CANSO INVESTMENT COUNSEL LTD.

Transcription

1 CANSO INVESTMENT COUNSEL LTD. PBY-5A Canso Canso Lysander Conference Call January

2 Important Disclosures 1 Source: PC-Bond, a business unit of TSX Inc. Copyright TSX Inc. All rights reserved. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns for the period indicated including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any unit holder that would have reduced returns. Mutual funds are not guaranteed or insured, their values change frequently and past performance may not be repeated. This document is not an invitation to invest in the funds, nor does it constitute a public offering. THE USER AGREES THAT PC-BOND AND THE PARTIES FROM WHOM PC-BOND OBTAINS DATA DO NOT HAVE ANY LIABILITY FOR THE ACCURACY OR COMPLETENESS OF THE DATA PROVIDED OR FOR DELAYS, INTERRUPTIONS OR OMMISIONS THEREIN OR THE RESULTS TO BE OBTAINED THROUGH THE USE OF THIS DATA. THE USER FURTHER AGREES THAT NEITHER PC-BOND NOR THE PARTIES FROM WHOM IT OBTAINS DATA MAKE ANY REPRESENTATION, WARRANTY OR CONDITION, EITHER EXPRESS OR IMPLIED, AS TO THE RESULTS TO BE OBTAINED FROM THE USE OF THE DATA, OR AS TO THE MERCHANTABLE QUALITY OR FITNESS OF THE DATA FOR A PARTICULAR PURPOSE. 2

3 Lysander Funds: Annualized Returns As at Dec 31 st, 2013 Lysander Funds 1 Year Since Inception Lysander Corporate Value Bond Fund (LYZ 801F) Series A Series F 7.7% 8.3% (Dec 23 rd, 2011) 8.3% 9.0% Lysander Bond Fund (LYZ 804F) Series A Series F Lysander Balanced Fund (LYZ 800F) Series A Series F 0.1% 0.7% 29.5% 30.6% (Dec 28 th, 2011) 2.7% 3.2% (Dec 28 th, 2011) 22.7% 23.4% Canso Credit Income Fund (PBY.UN) Series A Series F Canso Select Opportunities Fund (SCW.UN) Series A Series F 12.4% 12.8% N/A N/A * Returns for SCW.UN can not be disclosed until the first completed year of operation (July 16 th, 2010) 9.2% 9.6% Dec 31, 2013 NAV Class A : Class F : See additional disclosures on slide 2 3

4 Canso Pooled Funds: Annualized Returns As at Dec 31 st, 2013 Pooled Funds 6 mo 1 Year 3 Years 5 Years 10 Years Since Inception Canso Short Term & Floating Rate Fund 1.9% 3.0% 4.1% 4.8% - 4.4% (Jan/06) DEX Short Term Bond Index 1.4% 1.7% 2.8% 3.3% - 4.1% Canso Canadian Bond Fund 1.8% 2.2% 5.4% 6.4% - 6.1% (Mar/08) DEX Universe Bond Index 1 0.5% -1.2% 3.9% 4.8% - 4.8% Canso Corporate Bond Fund 2.5% 3.1% 6.5% 8.3% - 6.5% (June/04) DEX Corporate Bond Index 1 1.3% 0.8% 5.1% 7.7% - 6.0% Canso Corporate Value Fund 6.7% 9.9% 9.5% 13.0% 9.1% 10.4% (Dec /00) DEX Corporate Bond Index 1 1.3% 0.8% 5.1% 7.7% 5.8% 6.5% Performance for the Canso pooled funds is calculated net of Class C management fees which range from 0.3% to 0.5% per annum plus operating expenses See additional disclosures on slide 2 4

5 Market Environment: 2013 was a great year for equities. Rising yields hurt fixed rate securities. Floating rate assets are in demand. High Yield and Bank Loan market is very speculative. Quality spreads have contracted. 5

6 DEX Index Performance Annual Returns: % 35% 30% 25% 20% 15% 10% 5% 0% -5% Source: TMX Group Inc. DEX Universe DEX Corp orate 7

7 Canadian Bond Yields and Inflation (Yield of DEX Long Index and Canadian YOY CPI) INFLATION Source: TMX Group Inc. 7

8 Bankers at it Again 1,200,000 US Leveraged Loan and High Yield Issuance 1,000, , , , ,000 - High Yield Leveraged Loan Source: Bloomberg 8

9 Credit Spreads Remain Attractive DEX Mid Corporate versus Mid Canada Yield Spread Source: TMX Group 9

10 RBS Bonds Rally RBS 6.666%, October 2017 RBS 5.37%, May 2016 Source: TMX Group 10

11 Financial Bond Yields (2016 Maturities in Canadian Dollars) Lloyds Bank PLC Euro Debt Crisis Royal Bank of Canada Source: TMX Group 11

12 Analysis Process Financial Capacity Liquidity Cashflow & Business Default Risk Security & Covenants Economy Industry CANSO RATING MAXIMUM LOSS 12

13 Credit Analysis: New management with success in turnarounds. Company s patents estimated at $1.5 - $3.5 billion. Sr. 7 year, 6% coupon, convertible at US $10. Limited additional debt. Possible significant upside from return to profitability. CANSO RATING: B+ MAXIMUM LOSS: 1 13

14 Outlook Global economies improving. Monetary policy will eventually tighten. Less money from central banks. Interest rates should trend higher. 14

15 Significant Value-Added by Informed Credit Selection. 15