Update – June, 2020
• Firm Update
• Key Mandate Review
• Concentrated Global Equities
• Small Cap Canadian Equities
BARRANTAGHInvestment Management
Update – June 30, 2020
• Firm Update
• Key Mandate Review
• Small Cap Canadian Equities
• Total Equities
• Economic Update
Total EquitiesSmall Cap Canadian Equities
Firm Update
2
FIRM PROFILE
• 100% employee-owned investment managers since 1995• 17 employees, firm ownership expanded to 6 employee-
shareholders• AUM: $1 Bn (private wealth, institutional, sub-advisory)• Fundamental quality value style
STRATEGIES OFFERED
• Balanced Mandates – active asset mix mgmt.• Fixed Income – Credit barbell + active duration mgmt.• Equity Strategies – Focus Portfolios (20 – 40 stocks in a
strategy):• Small Cap – quality/yield focus• Mid Cap – S&P TSX Completion Index• All Cap Cdn Equities • Income – yield focus• Global Equities – Global leaders + Special situations• Total Equities
FIRM UPDATE
Barrantagh celebrating 25 years in business!
COVID 19:• Operating remotely with full trading, portfolio accounting,
investment team and client service capability• Rotating limited office schedule & video conferencing
Diversification Strategies:• Small Cap – new prospectus fund launched in Q2/19
• ‘F’ Class – 1.0% MER, 12-year composite track-record• Mid Cap – reached 2-year track record end of Q2
ESG Integration Update:• Completed UN PRI signatory process (2019) & formalized BIM
Responsible Investing Policy
Sub-Advisory News:• Awarded new SMA mandate at key bank brokerage firm
broadening our offerings to 4 leading IIROC firms
Website Upgrade 2020:• Launched July, 2020• Improved navigation, functionality & content• Advisor Portal
BarrantaghCompetitive Advantages
3
Barrantagh Outcomes
Investment Boutique ▪ 100% employee-owned & independent▪ Investing in small, mid-size & larger
companies with minimal trading impact▪ Integrated client-focused team
Quality/Value investing style ▪ Capital preservation/absolute returns▪ Low portfolio risk metrics
Fundamental bottom-up research ▪ Focused “Best Idea” portfolios▪ Low portfolio turnover
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Investment PhilosophyDefining Quality
IDEA GENERATION▪ Competitive advantages
▪ Industry leaders
▪ Pricing Power
▪ High return on capital
▪ Low capital intensity
▪ ESG Profile
INDEPENDENT VALUATION▪ Cashflow analysis
▪ Independent valuation
▪ Forecast use of leverage
▪ Quality reduces risk
▪ Buy/Sell Targets
MANAGEMENT INTERVIEWS▪ Aligned with shareholders
▪ Clear business strategy
▪ Record of value creation
▪ Low cost operators
▪ Conservative use of leverage
Capable Management
DEFINING
QUALITY
OBSERVATIONS:Small Cap Canadian Equities
5
6
-5
0
5
10
15
20
25
Rolling 5 Year Annualized Performance
Large Cap Median - 1 Small Cap Median - 2
Canadian Equity MarketsSmall Cap Median Beats the Large Cap Median 70% of the time Since 1985
1Evestment Large Cap Canadian Equity2Evestment Small Cap Canadian Equity
• Periods of small cap active manager underperformance are not persistent and as the shaded areas indicate the difference in performance for those periods was only 2-3%
Nortel/Tech Run-up
Small Cap Median Manager Outperforms on ReboundsBeats the Large Cap TSX Composite on Market Recoveries
7
“Tech Wreck”
Recession Recovery
