that she co-manages at Toronto-based Howson Tattersall Investment Counsel Ltd.
"We keep our equity weighting at about 70% at all times," says Pennington, "yet we haven't had the high volatility because of the conservative construction of the equities." As a "Ben Graham shop," Howson Tattersall's philosophy is based on a bottom-up, value-based approach. The team uses traditional fundamental analysis to create a portfolio of stocks trading below fair market value.
Among the universe of about 700 Canadian names, the valuation metrics whittle down the companies to a more manageable number where further analysis is done. Valuation statistics are based on current information for a company, not future projections.
Pennington characteristically holds 45 to 50 broadly diversified equity names to reduce volatility. She says the firm is "completely agnostic" as to market capitalization or whether a business is structured as a stock or as an income trust. A stock position typically makes up about a 1.5% to 2.5% weighting among the equities.
Although Pennington finds it's a little harder to find cheap names compared to two years ago, she says her team is not running out of potential picks. "In the financial services area, we recently bought Kingsway Financial ( KFS/TSX). It is trading almost down to book value."
As well, "we have been excited about the rails," says Pennington, whose research will include a visit to a railway yard. "The valuations, we feel, have been very reasonable."
Pennington adheres to Howson Tattersall's strict sell discipline. Once a holding achieves a 25% premium over the firm's target price, it must be sold. "Usually we hold stocks for four or five years, some for many years," she says.
Although Pennington is "always bearish and focused on risk," cash is a drag on long-term performance. So she keeps her cash reserve as low as possible.
Pennington co-manages the equity portion of Saxon Balanced, whose holdings are the same as those ofSaxon Stock 
, which she has co-managed since April 2005.
She joined veteran Richard Howson in co-managing Saxon Balanced in April 2005. Steve Locke is responsible for the fixed income component. Since March 2006, the firm has also managedClarington Canadian Balanced .
Pennington brings a by-the-numbers background to portfolio management. In 1986, she received a bachelor of mathematics degree in actuarial science and statistics from the University of Waterloo. After spending the summer in the bond cage at Wood Gundy, she joined OMERS. She received the CFA designation in 1989.
In 1990, she moved to Prudential Insurance, which sold its mutual fund operation to Mutual Asset Management. She joined Mutual in 1993, becoming director of Canadian equities.
In 1997, Pennington moved to Synergy Asset Management in Toronto. She remained there until 2003, when the firm was acquired by what is now CI Financial Income Fund. For a brief period, she was a portfolio manager at Sceptre Investment Counsel before joining Howson Tattersall. She is currently responsible for about $2.5 billion under management, including institutional assets.
A portfolio manager of Canadian equities, Pennington strongly prefers to invest in the market that she knows best. Currently, only about 6% of her portfolio is in foreign holdings. But she contends that, indirectly, she still has significant foreign exposure.
According to Pennington, buying a Canadian resources stock is tantamount to a play on emerging markets and other foreign markets. Many of her non-resource holdings, she adds, have significant exposure to U.S. customers without, perhaps, as much currency exposure.
Sticking almost entirely with Canadian value stocks, while also having very limited foreign exposure, won't be a winning combination in all markets. In particular, Howson Tattersall's funds tend to underperform in strong bull markets.
Don't expect that to change under Pennington. "We tell our clients up front, we're not going to be your cocktail party fund," she says. "But hopefully we'll be there for your retirement."
, which she has co-managed since April 2005.
She joined veteran Richard Howson in co-managing Saxon Balanced in April 2005. Steve Locke is responsible for the fixed income component. Since March 2006, the firm has also managedClarington Canadian Balanced .
Pennington brings a by-the-numbers background to portfolio management. In 1986, she received a bachelor of mathematics degree in actuarial science and statistics from the University of Waterloo. After spending the summer in the bond cage at Wood Gundy, she joined OMERS. She received the CFA designation in 1989.
In 1990, she moved to Prudential Insurance, which sold its mutual fund operation to Mutual Asset Management. She joined Mutual in 1993, becoming director of Canadian equities.
In 1997, Pennington moved to Synergy Asset Management in Toronto. She remained there until 2003, when the firm was acquired by what is now CI Financial Income Fund. For a brief period, she was a portfolio manager at Sceptre Investment Counsel before joining Howson Tattersall. She is currently responsible for about $2.5 billion under management, including institutional assets.
A portfolio manager of Canadian equities, Pennington strongly prefers to invest in the market that she knows best. Currently, only about 6% of her portfolio is in foreign holdings. But she contends that, indirectly, she still has significant foreign exposure.
According to Pennington, buying a Canadian resources stock is tantamount to a play on emerging markets and other foreign markets. Many of her non-resource holdings, she adds, have significant exposure to U.S. customers without, perhaps, as much currency exposure.
Sticking almost entirely with Canadian value stocks, while also having very limited foreign exposure, won't be a winning combination in all markets. In particular, Howson Tattersall's funds tend to underperform in strong bull markets.
Don't expect that to change under Pennington. "We tell our clients up front, we're not going to be your cocktail party fund," she says. "But hopefully we'll be there for your retirement."
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