Q4 2015 Relative calm after sharp declines in Q3 TheS&P/TSXCompositeindexslumped2.2% inq4onapriceonlybasis.with244stocksin the index at quarter end, 111 rose, 132 declined, and 1 was unchanged. The sector also saw 2 additions and 4 constituents removedfromtheindexduringthequarter. The S&P/TSX small and midcap indices outperformed the broader index, while the largecapunderperformedinq4 The Information Technology sector posted the biggest gain in the S&P/TSX priceonly basis,gaining10.3%inq4. The Consumer Staples, Financials, and Materials sectors also gained through Q4, whiletheremaining6sector sretreated. ExcludingValeantPharmaceuticals(VRX),the S&P/TSX Composite was close to being flat QoQ in Q4. Valeant ended the year down 15.5%,comparedwitha108%mid2015gain which was erased after its drug pricing strategiescameunderfireanditbecamethe targetofashortsellerreport. 2015 Index Returns (price only) Q4 YTD S&P/TSXComposite 2.23% 11.09% S&P/TSX60 2.55% 10.56% S&P/TSXCompletion 1.21% 12.68% S&P/TSXSmallCap 0.35% 15.84% Top 10 Point Contributors CanadianNaturalResourcesLtd. (+37.0) BankofMont(+27.2) TorontoDominionBank(+24.3) BlackberryLtd.(+17.1) TransCanadaCorp.(+16.9) BarrickGoldCorp.(+16.3) CGIGroupInc.(+15.7) BrookfieldAssetManagement Inc.(+11.5) CanadianNationalRailwayCo. (+10.1) FairFaxFinancialHoldingsLtd. (+8.6) Top 10 Point Detractors ValeantPharmaceuticals InternationalInc.(250.2) BankofNovaScotia(27.5) PotashCorpofSaskatchewan( 24.8) MagnaInternationalInc.(24.5) EnbridgeInc.(24.1) CenovusEnergyInc.(18.2) TELUSCorp.(18.1) CanadianPacificRailwayLtd.( 17.2) CanadianImperialBankof Commerce(14.8) HuskyEnergyInc.(14.4) 20.0% 10.0% InfoTech +10.3% Q4 2015 S&P/TSX Composite Index Performance by Sector (Price only) Source: Bloomberg 0.0% Materials +3.1% Financials +0.6% Cons. Staples +0.5% 10.0% Industrials 1.6% S&P/TSX Index 2.2% Energy 2.6% Utilities 2.6% Telecom 2.8% Cons. Discretionary 5.7% 20.0% 30.0% 40.0% Healthcare 36.9% www.veruswealthmanagement.com
Sector Financials 38.28%ofS&P/TSXComposite Energy 18.45%ofS&P/TSXComposite Materials 9.50%ofS&P/TSXComposite Industrials 8.27%ofS&P/TSXComposite ConsumerDiscretionary 6.91%ofS&P/TSXComposite price-only return +0.6% 2.6% +3.1% 1.6% 5.7% total return +1.7% 1.6% +3.8% 1.2% 5.3% Notable Movement Ofthesector s46constituentsatquarterend,20advancedwhilethe other26retreated. BankofNovaScotia(BNS,4.9%)wasthesector sbiggestlaggardas Q4/15resultsmissedexpectations. Bank of Mont (BMO, +1.3%) was the sector s largest point contributorasthecompanysaidfiscalfourthquarterprofitrose13%, ledbycapitalmarketsandu.s.banking.thelenderraiseditsquarterly dividend2.4%to$0.84. 22oftheEnergysector s59constituentsgainedthroughq4,whilethe remaining37retreated,takingintoaccountthat4constituentswere removed. Canadian Natural Resources Ltd. (CNQ, +16.3%) was the sector s largest point contributor after agreeing to combine their royalty business with PrairieSky Royalty Ltd (PSK). PrairieSky will acquire a substantial portion of Canadian Natural s royalty assets for C$1.8 billion($1.4billion),consistingofc$680millionincashandabout44.4 millionprairieskysharesatc$25.20apiece Enbridge Inc. (ENB,7.2%) was the sector s biggest laggard through thefourthquarterafteru.s.peerkindermorgan(kmi)cutitsdividend by75%. The Materials sector saw 30 of its 46 constituents rise through Q4 while 15 retreated. There was also one constituent that remained unchanged. Barrick Gold Corp. (ABX, +20.6%) the world s largest gold producer wasthesector slargestpointcontributorafterreboundingfroma25 year low as thirdquarter earnings beat analysts estimates and gold pricesralliedatthebeginningofthequarter. PotashCorpofSaskatchewan(POT,13.6%)wasthesector sbiggest laggardafterthecompanywithdrewits7.85billioneuroproposalto acquire Germany s K+S AG amid a decline global commodity and equitymarkets. 