A brief summary of our TWC Risk-Managed Canadian Energy Fund. Please contact us for those looking for more information including our top-quartile performance summary.
TWC Risk-Managed Canadian Energy Fund Presentation June 29 Mini
1. TWC Risk-Managed
Canadian Energy Fund
Introducing a safer way of investing
in Canadian energy.
June 29, 2012
Proprietary & Confidential
2. Disclaimer
This presentation is for discussion purposes only, for use by its authors and confidential
use by those who have been furnished with this information by the authors. This
presentation does not constitute an offer or solicitation in any jurisdiction to any person or
entity. Offers to sell interests in TWC Risk Management Canadian Energy Fund are
currently made available by opening a discretionary account with TriVest Wealth Counsel
Ltd. and not by this presentation. A potential investor considering an investment in TWC
Risk Management Canadian Energy Fund should read the Subscription Agreement for
purposes of making an investment decision.
No representations or warranties, express or implied, have been made as to the accuracy
or the completeness of the information in this presentation and this presentation should
not be relied upon for making an investment decision. The information provided herein is
obtained from sources believed to be reliable as of the date indicated. TriVest Wealth
Counsel Ltd. makes no warranty as to its accuracy, completeness or suitability for any
purpose. Any opinions expressed herein may be subject to change without notice.
This presentation is confidential and is not intended for public use or distribution.
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3. Why TriVest for your energy investments?
Canadian energy represents approximately 26% of the S&P TSX Index and therefore is an important
influence on the performance of a manager’s Canadian equity portfolio.
There are three options currently available to these managers when making their energy allocations:
1) Invest in an ETF such as the iShares Capped Energy Index (XEG), which is a low cost
benchmark solution. However, it offers no risk-management solutions other than changing the
weighting to the sector.
2) Invest in an active Canadian energy fund manager. However, few managers undertake risk-
management solutions and with most being long-only who target to add alpha through stock
selection. In addition, fund MERs can be prove to be overly costly.
3) Invest directly in the energy sector with individual stocks. The problem is that this requires a
tremendous amount of time and resources in order to do an effective job.
OR a fourth option:
The TWC Risk-Managed Canadian Energy Fund which offers a safer and cost-effective way
to invest long-term in the Canadian energy sector.
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4. Fund overview
TWC Risk-Managed Canadian Energy Fund (“Fund”) – a long biased fund designed to
replace the energy component of an investor’s Canadian equity portfolio.
The Fund actively employs various risk management practices and targets to
outperform the S&P/TSX Capped Energy Index.
Concentrated portfolio in large capitalisation Canadian oil & gas companies that
are optionable.
Tactical and strategic positioning in selective public and private junior oil and gas
companies.
Active use of derivatives to assist with risk-management and tax-efficient income
generation strategies.
Will employ other risk management strategies such as commodity and foreign
exchange hedging, arbitrage, short positions, pair trading etc.
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5. Fund overview cont.
Distinctive Competitive Advantages
Unique investment strategies - currently not being offered by existing “long-only”
energy fund managers.
Superior adjusted returns - a safer alternative to both the Capped Energy Index
and the many other energy fund managers in Canada.
Liquidity advantage - larger firms have liquidity issues when investing in the
Canadian energy.
Local expertise - situated in Calgary, the heart of the Canadian oil patch. Able to
utilize extensive industry relationships and first mover advantage.
Very competitive fee structure - average MERs of active energy funds in
Canada are too high at approximately 2.2% (avg. class F, institutional). The Fund has
a 1% management fee and 15% performance fee with a high watermark.
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6. Fund leadership
Martin Pelletier, CFA
Managing Director, Portfolio Manager
Fund led by 15 year
Martin's 15 year career in the investment and finance sector was focused energy insider both in
primarily in institutional energy research including such firms as Blackmont Canada and abroad.
Capital, Canaccord Capital and GMP Securities. As a Brendan Woods
ranked Energy Analyst, Martin provided regular investment recommendations
to institutional fund managers located in Canada, the U.S. and Europe. Extensive relationships
with oil and gas
Martin's research has lead to the establishment of senior management and management teams,
board level relationships among those in the Canadian and International board members,
energy sector. Martin’s technical expertise included conducting many in-the- financiers and key
field diligence trips including onshore and offshore operations in South technical advisors.
America, India and North America.
Martin is a weekly contributor to the Financial Post’s Investment Pro section Fundamentals based
and has been interviewed by the Calgary Herald, Edmonton Journal, CTV, investor with a focus on
CBC, BNN, the Globe and Mail, La Presse, the Wall Street Journal, and those management teams
with a proven track
Reuters. Martin was also more recently selected as one of Oilweek
record.
Magazine’s 2012 Rising Stars.
Martin has also been sought out as an energy expert having undertaken
public speaking engagements on National Energy and Investing in Oil & Gas
symposiums.
Martin holds a Bachelor of Commerce degree with a specialization in finance
from the University of Alberta and is a Chartered Financial Analyst (CFA)
Charterholder.