Credit Crisis European Debt Crisis
1 Yr Ended Jun. 2020Small Cap Median +1.6%TSX Comp. -7.5%
8
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
9/86 3/89 9/91 3/94 9/96 3/99 9/01 3/04 9/06 3/09 9/11 3/14 9/16 3/19
Growth of $100 Invested Since Jan/1985
S&P TSX Composite Large Cap Median - 1 Small Cap Median - 2
Canadian Equity MarketsGrowth of $100 since Jan/1985
1Evestment Large Cap Canadian Equity2Evestment Small Cap Canadian Equity
9
Canadian Small Cap Universe Canadian Large Cap Universe Global Equity Universe ($C)
Barrantagh Small CapTSX Small Cap Index
Barrantagh Small CapTSX Composite Index
Barrantagh Small CapMSCI World Net ($C)
Strategy Inception Date: Jan. 1, 2008
RETURNS: Small Cap Canadian EquitiesStrong Performance vs. Large Cap Cdn & Global Equities (for Periods Ending Jun. 30, 2020)
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RETURNS: Small Cap Canadian EquitiesStrong Performance vs. Large Cap Core & Cdn Dividend Strategies (for Periods Ending Jun. 30, 2020)
11
-10
-5
0
5
10
15
20
0 3 orFewer
5 orFewer
7 orFewer
9 orFewer
12 orFewer
15 orFewer
20 orFewer
Morethan 20
(%)
# Sell Side Analysts Covering
Stock Performance1,2 vs. # Covering Analysts
5 Year Annualized Return 10 Year Annualized Return
TSX 10YR CAGR = 4.7%
Barrantagh Small CapAvg. Analyst coverage: 7
TSX 60Avg. Analyst coverage: 18
Small Cap Canadian EquitiesInformation Advantage: Lack of Research Coverage Creates Opportunities in Small Cap
1 Study universe includes all members of the TSX Composite & TSX Small Cap Indices with 5 & 10-year track records2 Returns are for periods ending Aug. 31, 2018
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0
5
10
15
20
25
30
35
40
45
> $50bn $15 - $50bn $7.5 - 15bn $1.5 - $7.5bn $750M -$1.5bn
$400M -$750M
<$400M
(%)
Market Cap Exposure
Market Cap Distribution (%) (Jun. 30, 2020)
Large Cap Median Barrantagh Small Cap
Small CapSmall/Mid CapLarge Cap2
Small Cap Canadian EquitiesLarge Cap Managers Ignore Small Cap Opportunities
1 Large Cap Median = Evestment Large Cap Canadian Universe2 Market Cap buckets as defined by Evestment
Small Cap & Large Cap universes are mutually exclusive – Large Cap managers don’t own below $1.5bn. Overlap exists in the Small/Mid bucket - $1.5bn -$7.5bn.
OBSERVATIONS:Diversification with
Small Cap Canadian Equities
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BarrantaghSmall Cap
Cdn. Equites1
Percentile Rank2
Annualized Return
11.6 1 1st Percentile
Standard Deviation
13.9 1 Lower Volatility than Median
Sharpe Ratio .76 1 Highest risk-adjusted return
Beta 0.54 1 Very Low risk vs. market
Treynor Ratio 19.6 1 Highest risk-adjusted return
Small Cap Canadian EquitiesRisk Statistics vs. Small Cap Canadian Equity (for Periods Ending June 30, 2020)
115
58
0
20
40
60
80
100
120
140
Upside Market Capture Downside Market Capture(%
)
Barrantagh Small Cap Canadian Equity
1 Since Inception Jan. 1, 20082 vs. Evestment Small Cap Universe
14
Creating Minimum Risk (Optimal) PortfoliosCombining Barrantagh Cdn. Large Cap Equity Income & Small Cap
15
7
7.5
8
8.5
9
9.5
10
10.5
11
11.5
12
10 11 12 13 14 15
An
nu
aliz
ed R
etu
rn
Standard Deviation
Canadian Equity AllocationSince Inception (Jan./08) Risk Return
For Periods Ending Jun. 30 2020
100% MANAGER ‘X’
100% BARRANTAGH SMALL CAP
