Canada Connection: Technology stocks

Technology is a sector often overlooked in the Canadian small-cap market, which is precisely why small-cap specialists Martin Dufresne and Patrick Potvin, portfolio managers at Montreal-based Fiera YMG Capital Inc., have been steadily boosting their holdings.
 
"We are finding select stocks that trade at modest valuations relative to the companies' growth prospects," Dufresne said after finishing a recent evaluation of the sector based on what he described as “industry reports by sell side analysts, meetings with managements and internal research.”

Generally, said Potvin, "our strategy is to sell off low growth or disappointing companies and put the proceeds into those companies that we consider have a more promising growth profile."

As a result, according to Potvin, the portfolio managers say they have been reducing holdings of companies that have become large cap and parlaying the proceeds into smaller caps that "generally tend to have higher growth prospects."
 
Fiera YMG has roughly C$21-billion under management, of which about C$6-billion is in Canadian equities. Dufresne and Potvin manage a number of small-cap Canadian portfolios including the Millennia III North American Small Company fund. This is part of the segregated family of funds managed by Fiera YMG for Desjardins Financial Security.

The Millennia III North American Small Company fund has almost 50% in the U.S. equity market via futures contracts linked to the Russell 2000 Index (NYSE: IWM). The rest is invested in Canadian small caps and managed by Dufresne and Potvin.

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