Brandon Snow, manager of the $819-million CI Cambridge Canadian Equity Corporate Class, isn't discouraged by recent market volatility. "There's a lot of terrific, low-volatility, low-risk names out there," he says, "so that gets me very bullish on a longer-term perspective."
Snow, a portfolio manager at CI Investments Inc. at its main base of operations in Toronto, works with the Boston-based team headed by Alan Radlo, chief investment officer of the wholly owned CI subsidiary which operates as Cambridge Advisors.
Snow has been responsible for the CI Cambridge Canadian Equity mandate since May 2011. He also co-manages CI Cambridge American Equity, along with Radlo.
As part of the Cambridge team, Snow's roles also include managing Castlerock Canadian Growth Companies, and co-managing Castlerock Pure Canadian Equity with Radlo. (Subject to investor approval, the Castlerock brand will be eliminated and the funds will be integrated into the main CI family of funds, on or about Sept. 10.)
The investment focus that runs throughout the mandates is always on "risk-reward scenarios," says Snow, "and so I am slightly more value-biased than I think others on the team may be." He says he is more comfortable with value-type names as the core of the portfolio because he can get a better understanding of the downside.
CI Cambridge Canadian Equity, which can invest half of its portfolio outside Canada, is an all-cap fund whose holdings include some small-cap names with market capitalizations of less than $1 billion. Currently all of the foreign content is invested in the United States.
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As an active manager, Snow is not constrained by stock positions or sector weights. "That's part of the flexibility on mandates," he says. "It is also very important not to be tied to benchmark weightings." But Snow doesn't make huge sector bets either. The 50 to 60 holdings in the mandate are broadly diversified across the main industry sectors.
Snow favours investing in companies whose management is aligned with shareholders through their compensation practices. Secondly, management has to show that it has allocated capital properly, either through mergers and acquisitions historically, through investment within the business, or through paying down debt or paying dividends. Thirdly, a company must have some sort of competitive advantage.
If the company's business remains sound, Snow and his colleagues will trade in and out of core positions during the peaks and troughs of market cycles. What will trigger an outright sell is a business model that is broken, a fundamental change in the management, or unreasonable valuations.
The top holding of CI Cambridge Canadian Equity is the convenience-store operator Alimentation Couche-Tard Inc. ATD.A. Pending the completion of an acquisition, the business is poised to expand to more than 8,000 stores.
"Management owns 30% of the stock," says Snow, "so they're aligned from a shareholders' perspective." Historically, the company has shown that it allocates capital well. It is focused on improving the stores and operations, and has paid down debt. "That's the kind of business you want to partner with at each stage of the cycle, so that's a name we hope we never have to sell."
Snow, 33, a Waterloo, Ontario native, graduated from Wilfrid Laurier University in 2003 with a BA in economics and financial management. His early investment experience included working as a co-op student at Gluskin Sheff & Associates Inc.
In 2003, Snow was recruited by Fidelity Investments and moved to Boston, where he was an associate analyst and covered pipelines and the oil and gas sector. In 2004, he was promoted to research analyst and monitored cable, media and consumer stocks.
In 2008, Snow became assistant portfolio manager of Fidelity Canadian Large Cap. The following year, he moved to Toronto and was promoted to portfolio manager. Then in March 2011, he resigned from Fidelity shortly before joining CI. Currently, he is responsible for close to $1.7 billion in assets under management.
Seven people make up the research team for Cambridge Advisors. They include portfolio managers Radlo, Bob Swanson and Snow, three analysts and a co-op student. All three managers, as well as two analysts, previously worked at Fidelity. "The idea was to be able to come back and rejoin Radlo," says Snow.
As investment managers, Snow says, the Cambridge team tries to align with investors by investing in the funds they manage. If fund performance goes down, says Snow, "we take a hit," and when returns are robust, the team shares in the gains.
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