10% SMALL CAP
20% SMALL CAP
30% SMALL CAP
40% SMALL CAP
50% SMALL CAP
60% SMALL CAP
70% SMALL CAP
80% SMALL CAP
90% SMALL CAP
Total Portfolio Risk a function of:1. Weights (ω) of underlying components2. Risk (σ) of underlying components3. Correlation (𝜌) of components
Most large-cap Cdn. Equity managers are highly correlated (>0.9) – with each other and the index
Barrantagh small cap offers very low correlation with large cap (0.6) and indices
• Allocation can reduce overall portfolio risk + increase return
Increase returns, Minimal change to risk profile
DIVERSIFICATION: Small Cap Canadian EquitiesPerspective on Allocation to Small Cap
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40.0%
20.0%
10.0%
30.0%
“Typical” Client Asset Mix
Fixed Income Canadian Equities
Small Cap Global Equities
=> 5% - 15% Total Portfolio Allocation
Incremental addition of small cap shows optimal (minimum risk) allocations of 20% - 50% which would suggest 5% - 15% of a typical 60% equity/40% fixed client portfolio
16
5
6
7
8
9
10
11
12
11 11.5 12 12.5 13 13.5 14
An
nu
aliz
ed R
etu
rn
Standard Deviation
Canadian Equity AllocationSince Inception (Jan./08) Risk Return
For Periods Ending Jun. 30 2020
Increase returns, no change to risk profile
100% BARRANTAGH LARGE CAP INCOME
100% BARRANTAGH SMALL CAP
10% SMALL CAP
20% SMALL CAP
30% SMALL CAP
40% SMALL CAP
50% SMALL CAP
60% SMALL CAP
70% SMALL CAP
80% SMALL CAP
90% SMALL CAP
DIVERSIFICATION: Small Cap Canadian EquitiesResults are Similar with Other Large Cap Managers
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4
5
6
7
8
9
10
11
12
10.5 11 11.5 12 12.5 13 13.5 14
An
nu
aliz
ed R
etu
rn
Standard Deviation
Canadian Equity Allocation10 Year Risk Return
For Periods Ending June. 30, 2020
100% LARGE CAP
MANGER “Z”
100% BARRANTAGH SMALL CAP
30% SMALL CAP
100% LARGE CAP
MANGER “X”
100% LARGE CAP
MANGER “Y”
30% SMALL CAP
40% SMALL CAP
Increase returns, no change to risk profile
SMALL CAP CANADIAN EQUITIES
18
19
Small Cap Canadian Equity MandatePerformance at June 30, 2020
For Periods Ending
Jun. 30, 2020
YTD 1 Yr 2 Yrs 3 Yrs 4 Yrs 5 Yrs 6 Yrs 7 Yrs 8 Yrs 9 Yrs 10 Yrs
BIM Canadian Small Cap Equity -3.6% 1.6% 3.0% 3.6% 4.9% 4.4% 3.8% 7.9% 9.6% 10.5% 13.0%S&P/TSX Small Cap Index -14.3% -10.1% -9.1% -4.6% -2.5% -0.2% -3.1% 1.7% 1.4% -1.2% 1.5%
2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
BIM Canadian Small Cap
Equity 19.0% -8.9% 5.9% 19.8% -5.3% 17.3% 30.9% 18.5% 15.6% 35.0% 43.8% -22.9%
S&P/TSX Small Cap Index 15.8% -18.2% 2.7% 38.5% -13.4% -2.4% 7.6% -2.2% -16.4% 35.1% 62.3% -45.5%
Calendar Years => Barrantagh Small Cap outperformed
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Small Cap Canadian Equity MandateJunior Gold Miners: Underperforming/Volatile & Poor Commodity Tracking
-100%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
May
-09
Sep
-09
Jan
-10
May
-10
Sep
-10
Jan
-11
May
-11
Sep
-11
Jan
-12
May
-12
Sep
-12
Jan
-13
May
-13
Sep
-13
Jan
-14
May
-14
Sep
-14
Jan
-15
May
-15
Sep
-15
Jan
-16
May
-16
Sep
-16
Jan
-17
May
-17
Sep
-17
Jan
-18
May
-18
Sep
-18
Jan
-19
May
-19
Sep
-19
Jan
-20
May
-20
Cumulative Returns ~ 10 Years
TSX - SC Gold Gold Barrantagh Small Cap
Gold +127% (7.7% p.a.)
Small Cap Gold Stocks +80% (5.4%
p.a.)
Barrantagh Small Cap +381% (15.1% p.a.)