9ofthesector s23constituentsroseduringthefourthquarterwhile theremaining14declined. CanadianNationalRailwayCo.(CNR,+2.1%)wasthesector slargest pointcontributorduringthefourthquarter. Canadian Pacific Railway Ltd. (CP,7.7%) was the sector s biggest laggardafterthecompanyexploredthetakeoverofu.scarriernorfolk SouthernCorp.inafreshattempttoconsolidatetheNorthAmerican industry.norfolkrejectedcanadianpacificrailway soriginaloffer. TheConsumerDiscretionarysectorsaw7ofits26constituent srise, whiletheremaining19fellthroughq4. Restaurant Brands International Inc. (QSR, +7.7%) owner of the Burger King and Tim Hortons chains, was the sector s largest point contributor after posting thirdquarter profit that topped analysts estimatesafternewmenuitemslikefierychickenfrieshelpedattract customers. Magna International Inc. (MG, 12.3%) was the sector s biggest laggard, sliding the most in more than four years after the largest North American autoparts supplier said currency exchange rates trimmed about $870 million from thirdquarter revenue, which fell shortofanalysts estimates.
Telecommunications Services 5.42%ofS&P/TSXComposite ConsumerStaples 4.49%ofS&P/TSXComposite InformationTechnology 3.21%ofS&P/TSXComposite Healthcare 3.17%ofS&P/TSXComposite Utilities 2.30%ofS&P/TSXComposite 2.8% +0.5% +10.3% 36.9% 2.6% 1.7% +0.8% +10.5% 36.9% 1.3% shortofanalysts estimates. 2ofthe4constituentsintheTelecommunicationsServicessectorrose duringthefourthquarterwhiletheothertwolost. TELUS Corp. (T,9.0%) was the sector s biggest laggard after Shaw Communicationsannounced plans tobuy Wind Mobile and compete headtoheadwiththethreewirelessincumbents. Rogers Communications Inc. (RCI.B, +3.8%) was the sector s largest point contributor after reporting thirdquarter earnings that topped analysts estimatesasitaddedmoresubscribersthanprojected. Ofthesector s10constituentsatquarterend,5advancedwhilethe other5retreated. Saputo Inc. (SAP, +13.0%) was the sector s largest point contributor after the company bought Woolwich Dairy for C$80 million, which generatesc$70minrevenueayear. LoblawCosLtd.(L,4.9%)wastheConsumerStaplesbiggestlaggard throughq4. TheInformationTechnologysectorsaw9ofitsconstituentsriseinthe fourthquarter,whiletheother4declined.therewasalsoanaddition ofoneconstituent. BlackberryLtd.(BB,+56.8)wasthesector slargestpointcontributor asthecompanyhaditsbiggestjumpsincejanuaryafterseeingitsnew Androidphone,theBlackberryPriv,hittingthemarketsinNovember. Thecompanyalsoreportedthatthenewmobiledeviceisbeingsoldat WalMartstores. DHCorp.(DH,19.3%)wasthesector sbiggestlaggardafterbecoming thetargetofa shortseller report. The Healthcare sector saw 3 constituents rise during Q4, while the remaining2declined. ProMeticLifeSciencesInc.(PLI,+128.6%)wastheHealthcaresector s biggestpointcontributorinq4. Valeant Pharmaceuticals International Inc. (VRX, 41.0%) was the sector sbiggestlaggardafterastockcommentarysiterunbyashort selleraccusedthecompanyofanenronlikestrategyofrecordingfake salesbyusingphonycustomers.citronresearchsaidvaleantisusinga specialtypharmacycalledphilidorrxservicestostoreinventoryand recordthosetransactionsassales. 4 of the Utilities sector s 12 constituents gained in Q4 while the remaining8declined. Canadian Utilities Ltd. (CU,11.6%) was the sector s biggest laggard after the company posted thirdquarter profit that missed analysts estimates. Algonquin Power & Utilities Corp. (AQN, +15.6%) was the sector s largestpointcontributor.
