| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.1% | -3.7% | -3.7% |
Bristol Gate's Canadian Equity Strategy declined 3.7% net in Q1 2026, underperforming the S&P/TSX Composite's 3.9% gain by 745 basis points. The underperformance was driven primarily by structural sector positioning during a narrow, commodity-led market rally. Energy surged 30.1% on Middle East geopolitical tensions while Materials gained 10.7% as gold surpassed $5,000 per ounce. The portfolio's dividend-growth framework creates intentional underweights to these commodity-sensitive sectors, resulting in 251 basis points of negative allocation from Energy alone. Stock selection headwinds came from TerraVest Industries, Pet Valu Holdings, and Element Fleet Management, which declined despite solid fundamentals as capital rotated toward large-cap commodity plays. Positive contributors included Toromont Industries and TFI International. The strategy's zero weight in Information Technology, which fell 22.5%, provided 245 basis points of positive attribution. Management maintains conviction in the portfolio's high-quality holdings with durable cash flows and dividend growth visibility, viewing Q1's underperformance as cyclical rather than structural.
Bristol Gate maintains a dividend-growth focused strategy targeting high-quality Canadian companies with durable free cash flows and conservative balance sheets, accepting structural underweights to commodity sectors in favor of businesses with sustainable competitive advantages and consistent dividend growth potential.
The portfolio remains concentrated in high-quality Canadian companies with durable cash flows, conservative balance sheets, and clear dividend growth visibility. This approach results in periods of underperformance during cyclical or commodity-led rallies but is well positioned to deliver attractive risk-adjusted returns and growing income over full market cycles.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 21 2026 | 2026 Q1 | CM.TO, CP.TO, EFN.TO, PET.TO, TFII.TO, TIH.TO, TRI.TO, TVK.TO | Canada, commodities, dividends, energy, industrials, materials, Quality | - | Bristol Gate underperformed by 745bp in Q1 as commodity sectors surged while quality dividend-growth stocks lagged. Energy's 30% rally and gold hitting $5,000 drove narrow market leadership that penalized the strategy's structural underweights. Stock-specific weakness in TerraVest and Pet Valu compounded allocation headwinds. Management maintains conviction in high-quality holdings positioned for full-cycle outperformance. |
| Jan 20 2026 | 2025 Q4 | CLS.TO, CM.TO, DOL.TO, EFN.TO, ENGH.TO, EQB.TO, FSV.TO, L.TO, OTEX.TO, PBH.TO, PET.TO, RY.TO, SHOP.TO, TFII.TO, TIH.TO, TRI.TO, TVK.TO | Banking, Canada, commodities, Copper, dividends, gold, materials, value |
TVK CN FSV TRI CN OTEX CN RY CN PET CN CM CN TFII CN |
Bristol Gate's Canadian Equity strategy significantly lagged the S&P/TSX's 31.68% gain in 2025, primarily due to missing the commodities boom in gold and copper. The dividend-focused manager made strategic portfolio adjustments, exiting companies with deteriorating dividend growth while adding quality Canadian banks and retailers. Materials sector dominance highlighted the challenge of maintaining dividend discipline during commodity cycles. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
DividendsThe portfolio's dividend-growth framework is central to stock selection, focusing on companies with internally generated free cash flow supporting dividend growth. This approach creates structural underweights to commodity sectors while identifying high-quality businesses with pricing power and recurring demand. |
Dividend Growth Free Cash Flow Quality Income |
OilEnergy sector surged 30.1% driven by geopolitical risk in Middle East and rising crude prices. The portfolio maintains a structural underweight to Energy due to commodity price volatility and mean-reverting nature of commodity-driven free cash flows. |
Energy Crude Oil Geopolitical Risk Commodity | |
GoldGold surpassed $5,000 per ounce for the first time, driven by central bank buying in emerging markets and structural shift away from US dollar reserves. Portfolio maintains limited precious metals exposure due to commodity price dependency and modest dividend yields from miners. |
Precious Metals Central Banks Reserve Currency | |
