The Omicron variant of COVID-19 has caused some short-term weakness in the travel industry. The reintroduction of lockdown measures in some parts of the world, and the continuation of travel restrictions have once again penalized the industry. After a slightly tougher start to the year, we still expect the travel industry to begin its recovery by March or April.

One area of travel that surpassed the pre-pandemic era is the overall outdoor living and leisure products sector, and with it, recreational vehicles (RVs). Demand for RVs has remarkably increased over the past two years. Even before the pandemic, this market segment benefited from favourable structural changes.

We believe that future demand for RVs and outdoor products should remain strong, in part because of sustained consumer interest, as well as the fact that the profile among RV owners and outdoor enthusiasts has changed. The RV Industry Association (RVIA) noted that half of the 11.2 million households that own RVs are less than 55 year old, with the 18-34 years old category representing 22% of the market. The RVIA’s survey also showed that an additional 9.6 million households said they were considering buying an RV in the next five years, combined with over 10 million households that camped for the first time during 2020.

Thanks to the growing popularity of leisure vehicles among younger consumers and families, there has been an increased preference for local destinations, and more interest in eco-friendly vacations. We anticipate demand for outdoor products will remain strong.

Companies offering sustainable solutions designed for consumers interested in outdoor adventures and exploring nature more frequently, should do well in that context. Dometic, a company we initiated at the end of 2021 in our international portfolios, could benefit from that trend.

Dometic is a Swedish manufacturer of products within the climate, hygiene and sanitation, and food and beverages sectors. The products are used in recreational vehicles, pleasure boats, work boats, trucks, and premium cars. Some of Dometic’s products include: refrigerators, barbecues, heating solutions, air conditioning, blinds, power solutions, safety solutions, and much more.

Dometic operates 28 plants in nine countries, and 85% of products sold are manufactured in-house. The products are sold in close to 100 countries through Original Equipment Manufacturers (OEM), aftermarket, and distributors. The company generates 32% of its sales in Europe, 30% in the Americas, 9% in Asia, and 29% in global markets such as marine, residential, hospitality, mobile deliveries, coolers. During the last 12 months, the company reported sales of SEK 20,187 million (USD 2,229 million) and an EBIT of SEK 2,937 million (USD 324 million).

Market size

Growth strategy

  • Signing more customers and increasing its product portfolio by developing new products.
  • Entering new product categories or new applications.
  • Growing the distribution network.
  • Bolt-on acquisitions.


  • Strong market leading position (number 1 or 2 in most markets).
  • Growing share in aftermarket channel, which carries a higher margin profile.
  • High barriers to entry due to high product requirements and tailor-made product dimension.
  • Strong relationships with clients.

Sales diversifications amongst RV, recreational boating, and commercial vehicles. 

The strategy generated a net return of 8.4% in the year ending December 2021. The strategy’s performance in the year was shaped by a continuation of some of the themes that underpinned returns in 2020 and others which had a less favourable impact on historical returns but now appear to be turning the corner. In the former, portfolio companies that offer digital services (payments and software), healthcare, and consumer staples have been big winners in the pandemic with many likely to experience a step change in their long-term cash flow generation capacity. With digital services companies, we’ve maintained our focus on profitable companies that are delivering valuable solutions to their consumer and business clients through the deployment of technology that is scaleable and adapted to local market dynamics. In health and consumer staples, we gained more confidence in companies we owned prior to the pandemic as management excellence, market leadership, distribution prowess, and brand equity all played nicely into consumer habit changes that were brought about by the pandemic.

In the latter, the late reopening of economies in many Asian and African markets we invest in has meant that earnings have remained below potential for longer (compared to similar companies in more developed countries). As a result, those companies trade at deeply discounted valuations, presenting an opportunity to own them as they recover back to pre-pandemic levels of earnings. Naturally, those are businesses that sell products and services in an offline environment and typically require a high degree of mobility (alcoholic beverages, education, retail, and snacking are good examples). Management teams at these companies did not rest on their laurels and have adapted their businesses to be more agile, more digital and more available to their customers. We expect these initiatives to be generously rewarded as economies begin to reopen.

