visa                                           V                            1.8%
Sun Life Financial                        SLF                      25.4%                      Walgreens Boots Alliance     WBA                        3.0%
Toronto Dominion Bank            TD                        27.5%
Tourmaline Oil                             TOU                     58.9%
Tricon Capital Group                  TCN                      8.9%

 

 * Added to portfolios on July 5, 2016 * Added to portfolios on October 28,2016
** Added to portfolios on January 12,2016 ** Added to portfolios on March 7,2016
*** Added to portfolios on August 23,2016

 

Many of the stocks that showed the largest returns were stocks that disappointed in 2015. Similarly, the stocks that have lagged in 2016 are all well-positioned, well-managed companies with reasonable valuations that are poised to be possible outperformers in 2017.

All in all it has been a great year to be an investor and a sports fan in Toronto. Markets certainly exceeded most investors’ expectations at the beginning of the year. The Toronto FC made it to championship game, the Jays and Raptors made it to the Final Four and well for the Leafs, that proverbial next year appears to be getting closer.

Padlock remains constructive on equity markets in spite of the recent post-election advance and concerns over the U.S political situation but will be reassessing and rebalancing the portfolios as we head into the New Year.

I would like to thank all of you (particularly the Padlock clients, the best clients one can have) for your encouragement and support during the year and I would like to wish you and your family a joyful holiday season along with my best wishes for a happy, healthy and prosperous 2017.

 

 

This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change without notice

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