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Investment Philosophy

The investment philosophy behind the BT Global Growth Fund is to provide investors with a global investment approach via the Canadian equity markets and hedge their portfolios against the negative effects of the unprecedented growth in money supply and the subsequent devaluation of paper currencies globally. The Fund is a value-oriented, long/short equity product created to provide an investment vehicle for Canadian high-net-worth investors and family offices to augment their portfolio returns through long-term capital appreciation.

Our Idea Generation Process

In-house Strategies

Some of our favorite themes include disruptive industrial and resource utilization patterns, identification of over-hyped stories as well as global trends in demographics, economic growth and resource consumption.

Industry Specialists Validation

We seek inputs from experts in specific industries such as agriculture, oil and gas, banking and finance, precious metals, uranium, healthcare including cannabis, telecommunications and various other sectors. This allows us to confirm or challenge our hypotheses, therefore making our conclusions more robust.

Proprietary Research

BT Global Growth’s management team perform in-house analysis of trends in the market. In addition, management conducts interviews with company executives, industry consultants, opinion leaders and research analysts.

Fund Investors’ Input

Fund investors are high-net-worth individuals and family offices, many of whom are experts in their industries. This includes over 30 senior executives of private and public companies with a solid expertise in a broad range of Canadian industries. Our investors have a strong commitment to share ideas and insights.

Strategically Well Positioned

The Fund’s Management Team is supported by some of the best investment professionals in the country. We are often given the best investment ideas and new issue opportunities from a myriad of independent Brokerage houses. We also have strategic relationships with research firms, other hedge funds and financial advisors that assist us in navigating these volatile markets

Our Investment Selection Process

  1. Identify global growth investment themes.
  2. Assess the company’s competitiveness on a global scale.
  3. Analyze corporate financial information for cash flow value (low P/CF multiples).
  4. Verify the oligopolistic nature of the industry.
  5. Make sure the balance sheet risks are minimal.
  6. Perform scenario analysis given changes in inflation and competition level.
  7. Find ways to hedge out the industry exposure through shorting overvalued companies and industry specific ETFs.

Investment Themes

The best source of our latest investment themes can be found in our latest Podcasts and Monthly reports.

  1. Certain Resource Sectors are in multi-decade upswing, which will benefit Canada as much as any global economy and have a negative impact on other economic sectors.
  2. The growth of 300-400 million people to “middle class” status in emerging markets will continue to be on of the greatest investment opportunities of our generation.
  3. For the next 5-10 years you want to own hard assets in your investment portfolio:
    1. Gold
    2. Silver
    3. Agri-products
  4. Canadian industries that are “protected oligopolies” (Banking, Insurance, Utilities and Telecom), are, in our opinion, expensive and approaching full price. With technological advancements targeting the Banking Industry, we do not believe this protected privileged position in Canada is as sustainable as one would think and we prefer to invest our money elsewhere.
  5. Financial assets, including Bank stocks, have been so good for so long that investors have forgotten or underestimated the risks. Technology risk is significant for Canadian Banks. It is our view that non-bank financial companies offer much more interesting opportunities.
  1. Inflation, and very possibly stagflation, is coming:
    1. We do not believe government-supplied CPI statistics, as there is plenty of evidence these numbers are understated;
    2. As inflation creeps into our economy, bonds and financial companies are not what investors want to own;
    3. Higher inflation will provide excellent short opportunities.
  2. Zombie companies, companies that have very high levels of debt and low levels of growth, are to be avoided as long positions. In our view, they will have major issues repaying their debt and can’t grow through acquisition or expand through capital expenditure, making them interesting short plays.
  3. In our opinion, the 35+ year bull market in bonds is over. It was a great run! Going forward interest rates will be more volatile, resulting in increased duration risk and lower returns.

Risk Management

  • Single industry exposure is limited to a maximum net exposure of 20% of the Fund.
  • Individual exposure should be a maximum of 10% of the Fund.
  • Ideally the Fund has a minimum of 15-20 long positions, with each name representing 2% – 5% of the Fund at the outset.
  • Ideally the Fund has a minimum of 10-15 short positions, with total short positions representing a minimum 20% of the Fund and preferably 30% – 35%.
  • Losses on a short position are reviewed at 5% increments and closed out in the event of a 20% loss.
  • We plan to be active in pair trading, with monthly reviewing and rebalancing.
  • We focus on “averaging up” successful positions.
  • In general, we aim to hold core positions for several years, which typically represent 30% – 40% of the Fund.
  • We will trade around core positions and earn interest income to offset management fees and other operating costs.
  • With specific brokers, we plan to manage currency risk at very low cost.
  • We will make judicious use of “stop losses”.
  • We actively generate income and hedge equity exposure through trading options.
  • We like to have a high yield component of 10% – 20% in bonds that yield 10% or more.

For more information about our organization and to learn more about our investment Fund and our investment philosophy, we invite you to contact our Montreal based Hedge Fund today. It will be our pleasure to answer your questions.

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