This mix of businesses complements the geographically diverse nature of our concentrated portfolio and mitigates the impact that a change in the market environment can have on returns. For example, as we enter a higher interest rate environment globally, valuations of our digital services companies might be capped but we expect that to be compensated by higher margins (i.e.: earnings growth) from our financial services companies. The portfolio’s investment in a wide range of market capitalisations and exposure to different ownership structures (owner-operator or multinational) adds to factor diversification and sensitivity to the ebbs and flows of liquidity. Within the portfolio, our job then is to ensure that capital is allocated to probabilistically optimise these factors, with the objective of producing a net positive outcome that is consistent with our and our investors’ return expectations. A less observable benefit of this approach is it allows us to see through periods of volatility which extends our holding period advantage in the market.

Outside the portfolio, our research is focused on identifying companies that can provide a superior risk-reward profile to existing investments or the excess cash position we might be holding at any one time. Our team’s knowledge of the markets and companies we invest in continues to compound and the opportunity set is getting deeper and more interesting for public market investors.

This year’s performance divergence between the strategy and emerging markets (a positive swing of ~13% versus the MSCI EM which was down ~5% in 2021) adds credence to the argument us and others have been making about looking beyond index-driven emerging market classifications when allocating capital outside core developed markets. We’ve put our money behind this thesis with a signification proportion of our Managing Partners’ capital invested in the strategy. We believe that a concentrated, geographically diverse, and benchmark agnostic approach is appropriate for investors looking to capture the growth in the next generation of emerging markets (i.e.: beyond the now “emerged” markets of China, Korea and Taiwan).

As the strategy wraps up its third year, we want to thank our clients, partners, and colleagues for their support and wish all a prosperous 2022.

Vergent Asset Management LLP


  1. Unless otherwise stated, all data is at December 30, 2021 and stated in US dollars (US$). Source: Connor, Clark & Lunn Financial Group, Thomson Reuters Datastream.
  2. Performance history for the Vergent Emerging Opportunities Strategy is that of the Vergent Emerging Opportunities Composite. The Composite has an inception and creation date of August 2018.
  3. Net performance figures are stated after management fees, estimated performance fees, trading expenses and before operating expenses. Operating expenses include items such as custodial fees for pooled vehicles and would also include charges for valuation, audit, tax and legal expenses. Such additional operating expenses would reduce the actual returns experienced by investors. Past performance of the strategy is no guarantee of future performance; Future returns are not guaranteed and a loss of capital may occur. For illustrative purposes, performance fee of 20% on added value over the hurdle rate of 6% plus the management fee of 1.25% have been assumed. Actual management fees charged to a particular account may vary.
  4. There is no benchmark for the Vergent Emerging Opportunities Strategy because it has an absolute return objective
  5. Standard Deviation measures the dispersion of monthly returns since the inception of the strategy.

Benchmarks and financial indices are shown for illustrative purposes only, are not available for direct investment, are unmanaged, assume reinvestment of income, do not reflect the impact of any management or incentive fees and have limitations when used for comparison or other purposes because they may have different volatility or other material characteristics (such as number and types of instruments) than the Strategy. The Strategy’s investments are not restricted to the instruments comprising any one index and do not in all cases correspond to the investments reflected in such indices.

