BCV Bulletin - Recent Trading Activity - June 2024
SELL: OpenText Corporation (TSE: OTEX)
We recently sold out of our position in OpenText Corporation (OTEX). OpenText has been a challenging holding for investors, having experienced many ups and downs within capital markets. When our initial investment was made in the company, we believed OpenText was providing value to businesses with their information technology solutions, data management, and software capabilities. While this was the case for some time, the company has recently struggled to grow organically and cement itself within the Canadian technology industry. OpenText has endured several strategic changes including an acquisition focused growth strategy, attempting to enter and compete in new verticals within the technology sector. These strategies have come with their challenges and ultimately, the business has struggled to execute their vision for growth. On several occurrences, OpenText has fallen short of market expectations. For these reasons, we feel our client capital may be more efficiently allocated in a higher conviction holding.
BUY: Gildan Activewear Inc. (TSE: GIL)
We are starting a new position in Gildan Activewear Inc. (GIL) – the leading manufacturer in the world of basic fashion garments. Gildan is the global market share leader in basic T-Shirts representing 80% of the overall market and has been a Canadian success story that we believe is currently undervalued. The company has strong underlying fundamentals with a business model that benefits from economies of scale. In December of 2023, the founder and longtime CEO of Gildan was ousted from the company and a new management team put in place. This took investors by surprise as the newly elected CEO lacked experience in clothing manufacturing and did not resonate well with the market. More recently, the company has been going through a push to reinstate the former CEO and founder, Mr. Glenn Chamandy. This initiative, led by prominent shareholder activist Browning West, proved to be successful as the current board resigned just a few days before the shareholder vote on May 28th. We feel that this is the best outcome for shareholders and that Mr. Chamandy is the most suitable person to lead the company. After receiving an overwhelming 86% shareholder support, we believe that Mr. Chamandy can steer the company back to its roots and continue to create value for investors.
This BCV Bulletin is prepared for general informational purposes only, without reference to the investment objectives, financial profile, or risk tolerance of any specific person or entity who may receive it. Investors should seek professional financial advice regarding the appropriateness of investing in any investment strategy or security and no financial decisions should be made based on the information provided in this document. Statements regarding future performance may not be realized and past performance is not a guarantee of future performance. This document and its contents do not constitute a recommendation or solicitation to buy or sell securities of any kind. Investors should note that income, if any, from any investment strategy or security may fluctuate and that portfolio values may rise or fall. BCV Asset Management Inc. does not guarantee the accuracy or completeness of the information contained herein, nor does BCV Asset Management Inc. assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. The information and opinions contained herein are subject to change without notice.
