NexC Partners Corp. January Commentary

Market Commentary

Global stock markets pulled back sharply after closing out 2013 at the highs, as heightened emerging market volatility triggered a broad sell off across risk assets. Destabilizing events in Turkey and Argentina received the majority of the headlines. Furthermore, weaker Chinese manufacturing data pointing towards a slowdown also fuelled negative sentiment. As a result, foreign investment flows broadly exited the emerging market (EM) space and into safe havens such as bonds and gold. In the U.S., an unexpectedly poor payrolls number was at odds with recent upward trends in economic data. Despite the market turbulence, the Fed tapered an additional $10 billion, signaling that it was staying the course for an eventual exit from its QE program. In Canada, weak employment and trade data suggested that the BOC would maintain a dovish stance going forward.

Fund Commentary

The Fund gained in the month of January despite the end of month selloff in equities. The Fund’s diversification helped as its exposure to REITs, utilities and health care offset losses in information technology, consumer discretionary and financials. The best performing sectors were utilities, real estate and health care, while the worst performing sectors were financials, consumer discretionary and information technology.

The best performing stocks were Merck, American Electric and TransAlta, and the worst performing stocks were Bank of Nova Scotia, Shaw Communications and CIBC. Merck continues to gain on strong fundamentals as better earnings and positive news from successes in their Alzheimer’s, melanoma, hepatitis and cholesterol pipeline buoyed their stock. American Electric and TransAlta were up as increased demand from colder weather in December and January buoyed the sector. Canadian banks sold off into month end and both Bank of Nova Scotia and CIBC were down immediately after the end of month FOMC meeting. Shaw Communications fell due to missed earnings mid-month followed by the broad market selloff at month end.

The current portfolio holds 12 U.S. equities and 28 Canadian equities, and continues to hedge USD currency exposure maintaining a net USD exposure of approximately 10% of the fund’s net asset value. The Fund continued the option overwriting program on 14 Canadian names and 5 U.S. names. The Fund has not deployed leverage.

Return to Post Listing

Fields marked with an * are requiredLES CHAMPS MARQUÉS D'UN * SONT OBLIGATOIRES
Fields marked with an * are requiredLES CHAMPS MARQUÉS D'UN * SONT OBLIGATOIRES

ENTER THE WORD "ANTISPAM" INTO THIS BOX
(WITHOUT THE QUOTATION MARKS)