TSX Small Cap Canadian Equity Contributions by Sector to Total Index Return
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-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
Rolling 5 Year Average Contributions to S&P/ TSX Small Cap Index
Contribution to the S&P TSX Small Cap Index Total Return
Opportunities : Industrials contributed > 50%
Cyclical Uncertainty : Materials detracted > 60%
.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Barrantagh Small CapIndustrials vs. Materials Sector Allocation
% Industrials % Materials
Profile: Small Cap Canadian EquitiesPortfolio at June 30, 2020
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0% 5% 10% 15% 20% 25% 30% 35%
Industrials
Staples
Real Estate
Utilities
Energy
Health Care
Materials
Financials
Discretionary
Technology
Comm. Services
Barrantagh Small Cap Industry Weight vs. Index
S&P/TSX Small Cap Index Barrantagh Small Cap
CHARACTERISTICS
Number of Holdings 23
Avg. Market Cap $1.85 Bn
# Industry Sectors 9
Dividend Yield 3.3%
P/CF 9.6X
0
2
4
6
8
10
12
14
16
Historic P/CF
Barrantagh Small Cap
0%
500%
1000%
1500%
2000%
2500%
3000%
3500%
4000%
4500%
0 - 500Mn 500Mn - 1Bn 1Bn - 2Bn > 2Bn
Market Cap Exposure
Barrantagh Small Cap
Canadian Small Cap Equity PortfolioPortfolio at June 30, 2020 | Q2 Transactions
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Portfolio Weight
Portfolio Weight
Consumer Discretionary Industrials SOLD
Diversified Royal 2.4% Aecon Group 3.4% Wajax
2.4% Badger Daylighting 3.2%
Consumer Staples Boyd Group 5.0%
Primo Water 4.9% Cargojet (-) 5.7% TRIM = (-)
Jamieson Wellness 5.3% Calian Group 3.9% ADD = (+)
North West Co. 4.2% People Corp. (NEW) 2.4%
Premium Brands 3.5% Morneau Shepell 4.4%
17.9% 27.9%
Energy Real Estate
Gibson Energy (+) 4.0% Minto Apartment REIT 4.3%
Parkland Fuel 3.2% Storagevault Canada 4.0%
Tidewater Midstream 2.2% Summit Industrial REIT (New) 3.0%
9.4% 11.3%
Financials Utilities
Trisura Group 4.0% Boralex (-) 4.1%
4.0% Superior Plus 4.0%
Health Care Transalta Renwables (NEW) 3.1%
Andlauer Healthcare (-) 5.8% 11.2%
5.8% Materials
Altius Minerals 2.5%
Intertape Polymer (+) 3.3%
5.8%
Cash & Equivalent 4.3%
Total 100.0%
TOTAL EQUITIES
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25
Total Equity MandatePerformance at June 30, 2020
For Periods Ending
Jun. 30, 2020
YTD 1 Yr 2 Yrs 3 Yrs 4 Yrs 5 Yrs 6 Yrs 7 Yrs 8 Yrs 9 Yrs 10 Yrs
Total Equity -7.8% 1.7% 6.4% 6.8% 8.8% 7.6% 7.5% 10.5% 11.6% 9.2% 10.1%
Benchmark -4.2% 2.6% 3.7% 6.2% 8.3% 6.7% 7.0% 9.7% 10.3% 8.5% 9.6%
2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008
Total Equity 31.6% -6.1% 10.9% 11.2% 7.2% 12.0% 31.8% 10.1% -8.3% 7.8% 15.9% -16.1%
Benchmark 22.1% -4.7% 11.8% 12.2% 4.6% 12.5% 23.7% 10.2% -5.9% 11.7% 22.5% -29.2%
• Benchmark: 50% S&P TSX Composite Index / 50% MSCI World (Net)
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BarrantaghTotal Equites
Percentile Rank1
Annualized Return
7.1 10 1st Quartile
Standard Deviation
10.61 1 Very Low Volatility
Sharpe Ratio 0.57 2 High risk-adjusted return
Beta 0.61 1 Very Low risk vs. the market
Treynor Ratio 9.9 2 High risk-adjusted return
Total EquitiesMarket Cycle Statistics vs. Pure Canadian Equity (for Periods Ending June 30, 2020)
81.2
54.3
0
10
20
30
40
50
60
70
80
90
100
Upside Market Capture Downside Market Capture(%
)
Barrantagh Total Equities
1 Since Jan. 1, 2008 Versus Evestment Pure Canadian Equity Universe
Total EquityPortfolio at June 30, 2020
