Andrew Pink, portfolio manager, LDIC
FOCUS: Canadian large caps, preferred shares and fixed income
Top Picks: AtkinsRéalis, Sienna Senior Living, Capital Power
MARKET OUTLOOK:
The first quarter of 2025 has proven to be a challenging period for investors and analysts as markets have struggled to keep pace with a wave of new tariff announcements, retaliatory measures, and shifting exemptions. The increasing number of variables impacting corporate fundamentals has significantly reduced confidence in forward estimates—one of the key drivers behind the surge in market volatility we’ve seen accelerate since early April.
While the range of potential outcomes remains broad, one thing is clear: the gears of global trade are grinding in reverse, and the friction is weighing on investor sentiment.
With the macro environment growing more unstable, equities have temporarily lost their luster, and bonds and other safe-haven assets have benefitted from a flight to safety.
In this uncertain environment, businesses and consumers are likely to delay decision-making, further dampening economic activity. Slowing trade flows could translate into weaker global growth and sustained market volatility until a clearer direction emerges.
In response to these developments, LDIC has proactively reduced portfolio risk:
- Trimmed equity exposure in low- to medium-risk mandates
- Eliminated positions in sectors and securities most vulnerable to tariff-related disruption
- Reduced exposure to high-valuation and momentum-driven growth stocks
- Increased allocation to defensive, large-cap companies with more stable cash flows and lower economic sensitivity
These adjustments are aimed at lowering overall portfolio volatility and preserving capital in a more turbulent environment. As conditions evolve and opportunities emerge, we will be ready to reposition into areas of the market that may be mispriced or overly discounted due to macro-related headwinds.
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TOP PICKS:
AtkinsRéalis (ATRL TSX)
Formerly SNC-Lavalin, is a Montreal-based engineering and professional services firm with a $12 billion market cap, around $10 billion in annual revenue, and an impressive $17 billion backlog. The company is ranked fifth largest international design firm, with global engineering expertise in transportation, water, defence, power, and nuclear. Following a successful turnaround, ATRL has emerged as a global leader and restored investor confidence through improved earnings visibility, consistent growth, and a strong executive team. The company has mapped out an impressive, “asset-light” corporate strategy, focused on business optimization, accelerated value creation, and unlocking untapped potential. We believe the company is positioned well to benefit from government and private sector infrastructure investment, and in particular, the global energy transition that is underway. ATRL’s specialty nuclear segment, contributes to 14 per cent of revenue and 19 per cent of backlog, offering strategic, high-margin growth potential considering the strong demand for alternative energy sources worldwide. The company has delineated a path to strong earnings growth through 2027 and beyond, which we believe is not yet captured in its valuation. A recent divestiture of its stake in Highway 407 strengthens the balance sheet, enabling the company to fund future mergers and acquisition opportunities, dividend increases, and to further return value to shareholders through stock buybacks. We believe ATRL is defensively positioned due to its scale, visible growth strategy, strong capital position, unique service offering and asset-light business model.
Sienna Senior Living (SIA TSX)
One of Canada’s top senior living providers, operating 94 properties across Ontario, Saskatchewan, Alberta, and British Columbia. Its portfolio includes long-term care (LTC), retirement residences, and managed residences, with 42 LTC facilities, 40 retirement residences, and 12 managed properties. Sienna offers a variety of senior care options under its Aspira retirement brand, including independent living, assisted living, and memory care. The company’s properties are diversified by class and geography, which positions them well to benefit from the aging population in Canada, with the 85 year plus demographic expected to triple in the next 25 years. Sienna has a strong balance sheet with substantial liquidity, and an attractive dividend yield of six per cent. With occupancy rates expected to rise meaningfully in the next several years, Sienna has several development projects underway to expand its capacity. In its latest quarterly results, the company saw a notable increase in net operating income by approximately 15 per cent, primarily from occupancy gains, improved pricing, and ancillary revenue.
Capital Power (CPX TSX)
Alberta-based independent power producer with a growing North American footprint and a strong focus on sustainable energy technologies. The company operates a diverse portfolio of power generation assets—including natural gas cogeneration, thermal, wind, solar, and battery—producing over 10,000 megawatts of electricity across Canada and the U.S. A cornerstone of its operations is the Genesee Generating Station, now one of Canada’s largest low-emission natural gas power plants, which supplies approximately 10 per cent of Alberta’s electricity. Following a major repowering initiative, Genesee has been fully transitioned from coal to natural gas, significantly reducing its carbon footprint and enhancing system reliability. Capital Power continues to demonstrate leadership in the development and execution of low-carbon power infrastructure, positioning itself as a key player in the global energy transition. Looking ahead, we believe the company is well positioned to capture long-term strategic opportunities—including potential partnerships with major Artificial Intelligence hyperscale’s—as a reliable and scalable power provider. The company also offers investors a compelling income profile, with a sustainable dividend yield of 5.2 per cent.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ATRL TSX | N | Y | Y |
| SIA TSX | N | Y | Y |
| CPX TSX | N | Y | Y |
PAST PICKS: April 16, 2024
Cenovus Energy (CVE TSX)
- Then: $28.52
- Now: $16.61
- Return: -42%
- Total Return: -39%
Chartwell Retirement (CSH-U TSX)
- Then: $12.59
- Now: $17.32
- Return: 38%
- Total Return: 43%
Granite REIT (GRT-U TSX)
- Then: $72.26
- Now: $63.90
- Return: -12%
- Total Return: -6%
Total Return Average: -1%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| CVE TSX | N | N | N |
| CSH-U TSX | N | Y | Y |
| GRT-U TSX | N | Y | Y |
