Ms. Shannon: Sionna is a Canadian equity value shop and we are an institutional manager. We have pension funds, endowments, foundations about 60% of our clients. The other 40% is retail-oriented. We co-own a mutual fund company with Brandes here in the Canadian marketplace and as well a separately managed account sold through various financial institutions in Canada. We currently have approximately 18 employees and AUM of just under 3 billion.
TWST: How do you define value oriented?
Ms. Shannon: Before we can talk about investments style, I have to back up a little bit and explain the idiosyncrasy of the Canadian stock market. Canada is the most resource exposed of the major markets in the world and the style box matrix was developed in the US, which is a much deeper, richer market with more breadth. Core styles like deep value or pure growth really do not offer enough selection to have a diversified portfolio in those categories in Canada. The style we use, we call it relative value, we consider to be pragmatic for operating in the Canadian marketplace versus true intrinsic value and deep value which, if you employ that, you would be out of some sectors, in particular the resource sectors for long periods of time and that could be quite painful in Canada.
Instead what we do is we try to be industry group neutral as much as possible and then use our intrinsic value models to find the cheapest applicable stocks within the sector. For example, we own gold stocks, which because they trade at 20 to 50 P/E multiples, would be unacceptable for most deep value managers. But, unlike in the US market, where gold is never more than 1% in the index, recently gold has been more than 12% of the index in Canada and has been close to this high previously in the past. So, that's the style of value investing we use here in Canada.
Tickers included in this excerpt: BCE, CNQ, MEOH
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