United Edge Truss Company, a project funded in partnership with TAAG Family Office
Private Placements
OCM Auto Financing Fund (OCM)
OCM was established in 2013 to expand the under-developed, non-prime, auto financing marketplace on a national level. The business has now grown across Canada, is currently utilized by more than 100 dealerships and continues to grow. OCM financing is available to car dealerships through the DealerTrack Network. What makes the business model so unique is the combination of loan structures and borrower profiles. Since its inception OCM has provided above-average double-digit returns with no loss of investor capital.
| OCM 9.00% Secured Subordinated Debenture - Series 4 | |
| Investment Type: | Debenture |
| Minimum Investment: | $25,000 |
| Annual Distribution/unit ($): | $22.50 |
| Distribution paid: | Quarterly |
| DRIP: | Yes |
| Discount: | No |
| Minimum hold: | 3 years |
| Eligibility: | Accredited only |
| Unit price | $1,000 |
| Distribution (%): | 9% p.a. |
| Tax treatment: | Interest |
| Registered eligibility: | Yes |
Q4 SOUNDBITE
The last quarter has seen exceptional growth, with OCM setting the highest records of all previous months. We have hired two new team members to keep up with demand in our Credit Department as well as two new team members in Collections including a Collections Manager. The monthly volume of lending has increased almost twofold compared to this time a year ago! Given the exponential increase in demand, we have not seen any change in our loss ratio. In November 2022 alone, out of an all-time loan application record of 2,503, only 412 were approved and 213 booked. As such, it was OCM’s best month to date followed by unprecedented growth in December and January. Total loans will likely top $50 million before the end of the calendar year!
Reverse Dealer is a Canadian technology company specializing in the automotive sector. The company’s mission is to redeem the industry by transforming the dealership's business model, and as a result, fundamentally change the way consumers buy and sell used vehicles. They are achieving this vision through the launch of their first product “PURR”—the first-ever all-in-one online platform that unites private sellers, buyers, and dealerships in one place, where everybody wins. This innovative technology is revolutionizing the way that vehicles are sold, providing a win for the sellers to expand their market, the dealerships to participate in a reasonable transaction cost as well as opportunities for potential financing and ongoing maintenance of the vehicle, and the purchasers getting the benefit of the dealer services but at private sale prices. For a one-minute video visit the website.
| PURR | |
| Investment Type: | Equity |
| Minimum Investment: | $25,000 |
| Unit price | $2.25 |
| Dividend: | None |
| Liquidity: | TBD |
| Eligibility: | Accredited only |
| Tax treatment: | Capital Gains |
| Registered eligibility: | No |
Q4 SOUNDBITE
Purr continued to thrive in Q4 with a productive quarter marked by the onboarding of 17 dealers in total and a website inventory increase of 75%. Their platform is delivering results with one notable deal earning one dealer partner $10,000 from a single vehicle sale. With the addition of a successful sales support team and the expertise of a Silicon Valley veteran from Salesforce and Neo Financial, Purr is poised for even more growth in operations and other key areas of the business. Purr is thrilled to report positive feedback from its new OCM partnership, including verbal commitments from the first two leads to join the Purr platform.
Multirez is building a portfolio of sustainable communities in under serviced towns and cities near major urban centres. Multirez is focused on creating value for tenants through the development and ownership of multi-residential, as well as mixed-use properties in select markets.
Q3 SOUNDBITES
Kingston: Multirez closed on a property on February 8th and has since had it listed on MLS. The property is fully zoned and approved for high-density, multi-residential purposes. The MLS listing is expected to reach a wide net of potential buyers, and as a superior offering in comparison to what’s presently available on the market, Multirez is hopeful for a sale by mid-year.
Carleton Place:Like most recent projects, this property has been conditionally sold and is presently on schedule, on budget, and on track for completion by the end of this summer. The buyer is well-known to Multirez having previously purchased three other properties from the company. Everything is proceeding according to plan, and should meet, and possibly exceed, forecasts.
Arnprior:This multi-residential property has been sold and closed on, with everything going according to plan. While still waiting on the official numbers, the investment is forecast to have achieved a return on investment of around 70% over a 2-year term.
United Edge Structural Components Truss: United Edge is in full production, and business is going extremely well despite the fact that it is a new start-up. There is a high demand for quotes which has translated into a full docket of jobs on-the-go and a healthy pipeline in waiting. The company is on new hires weekly to meet our operational demands and finding a good pool of talent from which to choose.
Investment Funds
DaVinci actively manages four, customized portfolios that offer unique investment opportunities not generally accessible to the public. Since their capital is pooled, they have access to many investments that carry minimum investment thresholds and would otherwise be out of reach for most clients. DaVinci combines traditional investments such as stocks and bonds with alternative investments such as real estate, private debt, private equity, and hedge funds. They offer consolidated reporting and real-time management. Senior Project Managers and Managing Directors have their personal wealth (excluding personal real estate) invested in DaVinci pooled funds and DaVinci sponsored direct deals.
| DaVinci Alternative Hedge Strategy | |
| Minimum Investment: | $500,000 |
| Inception: | 2012 |
| Eligibility: | Accredited only |
| MER | 2% or less |
| Incentive | 20.0% |
| Hurdle | 6.0% |
| Return since inception: | 8.87% (as of Dec. 31, 2022) |
Q4 SOUNDBITE
In general, we are happy the Davinci Alternative Hedge Strategies portfolio was able to withstand a very difficult year which included higher cap rates, and higher interest rates, which means lower property values, although that was offset by higher rents. We also see a market which is very stagnant with a lack of multi-family properties being listed. The banks have been extremely risk-averse in underwriting mortgages in this environment. Our crypto investments continued to come under pressure from the fallout of FTX. However, it appears that we are at or close to a bottom in that market, and we are seeing a recovery in Bitcoin which of course is the bellwether of the group. To reiterate, we do not have material exposure to tokens themselves, but are invested in the shares of private companies involved in the buildout of the crypto and blockchain industry. This was offset by a small gain derived from an increase on our warrant portfolio, realized through a recent financing of one of our investee companies.
