The AFINA investment products pared back their recent gains in January as we dug our heels into a variety of energy services and energy infrastructure stocks that we believe offer excellent value in the short-term. While these stocks underperformed in January and led to the negative performance, they have rebounded sharply in February. As a result, the AFINA Optima10 and AFINA Affinity Fund LP are up approximately +8% and +5%, respectively, thus far in February.
While we have seen oil prices and energy stocks rebound sharply in the short-term, we expect oil prices to be suppressed over the next few years as US shale production has increased significantly and OPEC has no plans to cut its own production. Energy-related stocks accounted for approximately 20% of the AFINA Affinity Fund LP at the end of January and we have pared back that weighting on the recent rally to 15% as of yesterday. We do not hold any oil producers as they take a direct hit from the significantly weaker oil price and we do not see any value in this area. Our energy holdings focus on pipeline maintenance and construction, drilling rig operators and other energy infrastructure. While these companies will likely see their earnings begin to decline late in 2015 and into 2016 (as opposed to Q4/2014 for oil producers), we believe the cheap price-to-earnings multiples and enterprise value-to-hard assets represent good value.
As a reminder, the iPad mini giveaway ends on March 2, 2015 with the RRSP deadline.
|Instrument||January 2015||Year 2014|
|AFINA Affinity Fund LP||-4.18%||+1.81%*
|AFINA Optima10 Managed Account
|Investors Group North American Fund||+1.82%||+12.17%|
|RBC Canadian Equity Mutual Fund||-0.26%||+9.20%|
|S&P/TSX Total Return Composite Index||+0.55%||+10.55%|
|S&P 500 Index||-3.00%||+13.69%|
As of January 31, 2015. All figures are net of fees and other expenses. Past performance is not indicative of future results. Annual results for the AFINA Affinity Fund LP include performance from October 1, 2014. Refer to afinacapital.com for full details and disclosures.