These materials (“Presentation”) are furnished by Vergent Asset Management (“Vergent”) on a confidential basis for informational and illustration purposes only. This Presentation is intended for the use of the recipient only and may not be reproduced or distributed to any other person, in whole or in part, without the prior written consent of Vergent. Certain information contained in this Presentation is based on information obtained from third-party sources that Vergent considers to be reliable. However, Vergent makes no representation as to, and accepts no responsibility for, the accuracy, fairness or completeness of the information contained herein. The information is as of the date indicated and reflects present intention only. This information may be subject to change at any time, and Vergent is under no obligation to provide you with any updates or amendments to this Presentation. This Presentation is not an offer to buy or sell, nor a solicitation of an offer to buy or sell any security or other financial instrument advised by Vergent. This Presentation does not contain certain material information about the strategy, including important risk disclosures. An investment in the strategy is not suitable for all investors, and before making an investment in the strategy, you should consult with your professional advisor(s) to determine whether an investment in the strategy is suitable for you in light of your investment objectives and financial situation. Vergent does not purport to be an advisor as to legal, taxation, accounting, financial or regulatory matters in any jurisdiction, and the recipient should independently evaluate and judge the matters referred to in this Presentation. Vergent Asset Management LLP is registered in England and Wales with its registered office address at 8th Floor, 1 Knightsbridge Green, London SW1X 7QA, United Kingdom (Companies House number OC418829) and is authorized and is an Exempt Reporting Adviser in the USA. It is regulated by the Financial Conduct Authority (FRN: 791909).


This report may contain information obtained from third parties including: Merrill Lynch, Pierce, Fenner & Smith Incorporated (BofAML), S&P Global Ratings, and MSCI. Source: Merrill Lynch, Pierce, Fenner & Smith Incorporated (BofAML), used with permission. BofAML permits use of the BofAML indices related data on an “As Is” basis, makes no warranties regarding same, does not guarantee the suitability, quality, accuracy, timeliness, and/or completeness of the BofAML indices or any data included in, related to, or derived therefrom, assumes no liability in connection with the use of the foregoing, and does not sponsor, endorse, or recommend CC&L Canada, or any of its products. This may contain information obtained from third parties, including ratings from credit ratings agencies such as S&P Global Ratings. Reproduction and distribution of third party content in any form is prohibited except with the prior written permission of the related third party. Third party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. THIRD PARTY CONTENT PROVIDERS GIVE NO EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. THIRD PARTY CONTENT PROVIDERS SHALL NOT BE LIABLE FOR ANY DIRECT, INDIRECT, INCIDENTAL, EXEMPLARY, COMPENSATORY, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES, COSTS, EXPENSES, LEGAL FEES, OR LOSSES (INCLUDING LOST INCOME OR PROFITS AND OPPORTUNITY COSTS OR LOSSES CAUSED BY NEGLIGENCE) IN CONNECTION WITH ANY USE OF THEIR CONTENT, INCLUDING RATINGS. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase, hold or sell securities. They do not address the suitability of securities or the suitability of securities for investment purposes, and should not be relied on as investment advice.

Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. MSCI makes no express or implied warranties or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data obtained herein. This report is not approved, reviewed or produced by MSCI.

Crestpoint Real Estate Investments Ltd. (Crestpoint) today announced the acquisition of 222 CitiGate Drive, a 2.8 million square foot Amazon fulfillment centre located in CitiGate Corporate Business Park in Barrhaven, a suburb of Ottawa. It is the largest fulfillment centre ever built in Canada and uses the latest in smart, and automated and robotic technologies with capacity to handle over 100,000 packages a day. Constructed in 2021, the project is 100% leased to Amazon for 20 years. Crestpoint acquired a 90% interest in the property on behalf of its clients including the Crestpoint Core Plus Real Estate Strategy, Vestcor Inc., and Kiwoom Securities and Hangang Asset Management, a South Korean investment consortium.

The completion of the CitiGate acquisition brings Crestpoint’s assets under management to over $7.5 billion and caps off a very active and productive past 13 months, which saw the completion of over $1.9 billion of acquisitions involving office, industrial, retail and multi-family opportunities, adding over 6.5 million square feet to its portfolio. Highlights of the activity during this period include:

(i) The Firm’s initial foray into the multi-family residential sector, following the investment of ~$500 million in the acquisition of over 2,000 apartment units.

(ii) The completion of over $950 million of transactions in the industrial sector, including the acquisition of 4.25 million square feet of existing properties, along with over 260 acres of development land, which can support the future development of over 4.5 million square feet of industrial product.

