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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Constructive on high-quality Canadian energy infrastructure positioned to benefit from national capitalism and domestic capital formation incentives, while avoiding heavily levered pipeline operators."
Avenue Investment Management did not report specific quarterly or year-to-date net performance metrics for the Avenue Core Equity Portfolio in its Q3 2026 letter. Instead, portfolio commentary highlighted that energy and energy infrastructure holdings have delivered strong performance year-to-date, buoyed by elevated crude oil prices stemming from the U.S.–Iran conflict and associated supply disruptions across the Strait of Hormuz. The fund maintains a disciplined capital preservation stance, focusing its infrastructure exposure on high-quality operators with self-funded dividends rather than relying on external leverage. Macroeconomic strategy is dominated by the global and domestic acceleration toward national capitalism, where governments increasingly dictate economic policy and capital allocation. Following a decade of capital flight that left Canada trailing its G7 peers in capital formation, domestic policy has pivoted aggressively through initiatives like the Building Canada Act, the Canada Strong Fund, and accelerated capital depreciation. Avenue views these policy incentives as effective triage for restoring domestic capital formation and enhancing long-term economic resilience against hostile U.S. tariffs. Within portfolio allocations, Avenue emphasizes select Canadian midstream operators including Pembina Pipeline, Gibson Energy, and South Bow, whose combined capital expenditures and dividend payments are fully funded through organic operating cash flows. In contrast, the fund deliberately excludes Canada's two largest infrastructure operators, TC Energy and Enbridge, citing their elevated leverage profiles, payout ratios exceeding 100% of cash flows, and acute vulnerability to rising debt refinancing costs.
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