Taking profits and adding with conviction

Monday, Feb 13th 2023

Investor Update

We added to our positions in Peabody Energy (BTU) and Canadian National Railway (CNI) on behalf of clients in our Offshore strategy. We also trimmed our positions in Cameco Corp (CCJ), LVMH (LVMUY), and Safran (SAFRY) following strong performance over the past several months. Our theses continue to track but feel that it is prudent to take some profits on the back of recent market strength. Let’s dive in:

Taking profits

Cameco Corp (CCJ) reported a monster top line beat for Q4 with revenues coming in well above expectations. The company recently signed a 12 year agreement with Energoatom to add up to 67 million pounds of Uranium to their contracting book - the largest contract in the company’s history. Following a strong rally year-to-date (+29%), we took the opportunity to lock in some profits for clients by trimming the position by 1%.

LVMH’s (LVMUY) well diversified portfolio of brands have proven to be recession and inflation proof as the company has posted outstanding revenue growth over the last several quarters. Bernard Arnault’s luxury empire is trading close to all time highs following +46% move since the start of Q4 and our team has used the recent strength as an opportunity to lock in gains.  

Safran (SAFRY), like LVMH, has been one of our strongest performers in the portfolio to date as our commercial aerospace thesis has continued to play out nicely. After the meaningful +50% rally in the stock price since the beginning of Q4 and now trading close to its all time highs, we trimmed our positioning by ~1.8% to take some chips off the table.

Adding with conviction

We added to our position in Peabody Energy (BTU) prior to earnings on February 14th given our view the stock presented an asymmetric risk/reward opportunity. Earnings results were in-line with our expectations and the stock is reacting favorably. After generating impressive free cash flow over the last several quarters, the company has been able to pay down restrictive debt that had made it difficult for the company to return capital back to investors. Now that most of these restrictions have been cleared, we believe the foundation is set for the implementation of a long-awaited dividend/share buyback program - a potential tailwind for the stock that warrants new positioning.

Canadian National Railway (CNI) delivered a strong earnings print that confirmed our thesis is tracking and set the foundation for solid FY23 results on the back of a conservative guide. With compelling IRRs and de-risked earnings hurdle for this year, we believe there is room for outperformance following their impressive quarter which included an increased dividend and share buyback program.

The results of the trade allow us to maintain net exposure. We continue to hold high levels of dry powder and have a deep watchlist of companies to add in the event that markets move lower.

We believe that 2023 offers a compelling opportunity for investors allocating capital in international equities. As growth in the U.S. slows, international markets have raced higher - a trend we believe will persist through year end, but not without interim retracements which should provide opportunities for investors to invest new capital (as we plan to do). As always, let us know if you have any questions about the recent trades; we’re happy to assist.


Titan Investment Team


Titan Global Capital Management USA LLC ("Titan") is an SEC registered investment adviser. Trade communications are meant for informational purposes only. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and clients may lose money, including their original investment and principal. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or any other product offered by Titan or any third party. Please visit www.titan.com/legal for important disclosures.

As of this writing, SAFRY, LVMUY, CNI, BTU, CCJ were a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.

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