Founded in 2011, Ewing Morris & Co. is an independent, alternative asset manager. Assets are approx. $450m, focusing on inefficient/niche areas of the market in high yield, small caps, and the like. They have two principal strategies for their HNW clients – the Flexible Fixed Income Fund, focused on the high-yield credit of small/mid-cap companies, and the Small Cap Fund, focused on long-only, small-cap equities.
| Ewing Morris Flexible Fixed Income Fund LP | |
| Minimum Investment: | $100,000 |
| Inception: | 2016 |
| Eligibility: | Accredited only |
| MER | 0.75% |
| Incentive | 20.00% |
| Hurdle | 5.00% |
| Return since inception: | 5.3% (as of Dec. 31, 2022) |
Q4 SOUNDBITE
In 2022, the Flexible Fixed Income Fund Returned -4.7%. This return compares to our publicly traded high yield and investment grade benchmarks, which in 2022 returned -11.2% and -9.9% respectively. Having lost money in 2022, we cannot help but be disappointed with the outcome in absolute terms. The counterbalance to this is that the Fund outperformed its benchmark by 6.5 percentage points – the largest gap in the history of the fund. We can also put this relative performance in an absolute return context - since the inception of the high-yield market index, 36 years ago, a 6.5 percentage point value-add would have been sufficient to produce a positive absolute return in any calendar year other than 2008. In a phrase, the year was “passable but insufficient.”
| Ewing Morris Small Cap Fund LP | |
| Minimum Investment: | $100,000 |
| Inception: | 2015 |
| Eligibility: | Accredited only |
| MER | 0.75% |
| Incentive | 50.00% |
| Hurdle | 8.00% |
| Return since inception: | 11.5% (as of Dec. 31, 2022) |
Q4 SOUNDBITE
The fourth quarter proved to be another difficult quarter for most risk asset classes, and the Small Cap Fund was down in line with its benchmark in 2022. While disappointing, the Fund’s since inception return of 11.5% remains in-line with its return objective of 10-15% over a cycle. Overall, in addition to a growing list of companies that we believe will attract significant interest from private buyers, we own a portfolio of outstanding businesses trading at attractive prices that we hope to continue holding for the foreseeable future.
Giverny Capital Asset Management
The cornerstone of Giverny’s promise to their clients is that they are all in the same boat, since all investors are participating in the Rochon Global Portfolio, the personal portfolio managed by François Rochon himself since its inception in 1993. Although Giverny itself was founded in 1998, the portfolio has delivered close to a 15% compound annual return over the last 29 years. François Rochon, has been referred to as the Warren Buffett of the North. He focuses on high-quality companies that have sustainable competitive advantages and invests with conviction, so that the Top 10 holdings typically account for about 60% of the portfolio.
| Giverny Rochon Global Portfolio | |
| Minimum Investment: | $100,000 |
| Inception: | 1993 |
| Eligibility: | All investors |
| MER | 1.5% |
| Incentive | N/A |
| Hurdle | N/A |
| Return since inception: | 14.5% (as of Dec. 31, 2022) |
Q4 SOUNDBITE
Giverny's portfolio did not fare much better than the market portfolio in 2022. As a single-strategy equity fund, it recorded a double-digit decline for the year. Despite this, an intriguing deviation was observed in the fund's performance. Historically, the earnings of the companies in the portfolio and their stock prices have exhibited a strong correlation, with a rise in earnings leading to a concurrent increase in stock prices. However, in the year 2022, this pattern was disrupted, as an improvement in earnings was accompanied by a decrease in stock prices, a gap that might present an attractive opportunity for value investors.
Newport, which also manages the Lonsdale portfolios, is a discretionary money manager. This allows it to react to market conditions and adjust as needed. Newport mitigates the risk of volatility and has been 60% better than the market median, while also capturing an average of 95% of the upside. Portfolios are rebalanced weekly and invested internationally in public markets, private debt, and infrastructure. Clients can be confident that investments are made in their best interest, since all the investment committee’s personal assets (excluding real estate) are with Newport right alongside clients, and the partners own most of the equity in the firm. Newport operates using five pooled funds, of which clients own a mix depending on their risk tolerance.
| Newport / Lonsdale Portfolios | |
| Minimum Investment: | $200,000 |
| Inception | 2001 |
| Eligibility: | All investors |
| MER | 2% or less |
| Incentive | N/A |
| Hurdle | N/A |
Q4 SOUNDBITE
2022 lags only two Great Depression era years for the distinction of having the worst annual performance for a traditional 60/40 equity-and-bond-only portfolio. Thankfully, Newport is not bound by the limitations of the traditional 60/40 portfolio. Approximately 35% of client capital is currently invested in alternative & private investments which are attractive asset classes because their performance is largely uncorrelated to the direction of equity & bond market movements. This trend continued in 2022 as all five of the alternative asset classes generated positive returns for Newport, despite the public market sell-off. As such, we significantly outperformed our benchmarks and the broader public markets in 2022 (the Lonsdale Tactical Balanced Portfolio declined -5.69% versus -10.47% for the benchmark), as has been the case throughout the pandemic.
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