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June 2024 Pricing Commentary

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In June, North American equity markets displayed mixed results, with the US stock market significantly outperforming its Canadian counterpart. All three ABC Funds not only exceeded their benchmarks but also reached new all-time highs during the month. This performance was largely driven by the funds’ US geographic focus, coupled with our strategic commitment to high-growth sectors, particularly technology.

The AI revolution remains a pivotal area of growth, fundamentally altering industries worldwide. Our ABC Funds are diligently capitalizing on this incredible technological transformation, with strategic investments in leading companies that are driving these remarkable advances.

For instance, on June 10th, Apple unveiled its new “Apple Intelligence” AI strategy. This announcement included a suite of advanced generative AI features such as an enhanced Siri, real-time transcription for calls, improved health monitoring tools, personalized emojis, and the integration of ChatGPT across all its devices. We see these developments as game-changing for Apple, which could spur significant growth by driving higher user engagement and opening up new revenue streams. Following these announcements, Apple’s stock surged, breaking past significant technical resistance levels to new all-time highs.

Additionally, after the close on June 12th, Broadcom reported impressive quarterly earnings results, exceeding Wall Street’s forecasts on both the top and bottom line while also increasing their financial outlook. The company’s success was driven by robust demand for their generative AI solutions, sending Broadcom’s stock price soaring to record levels. Furthermore, the company declared a 10:1 stock split, which further powered its investment attraction.

Other significant contributors to our funds’ performance in June included NVIDIA, ServiceNow, Microsoft, Amazon, Meta, Alphabet, Adobe, and ASML. These companies continue to deliver outstanding financial results, further corroborating the strength of our ABC Funds’ investment strategy.

In a strategic move to enhance our portfolios, we added ARM Holdings to all three ABC Funds. Through our analysis, we recognized ARM as a pivotal player in the AI revolution, benefiting greatly from its leading-edge processor architectures that are crucial for AI and mobile technology.

As we enter the second half of 2024, our outlook remains optimistic. We are confident in our diversified, large capitalization portfolios that are strategically positioned in those sectors at the forefront of the AI revolution.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

May 2024 Pricing Commentary

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The month of May brought forward a significant recovery in equity markets, with global stock indices rebounding from April’s declines. Additionally, all three of our ABC Funds outperformed their benchmarks in May, setting new all-time highs.

The month saw standout sector performances from information technology, utilities, and communication services. We believe these sectors are at the forefront of the current bull market advance and are powering the artificial intelligence revolution.

NVIDIA, our funds’ most significant holding, continues to lead this charge. After the market close on May 22, NVIDIA delivered another exceptional ‘beat and raise’ earnings report which showcased the relentless demand for its AI solutions and its unrivalled dominance in driving technological innovation.

Jensen Huang, NVIDIA’s founder and CEO, aptly noted, “The next industrial revolution has begun — companies and countries are partnering with NVIDIA to transform traditional data centers into AI factories.”

Furthermore, the company announced a 10-for-1 stock split and increased their dividend. Reflecting these positive developments, NVIDIA’s share price surged over 25% in May.

Other notable contributors to our funds’ strong performance this month included Apple, Micron, ASML, Meta, Otis Worldwide, Royal Bank of Canada, and Brookfield Corporation.

Looking ahead, summer is traditionally a seasonally bullish period for equities, especially in a US election year. We remain optimistic and confident in our diversified, liquid, large capitalization portfolios. More importantly, we believe our funds are well-aligned with the sectors poised for future growth.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

April 2024 Pricing Commentary

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After five consecutive months of upward momentum, equity markets declined in April. This result was influenced by several factors including interest rate uncertainty, sticky inflation, geopolitical tensions, and general investor angst.

Despite these challenges, a number of positive elements reinforce our optimistic outlook. For instance, the economy remains strong, underlying market technicals are favourable, and current investor sentiment appears overly pessimistic. Additionally, corporate earnings have continued to surprise to the upside, with over 75% of S&P 500 companies surpassing analyst expectations this quarter. Notably, ABC Funds heavyweights – Microsoft, Alphabet, Meta, and Amazon – all reported exceptional financial results in April. Artificial intelligence played a key role in their success, exemplifying its increasing importance as a driver of corporate growth. Adding to the positive news, Alphabet took an important step forward by announcing its first-ever dividend. Other ABC Funds standouts in April included: Carrier Global, Boston Scientific, and Trane Technologies.

As we enter the month of May, we are optimistic about the opportunities ahead. The current market negativity coupled with significant investor cash reserves, could set the stage for a major snapback rally into the summer with any unexpected positive catalysts.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

March 2024 Pricing Commentary

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Equity markets in March closed out the first quarter of 2024 on a strong note. This advance enabled the ABC Funds to rally to new all-time highs.

The month was characterized by broad-based gains which encompassed a wide range of sectors and geographies, reflecting robust global economic momentum and stock market resilience.

