The top three performers for the quarter were Shopify Inc, Storage Vault Canada and NexGen Energy.  The three names contributed +2.1%.  At this juncture, all three names continue to be held.

Shopify is one of the better technology names to have come public in Canada this cycle. This company helps enable small to mid size businesses develop and operate their ecommerce platforms.  Shopify’s growth has been spectacular (at 90 plus percent) and the company has considerable run room to grow with new customer wins accelerating. 

Storage Vault’s primary business is owning, operating and renting self storage containers.  Since its IPO in 2015, Storage Vault has been consistently delivering solid revenue growth through enhanced capacity utilization, price increases and acquisitions.  Despite Storage Vault’s exceptional stock performance, the company still trades at a significant discount to its US peers despite having superior revenue growth.

NexGen Energy had a significant pull back during the later half of 2016 due the uranium price declining and a slow news period for the company. With the uranium price increasing in 2017 and positive winter drilling results, NexGen’s stocks price was up over 35%.  Their company’s Arrow deposit is clearly one of the best undeveloped uranium assets in the world.  The company continues to push forward on drilling however we anticipate that NexGen will need to decide in the near future on whether to develop the asset on its own or look for a large strategic partner. 

The three worst performing names were Corsa Coal, Trinidad Drilling and Pine Cliff Energy.  The combined negative attribution in the quarter from these three names was -1.5%.  There is no surprise that the names listed above struggled given the pull back experienced in the energy sector. 

Corsa Coal had a significant move through most of last year and the pull back experienced this quarter was not surprising given the recent volatility of the commodity. The portfolio had reduced its position in Corsa last year on price appreciation.  Given the continued short supply of quality metallurgical coal globally, we are comfortable holding this position.

The other two names are also energy stocks.  As mentioned above, the energy sector suffered a dramatic decline last quarter, as the US ramped up shale production and investors feared a potential border tax on Canadian exports.    The threat of this border tax caused further downward pressure on energy stock valuations as American investors repatriated their capital to their domestic companies who do not face the same political risk.  Towards the end of the quarter, we added to the energy sector expecting drawdowns in gas through the spring. Pine Cliff was one of the stocks the portfolio increased.  Pine Cliff is a low-cost gas producer with a strong balance sheet.  In the quarter a large shareholder exited their position, creating an opportunity to pick the name up at a significant discount to its peers. In March, Trinidad Drilling was sold out of the portfolio. 

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