(iii) The investment of ~$400 million into the office sector, most notably through the acquisition of two signature office complexes, specifically a 95% interest in SteelesTech Corporate Centre in Toronto and a 50% interest in Place De Ville in downtown Ottawa. Together, the two properties represent over 1.2 million square feet of office product that add to the quality of Crestpoint’s office portfolio and are consistent with Crestpoint’s continued commitment to enhancing the overall environmental profile of its entire portfolio.

(iv) The consistent strong performance of the Crestpoint Core Plus Real Estate Strategy, Crestpoint’s diversified, open-end investment vehicle that celebrated its 10 year anniversary in Q1 2021.

(v) The addition of 14 new members to the team, bringing the total number of investment professionals at Crestpoint to 32.

“I am extremely proud of what Crestpoint has accomplished over the past 13 months. It is a testament to the skill and dedication of our entire team and our proven ability to identify opportunities and execute despite the challenges the market throws at us. We appreciate the continued support of our investors and partners and look forward to continued success in the future” said Kevin Leon, President and CEO of Crestpoint.

About Crestpoint

Crestpoint Real Estate Investments Ltd. is a commercial real estate investment manager, with $7.5 billion of gross assets under management, dedicated to providing investors with direct access to a diversified portfolio of commercial real estate assets. Crestpoint is part of the Connor, Clark & Lunn Financial Group, a multi-boutique asset management company that provides investment management products and services to institutional and high net-worth clients. With offices across Canada and in Chicago, London, and Gurugram, India, Connor, Clark & Lunn Financial Group and its affiliates are collectively responsible for the management of approximately $100 billion in assets. For more information, please visit:


Kevin Leon
Crestpoint Real Estate Investments Ltd.
(416) 304-6632
[email protected]

The UK labour market has recovered impressively but isn’t at risk of “overheating”, as claimed by economists quoted in write-ups of this week’s data.

The number of payrolled employees is at a record but this partly reflects a large number of self-employed people switching to employee status during the pandemic. The comprehensive Labour Force Survey measure of employment remains 600,000 below its peak – see chart 1.

Chart 1

The unemployment rate for the 16-64 age group of 4.2% is almost back to its pre-pandemic low of 3.8% but has been suppressed by a rise in inactivity, which is 1.2 pp higher as a share of the labour force, i.e. the jobless rate would be 5.4% if inactivity had remained stable – chart 2.

Chart 2

High inflation is putting upward pressure on wage settlements but the six-month growth rate of regular earnings (i.e. excluding bonuses) is currently no higher than in mid-2019, at 3.7% annualised – chart 3.

Chart 3

Weak / negative real money growth is likely to be reflected in a loss of economic momentum, implying labour market cooling – chart 4. Vacancies lead and may be peaking – chart 5.

Chart 4

Chart 5

Connor, Clark & Lunn Infrastructure (CC&L Infrastructure) today announced the acquisition of a majority interest in Landmark Student Transportation (Landmark or the Company) – one of North America’s leading student transportation businesses. Landmark’s existing shareholders will retain a significant equity interest in the business and its current management team will continue to oversee its operations and growth.

Founded in 2010 by a group of industry veterans, Landmark provides essential student transportation services to local school districts and private educational institutions throughout rural and suburban markets in Canada and the United States. The Company has grown significantly in recent years, adding scale and a professional management approach to a relatively fragmented market. The business is well positioned for continued growth having built a reputation for excellence in both service delivery and customer responsiveness. Through its owned and managed fleet of more than 4,600 buses, Landmark safely and reliably delivers hundreds of thousand students to school each day.

“We are pleased to be expanding our portfolio of essential transportation businesses with this latest investment in student transportation,” said Matt O’Brien, President of CC&L Infrastructure. “This investment in Landmark is expected to provide CC&L Infrastructure and its clients with access to stable and resilient revenue streams contracted with a diversified customer base – adding further diversification to our portfolio and providing an attractive complement to the approximately 1.5 GW of clean energy assets that we own and operate.”