A notable investment decision taken early in the month was the addition of Micron Technology for all three ABC Funds. Micron stood out to us as an undervalued stock poised to benefit significantly from the artificial intelligence revolution. Furthermore, it was our view that Micron had been overlooked by investors given that the company offered excellent growth potential and a major turnaround opportunity. We believed the demand for high-bandwidth memory, essential for AI applications, positioned Micron as a key player, especially through its strategic partnership with NVIDIA for advanced memory solutions. On March 20th, Micron reported its quarterly earnings results announcing a spectacular beat and delivering an unexpected profit which lifted the stock to new all-time highs. Micron ended the month with a 30% gain, the highest in the S&P 500 for March.

Beyond Micron, March saw strong performances from other key ABC Funds’ holdings including NVIDIA, Microsoft, Alphabet, Amazon, ASML, Canadian Pacific Kansas City, and Bank of Montreal.

Entering April, our positive outlook is underscored by expanding market breadth, solid corporate earnings results, continued North American economic growth, and significant uninvested investor cash reserves, all indicative of a robust and sustainable rally. Additionally, the spring is historically a strong seasonal period for stocks, especially in a presidential election year.

As we advance into the second quarter, we remain optimistic and fully invested in our well-diversified equity mix. Furthermore, our ABC Funds are strategically positioned and committed to key secular market trends and industries driving growth.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

February 2024 Pricing Commentary

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February was another positive month for equities, with global indices continuing their ascent. Our three ABC Funds not only outperformed their respective index benchmarks but also achieved new all-time highs, marking a continuation of our funds’ strong performance.

The standout event of February was NVIDIA’s blowout earnings report, which propelled the stock to new record highs. NVIDIA has emerged as the uncontested leader of the current bull market advance and is uniquely positioned at the heart of the artificial intelligence revolution. The company’s influence extends far beyond AI, playing a critical role in drug discovery and healthcare, robotics, industrial automation, interactive gaming, and automotive.

Jensen Huang, founder and CEO of NVIDIA, captured the company’s momentum in the earnings release when he stated:

“Accelerated computing and generative AI have hit the tipping point. Demand is surging worldwide across companies, industries, and nations.”

His remarks underscore the magnitude of the technological shift underway. We believe this represents the greatest advancement in technology since the industrial revolution and has presented our funds with unparalleled investment opportunities.

NVIDIA has been a cornerstone of ABC Funds for many years and remains a top pick, reflecting our strategic commitment to identifying and capitalizing on industry leaders. In addition to NVIDIA, other ABC Funds holdings that contributed notably to our February performance included Meta, Amazon, ASML, Broadcom, Waste Management, and Canadian Pacific Kansas City.

Moreover, the technicals remain bullish, with a broadening rally that now encompasses the industrials, healthcare, and financial services sectors, indicating strong market internals. This expansion reinforces our positive economic and investment outlook.

Looking ahead, we remain confident with our three well-diversified portfolios and expect their positive performance to continue throughout 2024.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

January 2024 Pricing Commentary

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All three ABC Funds outperformed their respective benchmarks in the month of January, powering forward to new all-time highs. The equity markets continued their upward trajectory, buoyed by strong performances from large capitalization stocks. Leading the way were sectors pivotal to innovation and the “new economy” – semiconductors, software, medical technology, and infrastructure. Moreover, companies at the forefront of the artificial intelligence revolution emerged as significant beneficiaries, reflecting the growing impact of AI across various sectors.

In January, our standout performers were NVIDIA, ASML, Meta, Microsoft, ServiceNow, Boston Scientific, and Broadcom. Their contributions were pivotal to our funds’ outperformance during the month.

Looking ahead to February, our outlook remains optimistic, underpinned by a resilient economy, the continued deceleration of inflation, and the prospect of declining interest rates later in 2024 — all contributing to a favourable backdrop for investment. Moreover, corporate earnings have been notably strong, as evidenced by Meta and Amazon—key holdings within our ABC Funds—which, after reporting their impressive earnings results and forward guidance after yesterday’s close, saw their stock prices increase by 20% and 7% respectively today. Meta also announced a $50 billion share buyback program and initiated its first-ever dividend.

Moving forward, our positive stance on the stock market, the broader economy, and our portfolio’s strategic positioning remains unchanged. We believe our ABC Funds are well-positioned to continue their trajectory of outperformance, capitalizing on the numerous opportunities that 2024 presents.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

December 2023 Pricing Commentary

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The remarkable stock market rally that began in late autumn extended into December, ending 2023 with strong performances across all major equity indices. Our ABC Funds capitalized on this positive momentum, adding to their meaningful year-to-date outperformance with additional December gains. Notably, all three ABC Funds ended the year reaching new all-time highs since inception. These strong results were driven by a number of key portfolio contributors including NVIDIA, Broadcom, ASML, Autodesk, Meta, Alphabet, Canadian Pacific Kansas City, Thermo Fisher Scientific, and Brookfield Corp.

