Money-making bets on takeover targets such as Flint Energy
Services Ltd. (FES.TO) and TMX Group Inc. (X.TO) are pushing gains
in the Bissett Canadian Equity Fund (BISCNEQ) ahead of all
competitors this year, Bloomberg reported.
Calgary-based managers Garey Aitken and Tim Caulfield of Bissett
Investment Management returned 14.4% in 2012, the most among 33
Canadian equity mutual funds overseeing C$1 billion ($1.01 billion)
or more, according to data compiled by Bloomberg as of Dec. 18. The
advance compares with a 6.1% increase for the Standard &
Poor's/Toronto Stock Exchange Composite Index, including
The report said Aitken and Caulfield are finding winners in the
world's second-worst performing developed equity market by looking
past industries to pinpoint companies trading for less than they
are worth. The strategy steered them away from commodity producers,
the year's worst stocks. The S&P/TSX Energy and Materials
indices are the worst-performing industries this year, falling 3.7%
and 8.8% respectively.
"Our approach is well-suited to take advantage of frequent
mispricing of equities," Caulfield said. "We are always looking to
own businesses trading at a discount, and that may mean they then
get acquired and the share price converges with the intrinsic
Merger values increased in Canada this year, with 2,288
announced and completed transactions for a total of $207.44 billion
as of Dec. 19, the highest since 2007. Flint has returned 96% for
the Bissett fund, according to data compiled by Bloomberg as of
Dec. 18. The Calgary-based oilfield services company was acquired
by URS Corp. in a C$1.34 billion deal completed in May.
Caulfield and Aitken earned a 20% return from their investment
in TMX Group. The operator of the Toronto Stock Exchange was
acquired by a group of banks and financial services companies in a
C$3.73 billion deal that closed in September.
Celtic Exploration Ltd. (CLT.TO), which has oil and gas
properties in the Montney and Duvernay shale regions of Alberta,
contributed a 14% return when it agreed to be sold to Exxon Mobil
), the world's largest energy company, for C$2.9 billion.
Another holding that benefited from takeover speculation is
Inmet Mining Corp. (IMN.TO), owner of the second-biggest copper
mine under construction. The Toronto-based company has surged 40%
since Nov. 28, when it disclosed an unsolicited offer from First
Quantum Minerals Ltd. (FM.TO), a producer of copper in Africa, that
is now valued at C$5.2 billion.
Inmet was trading at a discount of as much as 47% to the
S&P/TSX Materials index in October, a month before the