News & Opinion

31 Mar 2017
Market Overview: Equities

The S&P remains near record highs despite a modest pull back most recently. The only period when stocks were more expensive was during the days of the dotcom bubble.

On a historical basis, it is hard to argue that equities are anything other than expensive. However given the fact we see no systematic risk factors today, we believe they will remain expensive and likely get more expensive based on traditional methods.

31 Mar 2017

For the first quarter of 2017, master limited partnerships (MLPs), as measured by the Alerian MLP Index (AMZ), were up 2.2% on a price basis and up 3.9% on a total return basis, or including the impact of distributions. As measured by the Alerian MLP Infrastructure Index (AMZI), a more concentrated measure of midstream MLPs, the sector gained 2.4% on a price basis and 4.1% on a total return basis. For context, the broader market, as measured by the S&P 500, gained 5.5% on a price basis and 6.1% on a total return basis.

31 Mar 2017
Market Overview

If we had to put a title on this quarter’s energy commentary, it would be: “Canada the Unloved!” The CDN S&P/TSX energy sub index was down 6.2% for the quarter. Digging deeper into the numbers however, the weakness was much worse. Excluding the pipelines and midstream companies from the energy sub index, the remaining 36 oil and gas producer and energy services providers dropped an average of 14 percent. It gets worse! The bottom 18 companies of the 36 dropped anywhere between 15-34%!

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The opinions expressed herein reflect those of the individual portfolio manager. These opinions are subject to change at any time based on market or other conditions, and Front Street Capital disclaims any responsibility to update such views. These opinions may differ from those of other portfolio managers or of Front Street Capital as a whole.

These views are for informational purposes only and are not intended to be a forecast of future events, a guarantee of future results or investment advice. All data referenced herein are from sources deemed to be reliable but cannot be guaranteed.

These views may not be relied upon as investment advice and, because investment decisions are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of Front Street Capital. Any discussion of any of the funds’ holdings are as of the podcast interview date, and are subject to change.

If specific securities are referenced, they have been selected by the portfolio manager on an objective basis to illustrate the views expressed herein. Such references do not include all material information about such securities, including risks, and are not intended to be recommendations to take any action with respect to such securities. Referenced securities may not be representative of the portfolio manager's current or future investments and are subject to change at any time.