Fund in Focus: AIM Global Value

Just as it can invest in companies regardless of where they’re based, the Global Value Fund can buy those of any size. Right now, the portfolio, which typically contains about 75 stocks, holds roughly equal numbers of small, mid-cap and large-cap stocks.

Hilton and Mortimer base their stock selection on the merits of individual companies. The fund’s country weights are a by-product of that process. At the end of November, Canadian companies accounted for 27.1% of the fund’s assets, and U.S. stocks made up another 24.5%.

Two companies that illustrate what the managers look for in choosing investments are Pan-Ocean Energy Corp. Ltd. and Fording Canadian Coal Trust, Hilton says. The stocks were the fund’s top two holdings at the end of November.

The fund bought Pan-Ocean, a Canadian oil and natural gas company, about a year ago, Hilton says, because the managers liked the prospects for fields it was exploring in and off the coast of Gabon. Since then, each well it has drilled in those areas has proven to be an “enormous success,” causing Pan-Ocean’s share price to nearly quadruple, Hilton says.

Fording is an open-ended mutual fund trust that distributes cash flow to shareholders in the form of quarterly dividends. Its principal asset is a 65% interest in the Elk Valley Coal Partnership, a miner of metallurgical coal that is used in the production of steel. Fording stands to be a beneficiary of currently tight supplies of the commodity, for which prices are increasing, Hilton says.

Those same dynamics, Hilton says, are helping Macarthur Coal Ltd, an Australian mining co., and Teck Cominco Ltd., another Canadian miner and smelter. The companies ranked third and fifth in the portfolio on Nov. 30.

The fund’s five biggest holdings at the end of last month included BMTC Group Inc., a Quebec-based retailer of furniture, appliances and home electronics products. The stock looks reasonably priced compared to the company’s cash flow, Hilton says. In addition, BMTC is virtually debt free and is a potential takeover candidate, he says.

When it comes to selling, the managers will unload a stock that becomes pricey. That was what lead them to banish Canadian brewer Molson from the portfolio this summer, Hilton says. The company’s shares moved higher after it agreed to merge with American beer maker Coors (Adolph)`B` (RKY). The managers bought Molson at $29 (Can.) in January and sold it for $35.50 (Can.) in July, Hilton says.

Hilton notes that he and Mortimer tend to hold stocks more briefly than other value-oriented investors. The fund’s turnover rate should typically average 175%-225%, he estimates. AIM Global Value turned its portfolio over at a 372% clip for the year ended in November, compared to its peers’ 88.7%. Hilton attributes that to the radical facelift he and Mortimer gave the portfolio when they took it over.

“We don’t want to buy and forget about these stocks,” Hilton says. “We make our money and we move on, put the money in the bank and think about the next idea.”

Contact Bob Keane with questions or comments at [email protected]