Sionna Sub-Adviser Profile v2.indd

OceanRock Investments Inc.
OceanRock Canadian Equity Fund
Sub-Adviser Overview
Sionna Investment Managers Inc.
Sionna Investment Managers Inc. (Sionna) is the sub-adviser of the OceanRock Canadian
Equity Fund. Sionna is an independent, employee-owned investment management firm
investing on behalf of its institutional and private clients. The firm adheres to a disciplined,
relative-value-driven, bottom-up approach to stock selection. Sionna’s relative-value style is a
low-risk approach that is focused on capital preservation and generating value-added returns
over the long-term.
Office
Total Assets
Toronto
C$3.4 Billion
(12/31/2012)
Portfolio Managers
Kim Shannon, CFA, MBA
Founder | President | Chief Investment Officer
Founded
■■ More than 30 years of industry
Current Clients
2002
experience
The Calgary Foundation Sick Kids Foundation University of Guelph
University of Waterloo
■■ BComm, BA Econ: University
of Toronto; MBA: University of
Toronto
■■ Morningstar Fund Manager of
the Year, 2005; RBC Canadian
Woman Entrepreneur Award,
2007
Portfolio Construction
■■ CIO & Senior VP for the
Canadian affiliate of a large
multinational firm prior to Sionna
Management Style
■■ Served on the Boards of:
Canadian large-cap relative value
Canadian Coalition for Good
Governance; CFA Institute
Financial Analysts Seminar;
Accounting Standards Oversight
Committee; Past President of the
Toronto CFA Society
Average Number of Holdings
35 to 45
Portfolio Turnover
Target 10 to 20%
Risk Management
■■ Sector exposures are typically managed to +/- 5% of index sector
weights
■■ Diversified across at least 7 of the 10 industry sectors
Investment Universe Teresa Lee, CFA
Portfolio Manager | Managing Director, Investments
■■ Joined Sionna in 2003
■■ More than 18 years of industry
experience
Primarily invested in S&P/TSX Composite Index listed securities. Permitted
to invest in securities traded on any recognized Canadian exchange and up
to 10% foreign equities.
■■ Previously managed a small-cap
Cash Position ■■ Serves on Investment Committee,
value fund
■■ BComm (Honours): University of
British Columbia
Fully invested with 0 to 5% cash
A wholly-owned subsidiary of Qtrade Financial Group
Casey House Foundation; Toronto
CFA Society Awards Committee;
Gimme Shelter Committee
www.oceanrock.ca
Investment Philosophy, Approach and Process
Sionna believes stock prices are influenced by human nature as
much as a company’s intrinsic value.
■■ Management teams often over or under value their companies;
■■ Investors buy on good news, sell on bad news; and companies
not making any news at all are overlooked.
These factors can create a disconnect between price and value.
Sionna takes advantage of this by picking stocks when they are
trading significantly below their intrinsic value and earns returns as
they revert to their intrinsic value.
How Human Nature Drives Public Markets
Emotion Drives Irrational Thinking: Changing investor
sentiment can cause stocks to be mispriced.
Groupthink Drives Herd Mentality: Researchers have
demonstrated that people think in herds and will act much
differently in the safety and comfort of a group than they would
on their own.
Investment Process
Sionna uses a combination of quantitative and qualitative analysis. The firm’s proprietary Intrinsic Value Model is used to screen down the
universe for companies that display attractive value and that are trading at a minimum 30% less than their intrinsic value. Those businesses
are then rigorously reviewed using Sionna’s independent, fundamental analysis to determine whether they are buy candidates.
Quantitative Analysis
Sionna’s Intrinsic Value Model calculations are based on three key factors:
1 Book Value
Sionna focuses on companies trading
below the long-term average book value
of the Toronto Stock Exchange (TSX).
2 Return on Equity (ROE)
3 Relative Price to Earnings (P/E)
Sionna values companies that
produce consistently strong profit
and cash flow.
Sionna also determines how a stock has tended
to be priced relative to the market: has it tended to
trade at a premium or a discount?
Book Value
750 +
Stock Universe
Historical ROE
Intrinsic
Value
Relative P/E
Expected
Return
70–140
Stock Research
Universe
Qualitative Assessment
Companies that meet the quantitative standards are then carefully reviewed on a qualitative basis. This process includes an extensive
review of a company’s public information, interviews with senior management and on-site visits to critically assess the quality of the
business.
Portfolio Construction
Buy criteria are based on the assessment of the quality of the company and its management, and the associated price Sionna is willing
to pay to own it. Some of the factors assessed to determine entry point include:
Stocks with the following fundamentals discounted 10% to 15%
relative to broad market multiples:
■■ Low price to earnings
■■ Low price to sales
■■ Low price to book value
■■ Low price to cash flow
Above-average dividend yield:
■■ 10% higher than market
The information contained herein is provided by OceanRock Investments Inc. (OceanRock) for general informational purposes only and is not intended to provide, and should not
be relied upon as providing, legal, accounting, tax, financial, investment or other advice, or a solicitation to buy or sell any securities. The information was obtained from sources
believed to be reliable, but cannot be guaranteed to be current, accurate or complete. OceanRock is not responsible for any errors or omissions contained herein.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual
funds are not guaranteed, their values change frequently and past performance may not be repeated. Publication date 04/2013
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