Q4 2015 Year Ends on Defensive Note TheS&P500indexgained6.5%throughQ4onaprice only basis. With 512 stocks in the index, 367 rose while 145 fell, after considering 7 additions and 8 removalstotheindex. The Dow Jones Industrial Average and NASDAQ Compositeoutperformedthebroaderindexwhilethe Russell2000underperformedtheS&P500. Theonlysectorthatdeclinedinthequarterwasthe Energy sector (0.6%), while the remaining ten sectors gained, led by the Materials sector, which was up 9.1%, followed closely by Health Care and Information Technology, which were up 8.8% and 8.7%,respectively. Whileequitieswerestronginthefourthquarter,all of the gains were delivered in October, with NovemberandDecemberremainingrelativelyrange bound. In addition, while Q4 was positive, the S&P 500 recorded a negative return in 2015, its first calendaryearlosssince2008. Marketswereagaindrivenbyeconomicdatareleases as investors awaited the first rate hike by the U.S. FederalReservesince2006. 2015 Index Returns (price only) Q4 YTD S&P500 +6.45% 0.73% DowJonesIndustrialAverage +7.00% 2.23% NASDAQComposite +8.38% +5.73% Russell2000 +3.20% 5.71% Top 10 Point Contributors MicrosoftCorp(+10.2) Amazon.comInc.(+7.1) GeneralElectricCo.(+6.7) AlphabetInc.(GOOG,+5.1) AlphabetInc.(GOOGL, +4.6) FacebookInc.(+3.8) Johnson&Johnson(+2.9) HomeDepotInc.(+2.4) ChevronCorp.(+2.4) IntelCorp.(+2.3) Top 10 Point Detractors AppleInc.(3.3) KinderMorganInc.(2.6) UnionPacificCorp.(1.0) WilliamsCosInc.(0.9) ChipotleMexicanGrill Inc.(0.9) InternationalBusiness Machine(0.8) QUALCOMMInc.(0.7) AnadarkoPetroleum Corp.(0.7) WalMartStoresInc.( 0.6) Macy sinc.(0.6) 10.0% Q4 2015 S&P 500 Index Performance by Sector (Price Only) Materials +9.1% Healthcare +8.8% InfoTech +8.7% Source: Bloomberg 8.0% 6.0% Industrials +7.4% Cons. Staples +6.9% S&P500 +6.5% Telecom +6.2% Financials +5.4% Cons. Discretionary +5.4% 4.0% 2.0% 0.0% Utilities +0.1% 2.0% Energy 0.6%
Sector Information Technology 20.69%ofS&P500Index Financials 16.47%ofS&P500Index Healthcare 15.16%ofS&P500Index Consumer Discretionary 12.89%ofS&P500Index ConsumerStaples 10.06%ofS&P500Index Industrials 10.05%ofS&P500Index price-only return +8.7% +5.4% +8.8% +5.4% +6.9% +7.4% total return +9.2% +5.9% +9.2% +5.8% +7.6% +8.0% Notable Movement TheInformationTechnologysectorsaw55ofits69constituentsgainthrough thefourthquarter,while16declined.thereweso2constituentsaddedand 2constituentsremovedfromtheInformationTechnologysectorinthefourth quarter. MicrosoftCorp.(MSFT,+25.4%)wasthesector slargestpointcontributorafter reportingfiscalfirstquarterprofitthatexceededanalysts estimates,buoyedby demand for Internetbased programs that handle business tasks and host companies applications. Apple Inc. (AAPL, 4.6%) was the Information Technology sector s biggest laggard throughout Q4 on concerns that iphone sales are weaker than expected. 72 of the Financials sector s 89 constituents gained through Q4, while 17 declined. JPMorganChase(JPM,+8.3)wasthesector slargestpointcontributor,leading positiveperformanceforthelargemoneycenterbanksinthequarter. AmericanExpress(AXP,6.2%),thecreditcardissuergrapplingwiththelossof a few contracts, was the sector s biggest laggard afterposting thirdquarter profitthatmissedanalysts estimatesasexpensesroseandrevenuedeclined. The Healthcare sector had 45 of its 56 constituents gain through the fourth quarter,withtheother11declining.thesectoralsosaw1constituentaddedin Q4. Johnson & Johnson (JNJ, +10.0%), the world s biggest maker of healthcare products, was the sector s largest point contributor after the company beat analysts forthirdquarterprofit. HCA Holdings (HCA,12.6%) was the sector s biggest laggard after the U.S. hospitalchainreportedpreliminarythirdquarterearningsthatmissedanalysts estimates, raising concerns across the industry of an increase in uninsured patientswhocan tpaytheirbills. 