Monthly Message
The Wutherich & Co. Composite was down 6.1% in March. This compares with the S&P/TSX being down 0.2%.
Some of our names came off significantly in March, notably goeasy (T-GSY) and Hibbett Inc. (Q-HIBB). Recession fears, inflation, higher interest rates, the health of the consumer, concerns about the banking environment and regulatory changes have put selective pressure on these stocks.
Sounds like a lot, huh? But, we have just finished looking at all our names following the release of their most recent quarters. Results, by and large, have been excellent, including those for GSY and HIBB. While outlooks are more cautious, long-term prospects still seem strong. It is interesting, when we speak to our companies’ managements, they are all concerned about the factors listed above but many of them are not seeing any effects in their current business. Clearly, they are also vulnerable to the bombardment of negative information that the media puts out on a minutely basis. Reality, for now, is much stronger than the media would have you believe. Might we suffer a self-fulfilling prophecy? That, perhaps, is a far greater concern.
Though our companies may face some short-term pressure, their long-term fundamentals continue to be very strong. This should support good long-term capital appreciation. On top of this, the portfolio has an average dividend yield of about 4%. This provides a good underlying rate of return while equity prices sort themselves out over the next few years.
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