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0%
5%
10%
15%
20%
25%
30%
Barrantagh Total Equity Industry Weight vs. Benchmark
Barrantagh Total Equity 50% S&P TSX Comp./50% MSCI World
CHARACTERISTICS
Number of Holdings 50
# Industry Sectors 11
Dividend Yield 2.3%
P/CF 14.3X
Cash2% Bermuda
1%
Canada36%
France5%
Ireland2%Netherlands
1%
Spain5%
Sweden3%
United States45%
Geographic Mix
Total EquityPortfolio at June 30, 2020 |Canadian / Global | Q2 Transactions
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Portfolio Weight Portfolio Weight Portfolio WeightConsumer Discretionary Industrials Health Care
McDonalds 1.9% CP Rail 2.1% Becton Dickinson 2.3%
Dollar General 2.6% CN Rail 3.2% Boston Scientific (NEW) 1.5%
Hasbro (+) 2.1% Allegion 1.8% Cooper Companies (NEW) 1.6%
6.6% Illinois Tool Works (+) 2.2% Kloninklijke Philips (-) 1,2%
Consumer Staples Ferrovial 4.5% Thermo Fisher Scientific (-) 2.0%
Mondelez International (+) 3.2% Schneider Electric 2.4% Unitedhealth Group (-) 1.9%
3.2% Union Pacific 2.6% 9.7%
Energy Stantec (-) 1.2% Information Technology
Enbridge 0.9% Toromont Industries (+) 2.0% CGI Group 1.9%
Parkland Fuel (-) 0.4% WSP Global (-) 1.1% Ericsson 2.9%
Gibson Energy (NEW) 1.3% 23.1% Mastercard (+) 2.5%
TC Energy (+) 1.4% Financials Microsoft 3.5%
4.0% Brookfield Asset Mgmt. 0.8% Leidos Holdings 1.2%
Real Estate Bank of Nova Scotia 2.0% Open Text (+) 2.6%
American Tower 1.8% Intact Financial 1.4% Global Payments 1.8%
Canadian Apartment REIT (NEW) 0.8% Royal Bank 1.5% 16.5%
2.6% TD Bank 1.7% Communication Services
Utilities J.P. Morgan 2.4% T-Mobile 3.0%
Brookfield Infrastructure Partners 0.8% 9.8% BCE 1.8%
Fortis (NEW) 1.9% Materials Alphabet 2.7%
Superior Plus (NEW) 1.9% Int’l Flavours & Fragrances (+) 2.2% Rogers Comm. (+) 2.1%
4.6% Nutrien (-) 0.3% Telus (+) 2.2%
Air Liquide 2.4% 11.8%
SOLD 5.9%
Cash & Equivalents 2.2%
Total 100.0%
TRIM = (-)
ADD = (+)
ECONOMICS
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Outlook
World:
• Response has been quick
• Rate cuts, fiscal stimulus, monetary support, credit supports, regulatory burden relief
• Fiscal policy response expected to add 1.3% to global GDP
• U.S. Example – fiscal policy between $850bn to $1.2tn• The U.S. response is about 5% of current GDP
• In 2008 the response was $830bn or 6% of GDP
Canada:
• Announced $82bn response package or 3% of GDP
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Canadian Growth Stocks Valuation StretchedValue Investing Avoids Overvaluation
Source: WSJ, Hugo Ste-Marie, Scotia Capital
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Source: WSJ, Bloomberg
U.S. Growth Stocks Valuation StretchedValue Investing Avoids Overvaluation
Working with You
• Why Small Cap Canadian Equities1. Adds low-risk alpha & yield to client portfolios
2. Diversification - reduce overall client portfolio risk (low correlation)
3. Exploit the opportunity in small cap stocks (limited sell-side coverage)
• Barrantagh Small Cap Canadian Equity Fund (F Class)• Fund Code: BMI105, 1.0% MER
• SMA Minimum Account: $100K(Small Cap), $150K (Total Equities)
• Advisor Portal (barrantagh.com) password: RGMP4
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Contact (Vancouver):Robin Ferguson, Vice [email protected](778) 990-3445
Contact (Toronto):Alan Daxner, Senior Vice [email protected](416) 864-7958
100 Yonge Street, Suite 1700Toronto, Ontario M5C 2W1
(416) 868-6295www.barrantagh.com