Canadian General Investments Ltd (TO:CGI) is a closed-end investment fund listed on both the TSX and LSE; it is registered as a Canadian investment corporation. CGI aims to outperform the benchmark S&P/TSX index by investing in an actively managed portfolio of primarily Canadian stocks. Given its diversified exposure to the Canadian equity market, CGI could be viewed as a ‘one-stop shop’ for investment in the country. It has a progressive dividend policy; emphasis has shifted to quarterly rather than year-end special dividends. The 2016 prospective yield is 3.6%. High share ownership by related parties ensures that management’s and shareholders’ interests are closely aligned – although it may also be a factor in the wider than average discount.
Investment strategy: Bottom-up stock selection
CGI is managed by Greg Eckel, who aims to outperform the benchmark via bottom-up selection of a broad portfolio of shares. The majority of holdings are Canadian stocks, but up to 20% of the portfolio may be held in US equities. Stocks are selected based on positive fundamentals, strong management teams and attractive valuations; sector weightings can vary significantly from the benchmark. Although investments are made for the medium and longer term, holdings are regularly reviewed to ensure that their individual exposures remain appropriate. Gross gearing of C$150m via a mixture of preference shares and bank debt is employed.