Each month we telegraph our strategies and positions as relevant to the time the letters are written. In February’s investor letter, we wrote about our strong belief that ONEX Corporation presented an incredible opportunity; and we made it one of the most significant investments in our Alpha portfolio.
In May, we added CI Financial to our Alpha portfolio. Unfortunately, the CI shares initially fell upon a disclosure revealed on a conference call, at which point we sold before further losses. Subsequently, after diving deeper and conducting meetings with upper management, we repurchased the shares at a lower price. We continue to hold both positions, which have generated material returns for the fund.
Our commitment to the Caravel Capital directive of “Analyse, Invest, and Advertise” has yielded broad favourable sentiment from the institutional sales and trading professionals we deal with. We are pleased to share these mentions from Jeremy Mosher, Director of Institutional Equity Sales at National Bank Canada.
Onex (ONEX CN) – Another one that Caravel called out – in short their thesis is – ONEX Corporation is a highly undervalued investment with its subordinate voting shares (SVS) trading at a 50% discount to net asset value (NAV). CEO succession and the phase-out of multiple voting shares are anticipated catalysts for improved valuation and attracting new investor capital.
CI Financial (CIX CN) – This is a favourite of Caravel. In short – this is a deleveraging and share buyback story as the FCF coming from CIX is great than the market is recognizing. Has been some noise recently – great JV – but the volatility created in the stock was significant.Jeremy Mosher, National Bank of Canada Director Institutional Equity Sales, Canadian Business Bulletin – August 11, 2023 – We are your eyes and ears in Canadian business.