Canso Investment Counsel
About Canso Investment Counsel
Canso Investment Counsel Ltd. (Canso) rejects “efficient market” theory. Canso believes that the financial markets are subject to human emotion and biases and are thus inherently inefficient.
The human predisposition to simplify causes the segmentation of financial assets by credit rating, geography and other issuer characteristics. These create artificial distortions that exacerbate market inefficiencies. Market participants frequently misinterpret or overlook critical information when forming investment opinions. Canso exploits these market inefficiencies by investing in mispriced securities, across the capital structure of issuers on a global basis.
The Canso emphasis on “bottom up” fundamental analysis of issues and issuers avoids overvaluation and concentrates portfolios in undervalued securities. To summarize: “Canso buys cheap stuff”.
Successful investing generates its returns over very long time periods, through the extremes of the economic and market cycles.
At Canso, “Clients Come First”. Canso believes that their singular mission is to deliver the highest possible risk-adjusted returns to those who have entrusted them with funds to manage. Canso believes that Canso clients should have the same opportunities as they have. The Canso staff is restricted to investing exclusively in the Canso funds. They are not allowed to hold any other marketable securities. This ensures that the Canso staff investment interests are aligned with its clients.
The Canso Team:
Canso employs an active management strategy to exploit inefficiencies in the financial markets. Our investment success depends on the experience, knowledge, patience and collaboration of our investment staff. Canso’s investment team consists of over two dozen employees with backgrounds in banking, lending, private placements, research, security analysis and trading. The other Canso staff support the investment team in the investment administration of portfolios and client service.
(1) Canso’s Investment Grade and Broad Corporate bond mandates are in the top quartile of the Pavilion ™ Performance Appraisal Report of Canadian fixed income managers since inception in 1997.
The intensive Canso research approach includes an exhaustive bottom up fundamental review of the business, financial and operational condition and prospects of an issuer. A key differentiator in the Canso process is a detailed review of Credit Agreements, Offering Memorandums and Trust Indentures. Understanding contractually the ranking in the capital structure and the available legal remedies should an investment deteriorate allows management of the downside risk and realization of value of investments when things do not go as planned. This knowledge gives Canso the confidence to invest in securities that others avoid and to avoid securities others are buying.
Independent analysis is the lifeblood of Canso. Personal bias is reduced by avoiding traditional analyst segmentation along asset class and industry lines. The focus is on internal proprietary research. Canso does not rely on external investment dealer analysts or credit rating agencies as part of our investment process. Internal credit ratings and maximum loss estimates are assigned to all of the issues held in our portfolios. The proprietary Canso “Maximum Loss” discipline ensures that Canso maximizes the return potential of selected securities while at the same time safeguarding the overall portfolio against loss on any one position.
The Canso investment team spends much of its time ensuring the consistency and continuity of its investment approach. This ensures that Canso portfolios are prepared to capitalize on opportunity and resists the allure of the latest investment fads.
Canso Corporate Bond Newsletter - February 2021Lookin' Out My Back Door In December 2019 we wrote: “If the rates markets, or the credit markets, or both reprice, we expect there to…
Canso Market Observer - July 2020This edition of the Canso Market Observer covers: Lessons learned in 2020 The financial rally Opportunities to be had Summary: COVID-19 has exposed both risks…
Canso Corporate Bond Newsletter - June 2020As governments now relax COVID-19 restrictions, whether too slowly or too quickly, we believe it is time to take stock of what has happened.