November 2018 Commentary

November yielded another difficult month to read for equity investors. While the performance of various indices finished in positive territory, we have been hard pressed to find anyone actually comforted by that fact. The month was full of volatility, troubling market and economic signals and ominous political developments. Perhaps the slight positive performance of both the S&P 500 and the TSX Composite were cold comfort to equity investors because of the sheer magnitude of the drop in October, making the bounce seem paltry. For us at Forge First, the month brought a slight decline with negative performance driven largely by the reasonably low cyclical exposure that we do have, namely in energy and industrials.  In particular two of our highest conviction long positions, Parex Resources Inc. (PXT.CA) and Parkland Fuel Corp (PKI.CA) were a disproportionate percentage of the decline, something we truly do not believe is going to be repeated. Positive contributions came from our consumer focused companies, real estate exposure, and market protection option strategies. Unsurprisingly, TSX positive performance was driven by the most defensive sectors with consumer staples, utilities and telco’s leading the positive performance. 

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