Canadian General Investments Ltd (TO:CGI) enjoys favourable tax status as a Canadian investment corporation. Its portfolio of primarily Canadian equities is broadly diversified, suggesting that the company can be considered as a ‘one-stop shop’ for investment in Canada, where there are investment opportunities available across a range of sectors. As a result of positive fundamental stock selection, CGI’s NAV total return has outperformed the benchmark S&P/TSX Composite Index over one, three and five years. The board has been shifting emphasis towards more regular interim rather than year-end special dividends; CGI’s current dividend yield is 3.1%.
Investment strategy: Active stock picking
CGI is managed by Greg Eckel, who aims to outperform the benchmark with a diversified portfolio of primarily Canadian equities. Stocks are selected on a bottom-up basis; the manager seeks companies with good fundamentals, strong management teams and reasonable valuations. The portfolio is actively managed, with sector weightings that can deviate meaningfully from the benchmark’s. An example is the financial sector (which has the largest index weighting), where CGI has a significant underweight exposure to banks. The company has C$150m in structural gearing, split evenly between preference shares and bank debt; at end-September 2017, net gearing was 18.7%.
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