Looking ahead to 2024, our optimism is underpinned by several key factors shaping the market landscape. First and foremost is our expectation of falling interest rates and more dovish central bank monetary policies. Any reduction in interest rates should be enthusiastically received by investors and provide a major catalyst for higher stock prices. Secondly, negative investor psychology continues to overhang the marketplace, which presents excellent risk/reward common stock opportunities. Additionally, there remains significant investor cash reserves on the sidelines which could be committed to equities with any potential positive catalysts. Finally, we are optimistic with regard to expanding North American economic activity, resulting in increasing corporate earnings, growing M&A, and company share buyback activity.

Furthermore, central to our investment thesis is a great new wave of innovation which we believe is at the heart of the current investment cycle and will fuel corporate earnings for years to come. Our ABC Funds are strategically positioned with portfolio holdings at the forefront of significant technological advances including artificial intelligence, robotics, spatial computing, and new drug discoveries.

In summary, our investment team remains optimistic on the economic and investment prospects for 2024. As a result, our portfolios are committed to our large capitalization and diversified North American common stock selections.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

November 2023 Pricing Commentary

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The month of November provided a remarkable stock market recovery, as common stocks rebounded strongly, underscoring their resilience and continued upward momentum. All three ABC Funds exceeded their index benchmarks during the month, but more importantly we were particularly pleased with their year-to-date outperformance.

In November, numerous holdings within our ABC Funds portfolios reached new 52-week and all-time highs, significantly bolstering our results for the month. The market’s leadership was particularly strong in the technology and communication services sectors, areas where our portfolios are strategically overweight. This sector strength was exemplified by standout performances from Apple, Microsoft, NVIDIA, Amazon, Broadcom, ServiceNow, Visa, Mastercard, Adobe, S&P Global, Thermo Fisher Scientific, and Zoetis.

The market narrative for November was characterized by a confluence of positive factors: robust corporate earnings, a significant easing of inflationary pressures, and a substantial shift in interest rate expectations. Interestingly, the market has shifted from bracing for further interest rate hikes to now anticipating rate cuts in 2024. This realignment highlights the increasing confidence that monetary authorities have successfully steered the economy towards a soft landing. We believe that any reduction in interest rates will be enthusiastically received by investors, serving as a major catalyst for higher equity prices. Furthermore, these positive macroeconomic developments in the month of November effectively pivoted investor sentiment away from the pervasive pessimism of October and towards a more optimistic and opportunistic view.

As we enter the final month of the year, we see the combination of renewed investor confidence, traditionally lower seasonal volumes, and substantial cash reserves on the sidelines as precursors to a potential end-of-year rally, setting a favourable stage for 2024. Consequently, we remain fully invested and committed to our new value investment philosophy.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

October 2023 Pricing Commentary

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Navigating through the month of October, the markets faced a number of challenges, including rising yields, persistent inflation, and geopolitical turmoil. Despite these conditions, our three ABC Funds outperformed their respective benchmarks.

The completion of Microsoft’s $69 billion acquisition of Activision Blizzard, held in all three portfolios, marked an important development in the tech sector this month. Both were significant holdings in our portfolios and the takeover at $95 USD added to our October returns.

On the earnings front, a number of our core holdings, including Amazon, Meta, Microsoft, Visa, and ServiceNow, reported strong results and offered positive forward guidance. Additional portfolio outperformers included Broadcom, Adobe, Waste Management, and ASML.

As we look to the final months of the year, we are optimistic. Historically, November and December are strong months for the markets, and we believe current conditions have created attractive opportunities in equities.

Furthermore, we anticipate a stabilization in yields and subsiding inflationary pressures, creating a conducive environment for corporate earnings growth. Technological advances, particularly in AI, remain a focal point of our strategy, as we see these innovations driving future earnings and share price increases.

Our portfolios remain fully invested, reflecting our confidence in our strategy and outlook. We are committed to maintaining our focus on quality and performance as we close out the year.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

September 2023 Pricing Commentary

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Historically, September has never been an easy month for financial markets. It was no different for the month of September 2023. Market headwinds included the growing investor recognition of “higher for longer” interest rates, as well as the recent Federal Reserve comments interpreted as alarmingly hawkish. Additionally, the impending threat of a U.S. government shutdown, with its huge risks and repercussions, kept investor sentiment on edge.

While decelerating, inflation remains stubbornly above the Federal Reserve’s 2% target. This has encouraged the central bank to continue with its tightening efforts. Consequently, bond yields have climbed to levels not seen since 2007, contributing to the steepest drop in bond prices in nearly four decades.

Despite the pervasive negativity overhanging financial markets, we remain optimistic with regard to our diversified, large-capitalization portfolios. Common stocks appear technically oversold, which we believe sets the stage for a significant snapback rally, buoyed by solid corporate earnings and transformative innovations in technology including generative AI and digital transformation. Additionally, as we enter October, seasonal market trends are encouraging. In fact, the October to April period has a track record of delivering superior returns relative to the rest of the year.

In summary, although the challenges of August and September have priced significant negativity into the financial marketplace, we believe our portfolios are resilient and strategically positioned to capitalize on an eventual market rebound into year-end.

Irwin A. Michael Signature

Irwin A. Michael, President
I.A. Michael Investment Counsel Ltd.

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