Daniel Bubis’ Tetrem Capital has filed its 13F with the SEC for the reporting period of June 30, 2015. The Canadian investment firm, headquartered in Winnipeg, Manitoba has disclosed owning a U.S-traded public equity portfolio valued at $3.26 billion at the end of the second quarter, which was dominated by banks from the firm’s home country, which were touted as some of the world’s strongest coming out of the financial crisis. According to the latest records, the firm has over $5.12 billion in assets under management, with pooled investment vehicles forming the majority of its clientele. The investment firm employs a combination of fundamental and quantitative analysis for its investments. At Insider Monkey, we decided to find out more about the equity positions of Tetrem Capital as of the end of the second quarter. The investment firm has nearly 40% of its U.S portfolio dedicated towards finance stocks, which also includes investments in U.S banks. However, we’ll look at the fund’s top three picks, which were made up entirely of Canadian banks: Toronto-Dominion Bank (NYSE:TD), Royal Bank of Canada (NYSE:RY), and Bank of Nova Scotia (NYSE:BNS).
We don’t just track the latest moves of funds. We are, in fact, more interested in their 13F filings, which we use to determine the top 15 small-cap stocks held by the funds we track. We gather and share this information based on 16 years of research, with backtests for the period between 1999 and 2012 and forward testing for the last 2.5 years. The results of our analysis show that these 15 most popular small-cap picks have a great potential to outperform the market, beating the S&P 500 Total Return Index by nearly one percentage point per month in backtests. Moreover, since the beginning of forward testing in August 2012, the strategy worked brilliantly, outperforming the market every year and returning 123%, which is more than 65 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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Tetrem Capital’s heavy investment in Canadian banks begins with Toronto-Dominion Bank (NYSE:TD), in which it has a position worth $233.03 million consisting of 4.39 million shares. Tetrem Capital trimmed its position in the bank by disposing of 39,766 shares during the quarter. Toronto-Dominion Bank (NYSE:TD) will announce its fiscal third quarter 2015 financial results on August 27. Wall Street is expecting somewhat weaker financial results from the bank in comparison with the prior year quarter, with EPS estimates of $0.93 on revenues of $7.53 billion. It is important to know that Toronto-Dominion Bank (NYSE:TD) missed the analysts’ earnings expectations for the fiscal second quarter, with EPS of $0.89 against the market’s expectations of $0.91. The shares of the Canadian bank have declined by 15.15% year-to-date, further bolstering the bank’s healthy dividend yield of 4%. Among the hedge funds in our database that have filed 13Fs for the second quarter of 2015, McKinley Capital Management, led by Robert B. Gillam, held a position in Toronto-Dominion Bank (NYSE:TD) of 273,390 shares valued at $14.51 million.
Royal Bank of Canada (NYSE:RY) comes in at number two terms of the top equity investments of Tetrem Capital, which held 2.90 million shares of the bank, valued at $221.46 million. Bubis cut his position in Royal Bank of Canada by 2% during the second quarter and rightly so, as the shares of the bank have declined by 15.69% year-to-date. Royal Bank of Canada (NYSE:RY) is trying to streamline its business and as a part of the transformation, it announced the sell-off its Switzerland-based private banking business to SYZ Group. Royal Bank of Canada (Suisse) SA or “RBC Suisse” provides private banking to high-net-worth clients from Latin America, the Middle East, and Africa. Royal Bank of Canada (NYSE:RY) is expected to announce its fiscal third quarter 2015 financial results on August 26, with the market expecting EPS of $1.33 over revenue of $8.13 billion. Fisher Asset Management, led by Ken Fisher, is another hedge fund in our database slashing its position in the company, as it sold 6.64 million shares during the second quarter, leaving it with just 102,319 shares valued at $6.26 million at the end of the second quarter.
Another Canadian bank, Bank of Nova Scotia (NYSE:BNS), found a place in the equity portfolio of Tetrem Capital, the third-place to be exact. The investment firm reported ownership of 2.69 million shares of the bank, with market value of $173.40 million. Much like its top two investments, Daniel Bubis trimmed his position in Bank of Nova Scotia (NYSE:BNS) by dropping 23,925 shares during the quarter. Bank of Nova Scotia (NYSE:BNS) follows a similar trend as that of the Toronto-Dominion Bank and Royal Bank of Canada, with a drop of 18% in its share value year-to-date. The bank will announce its fiscal third quarter 2015 financial results on August 28, with expected EPS of $1.18 over revenues of $6.20 billion. In its fiscal second quarter 2015, the bank faced a 12.2% decline in its revenue year-over-year, though its earnings and revenues were above the market’s expectations. Cliff Asness’ AQR Capital Management held a major position in Bank of Nova Scotia (NYSE:BNS) at the end of the first quarter with 1.58 million shares valued at $79.23 million.
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