Weekly Update, Jan. 27th

By: Matt Cimon

Hey everyone!

Our recruitment period has just finished for the semester and was very successful, to say the least! Four new analysts have joined our ranks and are currently in the process of familiarizing themselves with the workings of the Fund.

In terms of performance, the Fund lost 0.37% on the week, while the S&P 500 stayed relatively flat and the S&P TSX jumped 0.55%. Markets have rallied this month, but it will be interesting to see their reaction to the economic data this week, as well as earnings from some of the largest players on the S&P.

This week our teams will continue progress on their industry reports and will begin to narrow the field of potential plays within their respective industries. We are excited to begin detailed analysis on some firms that we haven’t gotten the chance to recently review, and the hope is that we can soon begin to bring our portfolio cash balance down. That said, some interesting economic data came out this week, which could weigh in on our strategy in the coming weeks.

This week the Fed announced that it plans to keep rates near zero through 2014. Markets responded well to the announcement, but some may take the news as a weak signal that the US economy remains reluctant to show consistent signs of growth. December US Housing data was also announced, with a decline of 3.5% in pending home sales and 2.2% in new home sales. With the loss in December, 2011 experienced the worst decline in US housing sales in nearly 60 years. This week the markets will no doubt continue to experience some volatility with Euro debt deals attempting to be reached and US January Employment numbers coming out at the end of the week. It is also a busy earnings week as over 20% of S&P firms have earnings releases. With AAPL taking over the number one spot last week as the highest valued US company, ExxonMobil earnings will be something to look out for.

Personally, my team and I are currently focusing on the Transportation Sector and have decided to take a closer look at Railroads and Shippers (oil tankers, commodity & container shippers etc.). The Canadian Railroad industry is definitely an area of interest for us and we’re currently conducting some relative analysis between CNI and CP; although our focus will be on plays in the US as well. The shipping industry is something that is new to me but it seems like an industry where we can gain exposure to some interesting country-specific trade relations and also have the opportunity to make a play on oil. Stay tuned for our progress!

That’s it from us! Should be an interesting week in the markets!