The CMAW Defined Contribution Pension Plancmawlocal99.ca/wp-content/uploads/2016/06/The-CMAW... · Nick Szucs 17 Catherine Heath 16 Jane Gilday 47 Alex Limion 14 Patrick Reddy 15

The CMAW Defined Contribution Pension Plan

Daren Atkinson, CFA Vice President, Portfolio Manager

March 31, 2016

Background & Experience

• Founded in 1982

• Funded by a multi-employer, union pension plan (still a client!)

• We have been managing your Pension Plan since April 2010

Independent & Employee Owned

• Succession planning in place to ensure continued independence

• Our livelihood depends on the success of our company – if our clients do well we will do well

Our Clients Come First

• We have controlled our growth to ensure we will continue to provide excellent performance results for our clients

Disciplined Value Investment Approach

• Excellent long term performance & preservation of capital

Overview of Leith Wheeler

The CMAW Defined Contribution Pension Plan – Mar 2016 Pg 2

History Of Our Company


1982 1985 1990 1995 2000 2005 2010 2016

1982 Leith Wheeler

Founded

2009 Jim Gilliland (President &

CEO) joins Leith Wheeler

2016 Over $16 Billion In Assets

Under Management

2003 Founding

Partner Succession

Begins

2013 Ownership Succession Completed

2005 Canadian Equity Fund Closed For

New Institutional Mandates

Founded in 1982, we are an independent, employee-owned investment manager, with a value-oriented investment philosophy that focuses on preserving clients' capital.

Our Clients


• We are a nationwide organization with over $16 Billion in assets under management

• We manage funds for 89 different pension plans across Canada

• We have offices in Vancouver, Calgary and Toronto

Our Investment Teams


CANADIAN EQUITIES FIXED INCOME U.S. EQUITIES

(Barrow Hanley) INTERNATIONAL EQUITIES

(Sprucegrove)

Years Experience

Years Experience

Years Experience

Years Experience

Bill Dye 31 Jim Gilliland 22 Mark Giambrone 23 Shirley Woo 27

David Jiles 31 Eric Lam 23 Michael Nayfa 11 Arjun Kumar 13

Richard Liley 19 Ben Homsy 18 Terry Pelzel 10 Sabu Mehta 28

Nick Szucs 17 Catherine Heath 16 Jane Gilday 47 Alex Limion 14

Patrick Reddy 15 Dhruv Mallick 16 Monroe Helm 39 Christine McLean 11

Bob Lau (Trader) 18 Alexei Konopkine 10 Plus 9 Analysts Plus 6 analysts

Ryan Goulding 9

Sean Greenhalgh 9

PORTFOLIO MANAGERS

Years Experience

Daren Atkinson 15

Perry Teperson 25

Growth of $10,000 Since April 2010


Performance of the CMAW Defined Contribution Pension Plan

$9,000

$10,000

$11,000

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

Ap

r-1

0M

ay-1

0Ju

n-1

0Ju

l-1

0A

ug-

10

Sep

-10

Oct

-10

No

v-10

Dec

-10

Jan

-11

Feb

-11

Mar

-11

Ap

r-1

1M

ay-1

1Ju

n-1

1Ju

l-1

1A

ug-

11

Sep

-11

Oct

-11

No

v-11

Dec

-11

Jan

-12

Feb

-12

Mar

-12

Ap

r-1

2M

ay-1

2Ju

n-1

2Ju

l-1

2A

ug-

12

Sep

-12

Oct

-12

No

v-12

Dec

-12

Jan

-13

Feb

-13

Mar

-13

Ap

r-1

3M

ay-1

3Ju

n-1

3Ju

l-1

3A

ug-

13

Sep

-13

Oct

-13

No

v-13

Dec

-13

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4M

ay-1

4Ju

n-1

4Ju

l-14

Au

g-1

4Se

p-1

4O

ct-1

4N

ov-

14D

ec-1

4Ja

n-1

5Fe

b-1

5M

ar-1

5A

pr-

15

May

-15

Jun

-15

Jul-

15

Au

g-1

5Se

p-1

5O

ct-1

5N

ov-

15D

ec-1

5Ja

n-1

6Fe

b-1

6M

ar-1

6

$10,000 would have

grown to over $16,000 today

How Is The Plan Invested?

Bonds 35.1%

Canadian Stocks 26.2%

U.S. Stocks 18.3%

International Stocks 18.3%

Cash & Equivalents

2.1%

Pg 7 The CMAW Defined Contribution Pension Plan – Mar 2016

As of March 31, 2016

A high quality, diversified portfolio of stocks and fixed income investments

We are cautious about the price we will pay for a stock

• Looking to invest in quality businesses selling for sensible prices

Think like long-term owners

• Would we buy the whole company?

Management We Trust

• Do they pass the “Wallet test”

Good Governance is Essential

• Does the company operate in a responsible manner

Characteristics We Look For In The Stocks We Own


Pg 9

An Example of a Stock We Do Not Own

The CMAW Defined Contribution Pension Plan – Mar 2016

$0

$50

$100

$150

$200

$250

$300

$350

Mar-1

3

May-1

3

Jul-1

3

Sep-1

3

No

v-13

Jan-1

4

Mar-1

4

May-1

4

Jul-1

4

Sep-1

4

No

v-14

Jan-1

5

Mar-1

5

May-1

5

Jul-1

5

Sep-1

5

No

v-15

Jan-1

6

Mar-1

6

Valeant Pharmaceuticals - The Market Darling…


$0

$50

$100

$150

$200

$250

$300

$350

Mar-1

3

May-1

3

Jul-1

3

Sep-1

3

No

v-13

Jan-1

4

Mar-1

4

May-1

4

Jul-1

4

Sep-1

4

No

v-14

Jan-1

5

Mar-1

5

May-1

5

Jul-1

5

Sep-1

5

No

v-15

Jan-1

6

Mar-1

6

Valeant Pharmaceuticals - The Ugly Duckling!


