London, UK, 16 November 2021
Edison issues review on Canadian General Investments (CGI)
Canadian General Investments (CGI) has been managed by Greg Eckel at Morgan Meighen & Associates (MMA) since 2009. He has an unconstrained investment process, seeking quality companies on a bottom-up basis that can be held for the long term. This approach means that the fund's sector weightings can differ meaningfully from those of the benchmark S&P/TSX Composite Index. The manager invests across the market cap spectrum including niche smaller companies that may not be on everyone's radar screen; hence, CGI may be viewed as a 'one-stop shop' for investment in Canada, although up to 25% of the fund may be held in US equities. The company has an enviable long-term performance track record and pays regular quarterly dividends from both income and capital gains.
CGI's shares trade at a wide discount, which may be due to the high level of family ownership, and the fact that the board is unable to repurchase shares as this would invalidate the company's favourable tax status. The current 35.8% discount is wider than the 29.5% to 32.6% average discounts over the last one, three, five and 10 years. Given CGI's very strong performance track record, one may argue that a higher valuation is warranted, having traded close to NAV in 2006.
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