INVESTMENT MARATHON #15 • November 2024

The building blocks of Aspira Wealth’s long-term investment strategy. Newsletter by Alex Vozian, CFA, Co-Founder and Associate Portfolio Manager

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Bull and horse – a couple of pictures from Alex’s recent trip to Moldova

SUMMARY

• Bull market or horse market ahead?
• Canadian and U.S. markets update
• What makes Aspira’s investment process special? Maybe it is curiosity!
• Featured holding – United Rentals (URI)
• Team update

HORSE MARKET?

The bull market is a financial market condition where prices of securities are rising or are expected to rise, typically characterized by investor confidence and optimism. The bear market is characterized by investor fear and pessimism.

The next few years might be a different animal. Let’s call it “horse market” - a market with opportunities but where you need a lot of grace to jump over obstacles.

The positives

The U.S. election uncertainty is gone. Also, we are entering typically favourable seasonality – markets often outperform in winter/spring and after the elections. In addition, inflation is declining across the globe.

The obstacles

The U.S. election uncertainty is over, but uncertainty over how the government will act has just begun. Also, the equity markets in Canada and U.S. have priced in too many positives – the market performance of 2024 is above 5-year average, while the 5-year average is above previous 5 years average.

The takeaway

Trying to predict short-term market movements is often a losing game. With the election results now behind us, the markets are still assessing the long-term implications of a Trump presidency. It is tempting to react to the result of the elections, but in times like this it is better to take a measured approach without overreacting.

Therefore, after the U.S. elections, our focus is still the same - striving to create value for you by building diversified portfolios with high-quality companies that can withstand any environment.

CANADIAN AND U.S. MARKETS UPDATE

Since the beginning of 2024, the stock market has surprised many Canadian and U.S. investors with its strength. This is great news for those of you who were invested in the equity market. It's even better for proactive investors who added money during brief periods of panic, like in late 2018, spring 2020, and fall 2022.

While we are still optimistic about the long-term opportunities, we currently see fewer than usual opportunities to buy equities at a significant discount, now, when the markets are at an all-time record high level.

Canada

United States

Charts courtesy of StockCharts.com

What makes Aspira’s investment process special? MAYBE IT IS CURIOSITY!

We have built a team of people that excel at continuous learning. Curiosity is a crucial trait for professional investors on multiple levels:

• Curiosity helps in discovering and investigating new opportunities. Also, it leads to informed decision-making.
• Curiosity is enhancing adaptability. The financial markets are very dynamic – to succeed investors have to stay adaptable and responsive to changes, allowing them to adjust their processes and strategies as needed.

Each investment team member is continuously learning, well beyond the courses required by the industry regulators. We learn from podcasts, books, and quarterly letters of legendary investors.

If you have a deep passion for investing, too, here are our top recommended podcasts:

• Founder’s Podcast (by David Senra) – focused on greatest entrepreneurs in the history
• Business Breakdowns (by Matt Reustle, Zack Fuss) – deep dive into how particular businesses work
• All In Podcast (by Chamath Palihapitiya, Jason Calacanis, David Sacks, and David Friedberg) – focused on technology, politics, economics

If you want to dive deeper, please ask Alex to provide you with more great sources on business and investment.

FEATURED HOLDING – United Rentals (URI)

Founded in 1997, United Rentals (URI) is the largest equipment rental company in the world, with a store network nearly three times the size of any other provider and locations in 49 states and ten Canadian provinces. United Rentals provides 3300+ equipment and tool classes for industrial & construction sites.

We discovered and studied URI in 2023 and bought the first position for our Dividend Value Discipline™ strategy in Feb 2024 and again in June 2024.

URI ranks in the top 5 of our best 50 names, based on our proprietary quality score.

• GREAT MANAGEMENT. We admire long tenures, internally promoted executives, well aligned compensation, and high transparency.
• GREAT ECONOMIC MOAT. Competitive strength originates from the large scale. The economic moat is confirmed by solid free cash flow margin and high return on invested capital.
• GREAT INDUSTRY TAILWINDS. We like the secular shift towards renting equipment and tools, supplemented by accelerating investment in global infrastructure.
• GREAT ESG. The environmental, social and governance score is remarkably high. Sustainalytics is ranking URI as 17^th best of 187 companies in the Traders & Distributors industry. MSCI also places it near the top of ESG ranking.
• DIVIDEND. United Rentals started its dividend program in early 2023 and increased the dividend by 10% in early 2024.

TEAM UPDATE

Exciting updates on the team since our last Investment Marathon edition.

• Eileen Kelly joined Aspira Wealth - filling the role of the next successor at Aspira, alongside your Associate Portfolio Manager - Alex Vozian, CFA.
• Maxim Gurbulea, CFA - our investment research specialist – earned the Chartered Financial Analyst after passing the third (final) exam.
• Ben Clark and Alex Vozian – launched a weekly chess club and... new members are welcome!

PLEASE REACH OUT

Let's chat about what is on your mind and the puzzles you are trying to solve.

• Schedule a meeting with Chris, Eileen or Alex.
• Read our earlier publications here.
• Subscribe to our newsletters here.

A clumsy heron steps on a turtle, Beacon Hill Park. By Alex Vozian.

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