• Over the years, we have struggled to wrap our heads around Valeant’s business model & have never owned it

• Valeant employed an aggressive acquisition strategy using a tax advantage it gained from being headquartered in Canada

• Subsequently it has come to light that they were increasing the price of the drugs they were acquiring by astronomical amounts

• Hillary Clinton has vowed to “go after” Valeant for their predatory pricing practices

What Happened At Valeant?

Pg 12

This Company Has Never Passed Our Wallet Test


Pg 13

Example of Stocks We Do Own


TD Bank


TD is a very well run, diversified Canadian bank that has also built a significant presence in the United States

Returning Profit to Shareholders

Owning Good Businesses Will Pay Off Over Time


$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

$0.50

1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

TD Bank’s Dividend Growth

Tourmaline Oil Corp.


Low Cost Structure

• Top quartile cost structure – total cash costs of $1.47 per mcf which is down 24% year-over-year

• All-in supply cost of $3 per mcf vs. industry at $3.75 per mcf

• Industry leading finding and development costs as well as capital efficiencies

Strong Management Team and Board

• Insiders own 30% of the business and have been purchasing shares in the open market

• Management team sold its former company Duvernay Oil Corp. to Shell in 2008 for $5.6 billion

Solid Financial Position

• Net debt to cash flow in 2016 is approximately 1.8X vs. its peer group at 4.1X

• Look for Tourmaline to use its balance sheet to take advantage of over-levered competitors over the next 12 months

Attractive Valuation

• Trading at 58% of its intrinsic value of $38 per share using a long-term natural gas price of US$3.50 per mcf

• Low cost structure allows business to generate growth in cash flow per share and production per share in the current environment

Tourmaline is a high quality energy company with a terrific management team, a strong balance sheet and one of the lowest cost structures in the industry

Tourmaline vs. Suncor


TOU SU

Current Valuation (Enterprise Value to Debt Adjusted Cash Flow)

10x 15x

Growth Over the Next 3 Years

TOU

SU

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

Per Annum Production Growth

TOU

SU -6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

Per Annum Cash Flow Growth

TOU

SU

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Per Annum Leverage Growth

Tourmaline stacks up well against Suncor and is trading at a much more attractive valuation


Expected Returns For Some Of Your Larger Holdings

As of March 31, 2016

Pg 18

Company 3 Year Target

Return

Saputo 6.0%

Toronto Dominion Bank 9.6%

Bank of Nova Scotia 11.6%

Toromont 7.8%

Open Text 11.9%

Canadian Tire 6.1%

Tourmaline Oil Corp 14.5%

CI Financial 12.0%

Brookfield Asset Management 15.6%

Stantec 13.9%

Our forecasted returns continue to look attractive for the companies you own

Pg 19

What Can We Expect Going Forward?


There Will Be Bumps Along The Way…


11,400

11,800

12,200

12,600

13,000

13,400

13,800

January February March

Feb.8: “Signs of distress in markets gather force as fears over global economy deepen” – Financial Post

Mar.7: “Commodity resurgence turns Canadian Stocks from Zero to Hero” – Bloomberg News

Mar.17: “The oil price crash is over – let the recovery of Alberta’s hard-hit economy begin” – Financial Post

Jan.4: “China sell-off sparks gloomy 2016 start for TSX, Dow” – The Globe and Mail

Feb.9: “Goldman [Sachs] Sees Risk of Oil Below $20.” – Bloomberg News Jan.15: “More bad news coming:

Canadian corporate earnings will be ‘awful’” - Financial Post

TSX Composite Performance Q1 2016

Mar.31: “TSX finishes flat to cap best month since 2011” – The Globe and Mail

Markets Will Move Higher Over Time

Pg 21

Performance of a Balanced Portfolio Over The Last 15 Years 60% Stocks and 40% Bonds

$75

$100

$125

$150

$175

$200

$225

De

c-0

0M

ar-0

1Ju

n-0

1Se

p-0

1D

ec-

01

Mar

-02

Jun

-02

Sep

-02

De

c-0

2M

ar-0

3Ju

n-0

3Se

p-0

3D

ec-

03

Mar

-04

Jun

-04

Sep

-04

De

c-0

4M

ar-0

5Ju

n-0

5Se

p-0

5D

ec-

05

Mar

-06

Jun

-06

Sep

-06

De

c-0

6M

ar-0

7Ju

n-0

7Se

p-0

7D

ec-

07

Mar

-08

Jun

-08

Sep

-08

De

c-0

8M

ar-0

9Ju

n-0

9Se

p-0

9D

ec-

09

Mar

-10

Jun

-10

Sep

-10

De

c-1

0M

ar-1

1Ju

n-1

1Se

p-1

1D

ec-

11

Mar

-12

Jun

-12

Sep

-12

De

c-1

2M

ar-1

3Ju

n-1

3Se

p-1

3D

ec-

13

Mar

-14

Jun

-14

Sep

-14

De

c-1

4M

ar-1

5Ju

n-1

5Se

p-1

5D

ec-

15

Mar

-16

Time to recover

Time to recover

Time to recover


"Over the long term, the stock market news will be good. In the 20th century, the United States endured two

world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and

financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose

from 66 to 11,497.”

Warren Buffet: The New York Times, October 16, 2008

A Wise Quote


Pg 23

Thank you


Documents

The CMAW Defined Contribution Pension Plancmawlocal99.ca/wp-content/uploads/2016/06/The-CMAW... · Nick Szucs 17 Catherine Heath 16 Jane Gilday 47 Alex Limion 14 Patrick Reddy 15