QualityPortfolio focuses on high-quality Canadian companies with durable cash flows, conservative balance sheets, and clear dividend growth visibility. This quality-focused approach creates temporary underperformance during commodity rallies but delivers attractive risk-adjusted returns over full cycles. |
Balance Sheet Cash Flow Competitive Advantage | |
| 2025 Q4 |
AIManager views AI as a classic capital cycle bubble comparable to past infrastructure manias. Sees improbable returns on massive capital spending, creative financing, and energy constraints pushing physical limits. Expects this to end badly for early investors despite societal benefits. |
Artificial Intelligence Data Centers Capital Cycle Bubble Infrastructure |
ValuePortfolio trades at 12.2x earnings with 8.2% earnings yield versus S&P 500's 26x multiple and 3.9% yield. Active value management maintains undervaluation through trimming expensive positions and adding to undervalued ones. Businesses reinvest at 19.6% return on equity. |
Value Investing Earnings Yield Active Management Undervalued Price to Earnings | |
GoldGold mining companies Kinross and Newmont delivered exceptional returns with gold reaching $5,000 per ounce. Mining profitability surged with net margins rising to 30%+ range. Manager constructive on long-term gold price for various unfortunate reasons. |
Gold Mining Kinross Newmont Commodity Cycle Precious Metals | |
RetailIncreased allocation to dollar stores and retailers from 17.1% to 25.9% of portfolio. Added to Five Below during tariff volatility. Retailers earn good returns on capital despite low profit margins through efficient capital turnover and working capital management. |
Dollar Stores Retail Five Below Tariffs Working Capital |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 20, 2026 | Fund Letters | Achilleas Taxildaris | TVK CN | TerraVest Industries Inc. | Industrials | Industrial Conglomerates | Bull | New York Stock Exchange | Acquisitions, buybacks, cashflow, growth, Industrials | Login |
| Jan 20, 2026 | Fund Letters | Achilleas Taxildaris | FSV | FirstService Corporation | Industrials | Industrial Services | Neutral | NASDAQ | Cyclicality, earnings, Propertyservices, valuation | Login |
| Jan 20, 2026 | Fund Letters | Achilleas Taxildaris | TRI CN | Thomson Reuters Corporation | Industrials | Research & Consulting Services | Neutral | New York Stock Exchange | AI, cashflow, Government, Info_Services | Login |
| Jan 20, 2026 | Fund Letters | Achilleas Taxildaris | OTEX CN | OpenText Corporation | Information Technology | Application Software | Neutral | New York Stock Exchange | ARR, cloud, dividends, Retention, Software | Login |
| Jan 20, 2026 | Fund Letters | Achilleas Taxildaris | RY CN | Royal Bank of Canada | Financials | Diversified Banks | Bull | New York Stock Exchange | banking, Capitalstrength, dividends, scale | Login |
| Jan 20, 2026 | Fund Letters | Achilleas Taxildaris | PET CN | Pet Valu Holdings Ltd. | Consumer Discretionary | Specialty Retail | Bull | New York Stock Exchange | cashflow, dividends, expansion, Petcare, retail | Login |
| Jan 20, 2026 | Fund Letters | Achilleas Taxildaris | CM CN | Canadian Imperial Bank of Commerce | Financials | Diversified Banks | Bull | New York Stock Exchange | banking, Capital, dividends, oligopoly | Login |
| Jan 20, 2026 | Fund Letters | Achilleas Taxildaris | TFII CN | TFI International Inc. | Industrials | Integrated Freight & Logistics | Bull | New York Stock Exchange | cashflow, Freight, Logistics, Margins, recovery | Login |
| TICKER | COMMENTARY |
|---|---|
| TVK.TO | TerraVest was the single largest detractor from relative performance in Q1. The stock returned –19.5% during the quarter on an average portfolio weight of 5.1%, contributing –107 basis points to absolute return and –243 basis points to relative return. TerraVest is classified in the benchmark's Energy sector by GICS, reflecting its exposure to propane distribution and pressure vessel manufacturing for the energy industry. However, the company has no direct commodity price sensitivity — its revenues are driven by equipment sales, service activity, and distribution volumes, not oil or gas prices. TerraVest's underlying business quality — its balance sheet discipline, its recurring revenue profile, and its growing dividend — has not deteriorated. The fundamental thesis remains intact. |
