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 subsequent devaluation of paper currencies globally. The Fund is a value-oriented, long/short equity product created to provide an investment vehicle for high-net-worth investors to augment their portfolio returns, through long-term capital appreciation.
Our Idea Generation Process
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 the oil and gas, uranium, banking and finance, precious metals, agriculture, healthcare, cannabis, telecommunications, water and various other sectors. This allows us to confirm or challenge our hypotheses, therefore making our conclusions more robust.
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 all High Net Worth individuals, many of whom are experts in their industries. This includes over 25 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.
Our Investment Selection Process
- Identify global growth investment themes.
- Analyze for cash flow value (low P/CF multiples).
- Assess company’s competitiveness on a global scale.
- Verify the oligopolistic nature of the industry.
- Make sure the balance sheet risks are minimal.
- Perform scenario analysis given changes in inflation and competition level.
- The Resource Sector will benefit Canada as much as any global economy and have a negative impact on certain economic sectors.
- 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.
- For the next 5-10 years you want to own hard assets in your investment portfolio:
- Anything you can touch, feel and eat will not only retain its value, but will increase in value relative to cash, bonds, debt credit derivatives, financials, etc.
- In our opinion, the 33 year bull market in bonds is over, 1982 – 2015. It was a great run!
- Financial assets, including Bank stocks, have been so good for so long, investors have forgotten or underestimated the risks. Technology risk is significant for Canadian Banks. Non-bank financial companies offer much more interesting opportunities.
- Inflation and very possibly stagflation is coming:
- We do not believe government supplied CPI statistics, as there is plenty of evidence these numbers are understated;
- As inflation creeps into our economy, bonds and financial companies are not what investors want to own;
- Higher inflation will provide excellent short opportunities.
- Leverage is to be avoided:
- Short overly levered companies, they will face massive dilution;
- Stay long cash-rich, debt-free equivalents;
- No use of Long leverage. No borrowed money!
- Single sector exposure in any one sector should be maximum 20%.
- Individual exposure should be maximum 10%.
- Ideally the Fund has a minimum 15 long positions, 2% – 5% initial positions per name.
- Ideally the Fund has a minimum 10-15 short positions, representing at least 20% – 35% of the Fund.
- Once a short position is established, we do not intend to add to it if we lose money; and review within 3 months to either close it or double down.
- 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 review and rebalancing.
- We focus on “averaging up” successful positions.
- In general, we endeavour to have many core positions held for several years.
- Will trade around core positions and earn interest income which will offset management fees and other operating costs.
- With specific brokers we plan to manage currency risk at very low cost.
- We make judicious use of “stop losses”.
- More recently we obtained our options licence and now actively generate income and hedge equity exposure through trading options.
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.