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Engaging the C-Suite: Access to decision-makers a key part of investment process at Cardinal

Emily Burt and David Aime say Cardinal Capital Management takes full advantage of its in-person access to corporate executives.

When members of Cardinal Capital Management’s investment team need to know a company’s long-term strategy, they go right to the top.

They want insight from the brain trust because the members of the C-suite do the strategic planning and oversee operational efficiencies, just like business owners do with their own companies.

Armed with an investment approach that uses the stock market as a means to own industry-leading public companies, Cardinal’s portfolio managers and equity analysts incorporate these high-level conversations into their research when deciding what investments to make.

These interviews are just part of the exhaustive research process at Cardinal, which also includes poring over company reports, taking part in quarterly investor calls, reading newspaper stories and speaking with analysts who cover various sectors.

Emily Burt, Cardinal’s executive vice-president, says such meetings enable its investment team to get a better understanding of the vision and management of each firm. “We can ask questions that are of direct interest to us and that align with our investment approach,” she says.

CEOs and other top executives are often made available to comment on a company’s quarterly earnings calls but the focus in those sessions tends to be what happened during the previous 90 days. While certainly valuable, buy-and-hold investors are more concerned with a long-term horizon.

“We want to hear from the decision makers. Quarterly reports might not touch on topics that we want to explore. Direct meetings allow us to engage the C-suite on other issues that haven’t been covered in those reports,” she says.

Burt says Cardinal takes full advantage of this direct access so that it can better understand how a company is run, how it maximizes its competitive advantages and how it formulates contingency plans for worst-case scenarios.

“Some investment firms rely on third-party research but we prefer to do our own homework. Doing it in-house and viewing it through the Cardinal lens is important because we’re applying our investment philosophy to the stocks that we’re researching. That might lead to different views and outcomes than third-party research,” she says.

David Aime, equity analyst at Cardinal, agrees. He says while he’s always interested to see if a company’s quarterly earnings have beaten analysts’ estimates, he’s far more concerned with how it’s positioned for the future.

“We have an investment thesis on every company we own, a long-term view on the opportunities for the company. When we talk to CEOs and CFOs (chief financial officers), we can focus on their strategy and whether they’re executing on it. We can also get a sense of management strength,” he says.

For example, over the past few months, Cardinal’s investment team has met with executives from 16 companies that they own and an additional six that they are researching.

This includes meeting with Scott Burrows, president and CEO of Pembina Pipeline, a Calgary-based player in the oil and gas industry, to talk about air and water pollution goals and emission reduction targets; and Kevin Strain, president and CEO of Sun Life Financial, to discuss gender diversity and climate change.

Aime is quick to note that the investment team’s sessions with executives of companies that aren’t in the Cardinal portfolios can be equally as valuable.

“Sometimes it’s just as important what you don’t buy as what you buy. The opportunity to meet with the C-suite of prospective companies helps us get better industry insight on the companies that we do own while we assess others for potential investment,” he says. “It’s all additive to the process. We definitely put weight on those meetings to help piece it all together. The ultimate combination helps us make better investment decisions for our clients.”

Cardinal Capital Management manages $4 billion in assets for institutional and private clients in Canada and the U.S.

Cardinal Capital Management

400-1780 Wellington Avenue, Winnipeg
1209 Richmond Avenue, Unit B, Brandon


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