“Landmark’s leadership team has established a very successful business through their community-based approach, focus on reliable service and customer satisfaction,” added Ryan Lapointe, Managing Director of CC&L Infrastructure. “As long-term investors, CC&L Infrastructure is committed to supporting Landmark’s continued growth. We are excited to partner with Landmark’s management team and to advance forward-thinking initiatives such as fleet electrification.”

Kirk Flach, CEO at Landmark, noted, “We are excited to be working with the experienced team at CC&L Infrastructure. Like Landmark, they place a high value on employee and customer relationships, with a focus on serving the needs of our local communities. This partnership will secure a stable future for the business through a long-term ownership model. Together with Landmark’s team of professionals, we will continue to deliver our best-in-class services to the communities we serve while building on our reputation as a leader in the student transportation industry.”

About Connor, Clark & Lunn Infrastructure

CC&L Infrastructure invests in middle-market infrastructure assets with highly attractive risk-return characteristics, long lives and the potential to generate stable cash flows. CC&L Infrastructure is a part of Connor, Clark & Lunn Financial Group Ltd., a multi-boutique asset management firm whose affiliates collectively manage approximately CAD$100 billion in assets. For more information, please visit

About Landmark Student Transportation Inc.

Landmark Student Transportation Inc. is a North American owned and operated company that provides school districts with safe, reliable, contracted student transportation services. Established by a team of industry veterans, the business provides school districts with cost-effective student transportation services with a focus on safety, reliability and responsiveness. For more information, please visit


Kaitlin Blainey
Connor, Clark & Lunn Infrastructure
(416) 216-8047
[email protected]

January has the reputation of being the most disliked month. In many parts of the world, it’s a long, cold period without any festivities and not much to look forward to. And in the aftermath of Christmas, it’s also a month of financial reckoning. For a lot of people, money stresses are high as the credit card bills from December begin to roll in.

All the exuberant spending on Christmas and New Year’s comes due in January, adding an extra bite to an already frosty month. But not to worry. A brand new business model has emerged to help consumers keep on spending, despite the post-Christmas budget crunch.

We’re talking about a new generation of Buy Now, Pay Later (BNPL) services, which are “helping” consumers push that age-old IOU even further down the road. The tantalizing draw of instant gratification and delayed payment have helped BNPL companies flourish in recent years, but at what cost? While the BNPL industry is indeed growing quickly, high user fees, ballooning consumer debt, and lack of collateral, point to another financial crisis – and an unviable business model for the long term.

What is BNPL?

BNPL is simply a spin on the lay-away plan, wrapped in the latest technology and artificial intelligence to make it sound more appealing to young online shoppers. In a traditional lay-away plan, you have to finish making all the payments before you get the item. With the new BNPL model, consumers get their items right away, and make the payments later. The basic concept is the same: lure and nudge consumers to spend more on things they can’t immediately afford today, with the promise to pay in the future.

The big difference? In the past, lay-away was used to purchase mostly bigger ticket, tangible items, such as washing machines. Nowadays, online shoppers can use BNPL to pay for almost anything, from massages to t-shirts.

Source: Urban Outfitters

Who are the main BNPL players?

Four companies in the BNPL industry have built scale: Afterpay, Klarna, Affirm and Zip. Many other small players are more focused on a geography (e.g. Sezzle in the United States) and/or verticals (Brighte in home improvement).

The business model

In the BNPL world, there are no credit checks on customers. The merchant is paid upfront and the BNPL company collects the installment payments.

Cost can be incurred in three ways when using BNPL products:

  1. Interest payments (if all payments are not made by specified deadlines);
  2. Late fees; or
  3. Account fees.

Costs differ for each provider. For example, Afterpay and Klarna don’t charge account keeping fees, whereas Zip collects a monthly account fee.

The maximum amount of purchases one can make varies depending on the company. On paper, credit loss is mitigated as the book turns anywhere from nine to 15 times a year, depending on the terms and loan balances.

What is driving BNPL industry growth?


The massive shift to online shopping has naturally led to a growing increase in online transaction volume. There is also a structural shift away from credit cards to online payment methods, like BNPL. Penetration of BNPL is merely 1% of United States (U.S.) e-commerce and 1-3% in most parts of Europe, compared to 10% in Australia or 25% in Sweden, so there is a strong secular tailwind.

