Investment Division

Beaumont Select Corporations Inc. owns and manages a portfolio of equity securities, publicly traded in Canada and the US.

The Investment Division was formed in 2003 as a result of positive cash flow from the Food Division and the need to manage core assets and cash effectively. It was determined that there was an opportunity to invest this cash into royalty trusts and therefore ensure another source of income as well as the potential for capital gains. As the Food Division production operation is a large user of food and energy commodities this strategy also helps offset the Food Divisions cost risk on the input commodities. Due to early successes in royalty trust investments, the investment area became its own division.

Beaumonts investment style utilizes margin, whereby we borrow in order to try to increase our return on equity.

The Board of Directors has appointed an investment committee which in turn has a written investment policy. The objective of the investment division was to take long positions in Canadian publicly traded stocks and income trusts for the purpose of achieving capital gains plus dividends in excess of 20% on equity. As part of the recent review of the policy, the investment committee is changing this target return to become a specified percentage (currently proposed at 5%) above the return by the S&P TSX Composite Index. The investment guidelines include two major restrictions: No position can exceed 20% of the portfolio on an adjusted cost base basis No position can exceed 20% of the public float of any company. From time to time the investment committee has approved specific exceptions to this guideline as is the case with the Corporation's current investment in securities of Student Transport Ltd.

The investment process for the Investment Division pursues growth at reasonable prices (GARP) using both macro and micro economic considerations, then devolving into a consideration of desirable firms in the industries or sectors in which investment is sought. Specific investments are chosen based on the following criteria:

  • A. Trading criteria: the securities should trade more than 50,000 shares per day.
  • B. Industry criteria: must be a vibrant industry where growth potential is greater than in food processing (eg >10%) and preferably contra cycle to the variable costs incurred in the baking and frozen food industry.
  • C. 10 other specific investment and business criteria.
  • D. Special Situation Criteria: Is a turnaround, takeover target, exceptional growth opportunity (eg>20%), low risk growth scenario for 3yrs+, etc.
  • Top 10 Investments as of February 24, 2014

    AutoCanada IncACQ
    Altus GroupAIF
    Student Transportation STB
    Long Run Exploration LRE
    Eagle Energy TrustEGL.UN
    CanElson Drilling IncCDI
    BGC Partners Class ABGCP
    Element Financial CorpEFN
    Bellatrix Exploration Ltd.BXE
    Macro Enterprises IncMCR