54of89constituentsintheConsumerDiscretionarysectorgainedinthefourth quarter while the remaining 35 declined.the sector also saw 1 constituent addedand2removed. Amazon.comInc.(AMZN,+32.0)wasthesector slargestpointcontributorafter thirdquarter sales topped analysts estimates thanks to the company s fast growing cloudcomputing division, aboost fromits JulyPrime Day promotion andawatchfuleyeonspending. ChipotleMexican GrillInc.(CMG,33.4%)wasthesector sbiggestlaggardin the fourth quarter after the U.S. Centers for Disease Control and Prevention reportedsevennewinstancesofconsumersfallingillduetoane.colioutbreak that sbeenlinkedtothemexicanfoodchain. 34 of the Consumer Staples 38 constituents advanced in Q4, while the remaining4retreated.therewasalsooneconstituentaddedtothesector. Procter & Gamble Co. (PG, +10.4) the world s largest consumerproducts maker, was the sector s largest point contributor after posting firstquarter profit that topped analysts estimates as Chief Executive Officer A.G. Lafley s costcuttingprogramhelpedthecompanycopewithdecliningsales. WalMart Stores Inc. (WMT,5.5%) was the sector s biggest detractor after sufferingitsworststockdeclineinmorethan15yearsafterpredictingadropin annualprofit,underscoringthegiantretailer sstrugglestoreignitegrowth. The Industrials sector saw 49 of its 67 constituents rise during the fourth quarterwhiletheremaining18retreated. General Electric Co. (GE, +23.5%) was the sector s largest point contributor afterbeatinganalysts thirdquarterearningsestimates,buoyedbygainsinthe aviation and transportation units, as the industrial giant reemphasized manufacturingandaccelerateditsretreatfromfinance. UnionPacificCorp.(UNP,11.6%)wasthesector sbiggestlaggardasconcerns about weak volumes combined with ongoing weakness in its coal business weighedontheshareprice.
Energy 6.50%ofS&P500Index Utilities 2.99%ofS&P500Index Materials 2.76%ofS&P500Index Telecommunications Services 2.43%ofS&P500Index 0.6% +0.1% +9.1% +6.2% +0.2% +1.1% +9.7% +7.6% Of the 40 constituents in the Energy sector, 16 were positive while 24 constituentswerenegativeinq4 Kinder Morgan Inc. (KMI,46.1%) was the sector s biggest laggard after the company cut its 2016 dividend by 74 percent as the decline in crude prices reducedcashflowneededtocoverdebtpaymentsandcapitalexpenditures. Chevron Corp. (CVX, +14.1%) was the sector s largest point contributor after beating analysts thirdquarter earnings estimates and cutting 60007000 jobs forthenewyear(10%ofitsworkforce). The Utilities sector saw 18 of its 29 constituents rise through Q4 while the remaining11fell. NextEra Energy Inc. (NEE, +6.5%) was the sector s largest point contributor afteragreeingtoselltwonaturalgasfiredgeneratorsintexastoanaffiliateof EnergyFutureHoldingsCorp.for$1.59billion. Public Service Enterprise Group Inc. (PEG, 8.2%) was the Utilities sector biggestlaggardafterreportingaslightearningsmissinlateoctober,followed byaratingdowngradetoholdatdeutschebank. 20 of the Materials 28 constituents gained in the fourth quarter, while the remaining8declined.thematerialssectoralsosaw1constituentremovedin thefourthquarter. DuPont (DD, +38.2%) was the sector s largest point contributor after Dow ChemicalCo.andDuPontCo.announcedplanstojoininanallstockmergerof equalsthat sthefirststepinaplantocreatethreenewbusinesses. FreeportMcMoRan Inc. (FCX,30.1%) was the sector s biggest laggard after reporting thirdquarter results that missed analysts estimates by a wide margin. Ongoing weakness in commodity prices, particularly copper and oil, alsoweighedontheshareprice. 4ofthe5constituentsintheTelecommunicationsServicessectorgainedwhile theother1retreated. AT&TInc.(T,+5.6%)wasthesector slargestpointcontributor,followedclosely byverizon(vz)(+6.2%). Frontier Communications Corp. (FTR, 1.7%) was the only company in the sectortodeclineinthequarter.
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