December Market Update
After the strong initial rally following Donald Trump's successful US Presidential race, we saw markets take a slight breather in the final month of the year. Nonetheless, major indices ended the year in positive territory across the board and the macroeconomic backdrop is broadly constructive for 2025. While we remain cautiously optimistic for risk assets over the next 12 months, we continue to closely monitor new developments as we have experienced two very strong year of equity market returns and valuations are somewhat elevated compared to historical levels.
The Surprising Trump Trade
November Market Update
Markets rallied strongly in November following Donald Trump's re-election, driven by optimism about his business-friendly policies, despite uncertainty about which campaign promises will materialize.
Press Release - Yorkville Health Care Fund and Southbridge Health Care Announce the Acquisition of 21 Long-Term Care Homes from Revera
Yorkville Health Care Fund, alongside Southbridge Health Care, has acquired 21 long-term care homes from Revera, marking one of the largest transactions in Ontario's history. The expanded portfolio now includes 57 homes with a resident capacity of approximately 6,500, positioning Southbridge as a leading owner-operator in Canada.
Key highlights:
- Portfolio Growth: The acquisition strengthens Yorkville’s presence, enhancing capacity, density, and land utilization.
- Modernization: Yorkville has raised $275 million in equity since 2020, modernizing 70% of its Class C homes to meet updated long-term care standards.
- Development Initiatives: Southbridge is advancing with eight new homes in development and a commitment to improving senior living conditions.
The transaction, pending Ministry of Long-Term Care approval, was facilitated by Yorkville Asset Management and Canaccord Genuity Corp.
October Market Update
October saw a pause in the strong rally across equities as investors shifted focus to key November events: the U.S. Presidential Election and the Federal Reserve's interest rate decision.
Despite the lull in markets, the macroeconomic environment remained robust, driven by:
- Positive economic indicators: A strong U.S. jobs report early in the month, better-than-expected Chinese GDP growth, and surprising U.S. retail sales data.
- Cooling inflation: Both Canadian and UK inflation figures came in below estimates, alleviating some concerns.
- Corporate strength: U.S. Q3 earnings showed resilience, with S&P 500 companies reporting sales growth of +5.1% and earnings growth of +7.8%.
This combination of strong fundamentals and corporate performance created a supportive backdrop for risk assets going forward.
The Season Finale
In his latest letter, our CEO Hussein Amad reflects on the 2024 U.S. election’s unpredictability and its potential effects on the economy. With a focus on Trump’s anticipated policies—such as tax cuts, tariffs, and support for digital currencies we foresee inflationary pressure but also new investment opportunities, especially in sectors like digital currency, healthcare, and long-term care.
Our funds remain strong, with Yorkville's diversified offerings providing resilience in this market. We're committed to growth and stability, adjusting hedges where needed to protect gains.
Yorkville Asset Management Inc. has announced the opening of Back In Motion’s second multidisciplinary health clinic in Ontario, located at Chelsey Park in London. This facility will provide comprehensive health services to residents and the local community, aligning with Yorkville's strategic initiative to enhance the value of its real estate portfolio and alleviate hospital burdens. A comparable clinic is set to open in Pickering, further supporting this model.
Is the M&A Winter Behind Us?
At Yorkville, we pay particular attention to the M&A landscape as it has implications for how we allocate capital in the public markets. For example, if one of the companies we own is the target of a takeover, it will typically drive the stock price materially higher. While searching for potential “targets” is not part of our core investment thesis, it can nonetheless be a byproduct of our investment process as we tend to invest in durable, fundamentally strong businesses that can trade at discounts to their intrinsic value. The past few years have been particularly slow for the M&A world as rising interest rates and relatively modest valuations have tempered activity. Against that backdrop, in this article we will explore the current M&A market environment and recent uptick in activity to highlight some of the key implications and how we are positioning our portfolios accordingly.
September Market Update
Markets continued to march higher in September, thanks in large part to the US Federal Reserve's somewhat surprise announcement of a 50 basis point rate cut during the month. While markets were pricing in a chance of this larger cut, the news nonetheless was a catalyst to drive equity markets higher and end the month firmly in positive territory. We also saw China step in and provide some respite for their struggling economy by also cutting rates by 50 basis points and reducing bank reserve requirements. This ignited a strong multi-day rally in Chinese equity markets that trickled into the broader global markets, albeit much more modestly, during the latter part of September.
Market Update - August 2024
August introduced some more significant volatility to markets that hadn’t been seen recently, with asset prices whipsawing from steep drops at the beginning of August to modest gains by the end of the month. Early volatility was driven by a weak US jobs report increasing the likelihood of larger rate cuts and an unwinding of the Yen carry trade, which involved large market participants selling to cover short-term losses. The Bank of Japan stepped in quickly to reassure markets that they would not raise rates during market volatility, reversing some of the losses from the prior days. As markets normalized, we saw a slow recovery in major market indices for the remainder of August. Over the latter part of the month, additional economic data came in more positive and provided further relief to market participants. CLICK HERE
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What Federer Teaches Us about Stock Investing
Market Update - August 2024
In July, investors decided to switch from high-growth sectors to more defensive ones. That move was influenced by some strong consumer data and positive GDP figures in the US and Eurozone. The US and Canadian markets both saw great sales and earnings growth, with the S&P/TSX Index having its best month of the year. Even though there was some mixed performance with currencies and commodities, the overall outlook seems positive thanks to robust economic indicators and corporate earnings. However, people are still being cautious about potential interest rate changes and market volatility.
Starting in January 2024, attacks on ships by Houthis in Yemen have caused shipping routes between Asia and Europe to bypass the Red Sea/Suez Canal, increasing transit times and fuel costs by 40% and driving up shipping rates. As happened previously in 2021, a rise in shipping rates is expected to contribute to a bump in inflation data, although the impact may not be evident until after the November election. CLICK HERE
YORKVILLE HEALTH CARE FUND SPECIAL DISTRIBUTION ISSUANCE
Yorkville Asset Management Inc. is pleased to announce a special distribution of the Yorkville Health Care Fund issued on July 22, 2024.. CLICK HERE to read the full release.
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