Election 2015: Change is Coming
by Scott Coleman
Election Day falls on October 19th this year, and for many Canadians, it represents the hard-fought opportunity to exercise our right to vote. Further than that, the election is a symbol for change – for new beginnings, and a new Canada. This election, seemingly more than others of the recent past, has been riddled with uncertainty around the identity of our new Prime Minister. Voters have faced a brand new set of challenges as a result of Canada’s ever-changing - and at times, volatile, political and economic environments. With depressed oil prices, a weakened Canadian dollar, historically low interest rates, and increased unemployment - our new Prime Minister will have their hands full. What is certain for investors is that the economy of Canada is transforming, and with it, policies that will shape the future of Canadian investments.
For investors specifically, some of the most notable challenges out of 2015 include lending rate cuts by the Bank of Canada, and extreme shifts in the landscape of Canadian oil companies. In January, and then June of 2015, investors were subject to two separate overnight lending rate cuts by the Bank of Canada. These cuts drove interest rates to historical lows, and heightened volatility in various asset classes that were once thought to be safe solutions for generating income (see Market Intelligence for September 2015 – “Preferred Shares: The Perfect Storm”). In addition to the Bank of Canada's actions, declining oil prices have created an environment in which oil producers and service providers have experienced record layoffs, falling stocks, and decreased investor confidence. However, despite unfavorable conditions, the most important piece to keep in mind is that our ups cannot be experienced without downs.
At McLean & Partners, we are focused and confident in our ability to make the best decisions for our clients – regardless of market volatility. Our bottom-up fundamental research analysis, coupled with a stringent investment process, enables us to continually make sound returns on a global scale. We approach our buying discipline with the perspective of a business owner, and in many cases, will own companies for over three years if our thesis remains consistent. We constantly measure companies against our investment criteria, which include, but are not limited to: sustainable competitive advantage, stable or growing ROE/ROC, growing free cash flows, an appropriate balance sheet, valuations that represent a discount to intrinsic value, and a sound management team with a proven track record.
Whoever our Prime Minister is tomorrow, have confidence in our commitment to making the best possible investment decisions for you and your family. Know that despite this changing world, our team of professionals are on your side, and are dedicated to forging through economic challenges. Happy voting!