At a combined 140 million, Gen Z and Millennials now comprise the largest portion of the U.S. population. They are the driving force in e-commerce growth, and the primary target customers for BNPL operators. This is because many of them do not have credit cards, with a major concern being the fees and penalties associated with having one. Interest-free instalment payments offer an appealing alternative, and have quickly gained traction among younger consumers. Even older Generation X adults are starting to adopt BNPL products.


There is an obvious value proposition for merchants, namely access to a large, engaged, and rapidly expanding online customer base. BNPL provides higher conversion from leads to sales, increased average order value, and improved online and in-store traffic. Many BNPL companies also provide customer insights and benchmarking data to retailers. The average merchant fee can range anywhere from 2-6%, depending on the provider and the services rendered.

The looming risks of the BNPL industry

Historically, recessions are almost always triggered by problems in the credit market. BNPL could very well be that trigger. For now, the consumer balance sheet is in great shape, but the question is for how long? What happens when government handouts stop, and all these installment payments come due? We could be setting ourselves up for the next global financial crisis.

Take credit scores, for example. As BNPL in most cases is not considered conventional credit, it does not show up on credit scores. This in turn paints a distorted picture of the consumer’s true financial health. 

Where is the collateral in case of default? Many consumers are using BNPL to pay for clothes, vacations or other services which do not have any resale value as they are not tangible. How will the lenders recover the unpaid debts?

There is also regulatory risk. The rules differ from country to country. In Australia, the BNPL industry is allowed to self-regulate. In the U.S., regulations are lax and differ by states. For example, the State of California requires BNPL providers to obtain a license from the Department of Business Oversight (DBO). But this is not the case in other parts of the country. In the United Kingdom (UK), the Financial Conduct Authority (UK) is currently reviewing the regulation of unsecured credit, including BNPL arrangements.

At some point, customers will have to come up with the funds to pay their loan, and if they don’t, they will be on the hook for late payment fees and/or high interest payments. Many customers might even default. One thing seems certain: BNPL loans will make the collective debt burden worse.

Portfolio impact

At Global Alpha, we do not invest in BNPL. Our focus is on finding high-quality companies with defensible business models and strong balance sheets that should outperform the small-cap benchmark.

However, one of our holdings, ACI Worldwide (ACIW), is benefitting from increased transactions online. Every time a customer uses a credit or debit card, a number of systems are involved, including the merchant processor: Visa, Mastercard, or the ATM and the card issuer systems. ACIW software essentially provides the “electronic handshake” that connects these systems.

Every second a purchase is made using BNPL, we can rest assured in some way or another that ACIW is benefiting from it without the inherent risk of the “buy now, pay later” industry. As the saying goes, ACIW is enjoying both the cake and the cherry.

Have a nice day.

The Global Alpha team

Recent US economic news has surprised negatively when properly weighted for significance. The Atlanta Fed’s nowcast of the contribution of final sales to Q4 annualised GDP growth has been slashed from 8.1 percentage points at the start of December to just 2.0 pp currently – see chart 1.

Chart 1

The most recent lurch down was driven by shockingly bad December retail sales – inflation-adjusted sales have now dropped 10% from their stimulus-inflated March peak.

The consensus is discounting weakness as temporary and due to the omicron wave. The “monetarist” forecast is that a cyclical slowdown is under way related to a big fall in real money growth since 2020 – chart 2.

Chart 2

The distribution of money growth, moreover, looks unfavourable for demand growth. Broad money balances have risen fastest for high-income households with a lower propensity to consume. Money holdings of the bottom 40% of earners were stagnant in real terms in the year to end-Q3 – chart 3.

Chart 3

The Atlanta Fed’s Q4 GDP growth nowcast is still up at 5.0% but this reflects a whopping 3.0 pp contribution from inventories – consistent with the view here that the stockbuilding cycle is peaking.

