The Wutherich & Co. Composite was up 2.7% in September. This compares with the S&P/TSX up 1.7% and the BMO Small Cap Index down 2.0%.
The Wutherich & Co. Composite recovered somewhat in September and is now up 16.1% year-to-date. Valuations continue to look compellingly cheap to us. We have maximized exposure to our highest conviction names and have kept cash to less than 1%. Off the critical list is Poly Corp. (PLT–N), the US based manufacturer of office communications equipment. It looks like they can manage their heavily indebted balance sheet and re-establish growth over the next year or so. On the critical list, for now, is Baylin Technologies Inc. (BYL–T). After reporting a terrific second quarter, the company is facing a significant air pocket in demand from several customers. This may last for several quarters. It is also having operational problems with one of its recent acquisitions. This combination is straining cash flow at a time when the company is carrying a lot of debt, the result of two acquisitions completed last year. Baylin will have to walk a cash flow tight rope for the next few quarters. At that point, they expect demand to resume for several key products and they will have worked out the bugs in their acquired operations.
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