| PET.TO | Pet Valu returned –22.8% in Q1 on an average portfolio weight of 4.7%, contributing approximately –111 basis points to absolute performance and –96 basis points to relative performance. The decline was primarily driven by a specific corporate event: Pet Valu's Q4 2025 earnings release in early March, which included a 2026 guidance miss. Management guided to revenue growth of 2–4% for 2026, below prior-year growth rates and below analyst expectations, citing increased promotional activity across the pet retail sector and suppressed consumer discretionary demand. We view the near-term softness as cyclical — driven by the same macro headwinds affecting the broader Canadian consumer — rather than a structural impairment of the business model. |
| EFN.TO | Element Fleet returned approximately -15.9% in Q1 on an average portfolio weight of 4.9%, contributing -69 basis points to relative performance. Element Fleet reported record 2025 results and set ambitious 2026 targets, reflecting the strength of its capital-light fleet management model, its net revenue growth, and ongoing balance-sheet improvement. Despite this, the stock declined as investors assessed normalization in fleet replacement cycles and moderated volume expectations — and as capital rotated broadly away from financial and business services names toward commodity-linked equities. EFN's dividend growth trajectory and balance-sheet improvement path have not changed. |
| TRI.TO | Thomson Reuters returned -30.1% in Q1 on an average portfolio weight of 4.7%, contributing approximately -106 basis points to absolute return and -50 basis points to relative selection effect. However, our rebalancing process aided returns from the middle of February to end of March as the top up was well timed, near the bottom of the first quarter. The stocked moved higher after Thomson Reuters was prominently featured in Anthropic's 'The Briefing: Enterprise Agents' event, highlighting the integration of AI models into professional tools. |
| TIH.TO | Toromont was the largest relative contributor, returning approximately +17.6% in Q1. The company's Eastern Canada Caterpillar dealership franchise generated resilient margins, supported by a growing mix of higher-margin aftermarket service revenues and disciplined capital allocation. The company has been on a torrid run over the last year, as AVL Manufacturing, acquired in early 2025, who specializes in building the complex, custom power enclosures that house those giant generators and switchgear for data centres continues to grow at a staggering rate. In their most recent annual report (Feb 2026), Toromont's order backlog jumped by 68% to $1.2B, with nearly $430M of that coming directly from the AVL data center business. |
| TFII.TO | TFI International contributed positively after reporting Q4 2025 earnings per share of CAD 1.50 vs. analyst expectations of CAD 1.17 — a 27% beat that drove meaningful positive stock reaction. Investors began to look through near-term LTL freight softness toward cycle normalization, rewarding TFII's pricing discipline, U.S. operational progress, and strong free cash flow generation. TFI International (TFII) was sold because of deteriorating dividend growth. While the company continues to improve its LTL operations in the US, its latest dividend increase in December 2025 was just 4.4%. A prolonged freight recession as well as the company specific challenges in replicating their Canadian LTL profitability levels in the US were the main contributors behind the name's underperformance. |
| CM.TO | Within Financials, CIBC contributed positively on a relative basis as improved confidence in domestic credit quality and a disciplined capital position supported the stock. |
| CP.TO | During the quarter we exited TFI International (TFI) and initiated a position in Canadian Pacific Kansas City (CP) at the end of March. Canadian Pacific Kansas City (CP) is a Class I railroad operating a freight rail network spanning approximately 20,000 miles across Canada, the United States, and Mexico. CPKC was created in 2023 by the merger of Canadian Pacific Railway (CP) and Kansas City Southern (KCS), a transformative combination that established the first and only single-line rail network linking all three NAFTA (now USMCA) nations. We believe this unique network will allow CPKC to unlock tremendous value, with offerings that compete directly against trucks and other rails. |
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