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7. Fund leadership
Craig Stanford, MBA, CFA
Managing Director, Portfolio Manager Over 20 years of
senior-level portfolio
Craig has over 20 years of senior-level portfolio management experience. management experience
at buy side firms varying
His prior Portfolio Manager and Investment Counsellor positions include the in size from smaller
specialised boutiques to
following: Partner / Director of Private Client Portfolio Management Mawer
multi-billion dollar AUM
Investment Management; Managing Director / Portfolio Manager Cypress
firms.
Capital Management; and, Managing Director / Portfolio Manager at
Brickburn Asset Management.
Extensive experience
Earlier in his career he worked for the Royal Bank Financial Group as a working with family
Senior Account Manager, Global Private Banking and as a Trust and offices, endowments and
Investment Advisor for Royal Trust. foundations.
Craig is a Chartered Financial Analyst (CFA) Charterholder. He obtained a
Master of Business Administration degree and a Bachelor of Science Career focused on
(Agriculture) degree from the University of Alberta. In addition, he holds and strong fundamental
maintains Trust and Estate Practitioner (TEP) and Professional Agrologist research and risk
(P.Ag.) designations and is a Certified Financial Planner (PFP). management.
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8. Investment thesis
Of all the sub sectors in the S&P TSX, Canadian Energy has delivered the highest
returns over the past 10 years with reasonable levels of volatility.
Source: Original chart from Martin Roberge, North American Portfolio Strategist,Canaccord Genuity, red-line adjustment by TriVest
Wealth Counsel Ltd.
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9. Investment thesis – short-term
We believe we are in a secular flat, and very volatile range- bound market in the
near-term not unlike previous periods of consolidation.
A simple buy and hold strategy is not the most prudent action in this
environment.
iShares S&P/TSX Capped Energy Index (XEG.TO): Last eleven years
30
25
20
15
11-year average 14 -33%
10 -60%
5
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: data from Bloomberg, Chart by TriVest Wealth Counsel Ltd.
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10. Investment thesis – long-term
We believe that energy markets, especially Canadian Energy, will directly benefit
from the continued rapid growth in emerging markets such as Southeast Asia and
China.
On a risk-adjusted basis we believe that the Canadian Energy sector is a
safer way to participate in this growth.
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11. An excellent time to begin allocating to
the Canadian energy sector
Investors have also been very selective in their equity exposures, recently buying
U.S. equities and fixed income while selling emerging markets and resource
focused economies such as Canada – this includes Canadian oil and gas stocks.
For example, the % deviation of the implied oil price in stock valuations
versus the actual oil price was more recently at its widest deviation in over 10
years – even wider than levels reached during the financial crisis of 2008.
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12. Investment process and portfolio construction
Top down macro research on crude oil, natural gas, specific new play-types
and participants, sector activity and weightings etc.
Deep primary research and diligence
screen – often involves meeting with senior
management of each company.
Portfolio additions and/or
Portfolio Composition at June 29, 2012 deletions
Option overlay
and/or other risk
For management
Clients strategies
Only
Current Portfolio
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13. Security selection – our bottom-up process
Qualitative Analysis
• We diligently screen our short listed companies by the quality of their management
team, underlying assets, and current valuation.
• Extensive use of both Primary or Secondary sources, and direct access to management.
PEOPLE ASSETS VALUE
• Expertise • High-quality, long-life reserves • We prefer to own those companies
• Track record • Oil vs Natural Gas trading at a reasonable value given
• Ability to raise capital • Growth vs. Dividends and/or both their underlying growth outlook
• Strong Corporate Governance • Strong market positioning
• Shareholder and Mgmt alignment • Reasonable inventory of prospects
• Management ownership structure • Ability to generate attractive IRR on
internal projects
• Independent Board of Directors
• Low cost structure
• Reasonable financial position
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14. Focus on active risk management
Our Option Overlay is an excellent risk-management tool. It
enables:
1. Absolute return from option writing income.
2. Timing opportunities – ability to automate buying and selling
of companies when they deviate from their intrinsic values.
3. Hedging or downside protection.
We will also employ other risk management strategies such as
commodity and foreign exchange hedging, arbitrage, short
positions, pair trading etc.
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15. Summary of terms and fund contact details
FUND DETAILS TriVest Wealth Counsel Ltd.
Structure: Unit Trust 1717 9 Street SW
Min. Investment: $100,000, RRSP Eligible Calgary, Alberta
T2T 3C1
Management Fee: 1% per annum
Incentive Fee: 15% of performance Main: 1.855.565.8378
inquiry@trivestwealth.com
Watermark: Yes
Liquidity: Monthly
Auditor: Meyers Norris Penny Martin R. Pelletier, CFA
Managing Director, Portfolio Manager
Custodian: Penson Financial Services 403.536.6444
Fund Admin: SGGG martin.pelletier@trivestwealth.com
Trustee: Valiant Trust Company
Craig B. Stanford, MBA, CFA
Portfolio Managers: Martin Pelletier Managing Director, Portfolio Manager
Craig Stanford 403.536.6443
craig.stanford@trivestwealth.com
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