Volume 47 April 2019

Here we go again… The first quarter of 2019 proved to be one of the best in recent memory, with stock markets around the world returning 8-15%. The Capital Ideas Fund is up 12.47% 1 year to date and our annualized return since inception now stands at 17.91% 1 versus 6.17% 2 for the S&P/TSX Total Return Index. These high returns are a result of a bounce back from a horrible Q4 2018 and, more importantly, reflect a big shift in monetary policy projections. The Capital Ideas Fund re-opened to new assets as of April 1 st , 2019. We have now also started investing in US equities which we believe will give us considerable new investment options and growth opportunities. We provide much more detail and reasoning behind the timing of this decision later in this newsletter. Due to this event, we have been speaking with many current and prospective investors and we have returned from these meetings with a few common questions. One recurring request was from investors who would like updates on both overall sector and portfolio exposure. At the time of this writing, the fund now holds 19% US equities and we expect this weighting to increase over time. Currently, the top 20 stocks in our stock tracker are exactly 50% Canadian listed and 50% US listed. We think this is a good gauge of the direction the fund is shifting. That being said, of those 20 companies, less than 5% of aggregate revenue would be derived from Canada. The fund is currently fully invested at 121% long and 21% short for a net 100% position. As for sector exposure, the fund is roughly 31% technology, 31% consumer cyclical, 21% consumer non-cyclical, 6% industrial, 6% energy and materials and 3% financials. Another question we were asked was about our macro view. Even though we are stock pickers and view the stock market as a group of stocks and not a single machine that dictates returns, investors would still like our market outlook. We have provided it below and it helps explain part of our rationale for re-opening the fund. VOLUME XLVII April 2019 INVESTMENT ISSUES • STRATEGIES • INSIGHTS FROM DONVILLE KENT