The latter estimate is based on inventory data through November but the December retail sales slump suggests further stockpiling. So does another bumper monthly rise in commercial and industrial loans, which are strongly influenced by inventory financing needs – chart 4.

Chart 4

The Fed’s “hawkish pivot” was predicated on a strong economy* but the Fed is often facing the wrong way at turning points. Officials are likely to row back if activity data continue to disappoint, even if inflation news remains unfavourable.

*From Chair Powell’s testimony to the Senate Banking Committee on 11 January: ”Today the economy is expanding at its fastest pace in many years, and the labor market is strong.”

The violent rotation in equity markets since the start of the year appears to have been driven by a tightening of liquidity conditions hitting high-flying growth stocks, rather than signalling increased economic optimism and a resumption of the late 2020 / early 2021 “reflation trade”.

The price relative of MSCI World value to growth surged 8.1% between 31 December and last week’s close, reaching its highest level since June. The relative of non-tech cyclical sectors to defensive sectors was up by “only” 1.4% over this period and remains below a November secondary peak – see chart 1.

Chart 1

The behaviour of the cyclical to defensive sectors relative remains consistent with the view here that the global manufacturing PMI new orders index is in a downtrend – chart 2. This relative has displayed a much stronger correlation with the PMI historically than value vs. growth.

Chart 2

Global six-month real narrow money growth leads the PMI and is estimated to have moved sideways in December after November’s 27-month low. The suggestion is that the PMI will fall further in H1 with no recovery before Q3 at the earliest – chart 3.

Chart 3

The view that equity market moves reflect liquidity tightening rather than reflation optimism is supported by the stability of Treasury market breakevens and a rising real yield – chart 4.

Chart 4

As previously discussed, both measures of global “excess” money tracked here are now negative for the first time since 2019.

On this view, the Fed’s “hawkish pivot” has been coincident with rather than the key driver of tighter liquidity.

Growth stocks may continue to suffer near term but the forecast of a global economic slowdown suggests approaching liquidity relief. The rally in the cyclical vs. defensive sectors relative, meanwhile, may reverse as activity news disappoints.

Connor, Clark & Lunn Infrastructure (CC&L Infrastructure) is pleased to announce the completion of construction at its 200 megawatt (MW) Riverstart solar project and the concurrent closing of a US$87 million bank financing with a consortium of North American banks. In aggregate, CC&L Infrastructure has closed over $4 billion in renewable power debt financings in the Canadian and U.S. markets in recent years.

This investment forms part of a previously announced acquisition of an 80% equity interest in a 563 MW U.S. renewable power portfolio that CC&L Infrastructure, alongside Régime de Rentes du Mouvement Desjardins and Desjardins Financial Security Life Assurance Company (together, Desjardins Group), purchased from EDP Renováveis, S.A. (EDPR). In addition to the 200 MW Riverstart solar project, the portfolio includes four operating wind projects located in Indiana, Wisconsin, Oklahoma, and Ohio with an aggregate installed capacity of more than 360 MW. Each asset is fully contracted through long-term power purchase agreements with high-quality offtakers, and the portfolio provides geographically diversified exposure to three distinct U.S. electricity markets.

The Riverstart solar project is located in Randolph County, Indiana, approximately 80 miles northeast of Indianapolis. The facility, which recently entered into operations, is now the largest solar array by capacity in the state and generates energy equivalent to the average consumption of more than 36,000 Indiana homes each year.

“We are excited to announce the achievement of this important milestone and the closing of the related financing for Riverstart, the largest solar project in our rapidly growing renewable portfolio,” said Matt O’Brien, President of CC&L Infrastructure. “We would also like to thank our partners, Desjardins Group, for their support in this transaction, and EDP Renewables North America, who developed and constructed the project, and alongside whom we look forward to working in the ongoing operation of the asset for many decades to come.”

CC&L Infrastructure now owns approximately 1.5 gigawatts (GW) of renewable power globally, with more than 1.3 GW in operation. On a combined basis, these operating facilities are expected to produce approximately 4.2 million MW hours of clean energy each year – enough energy to power more than 340,000 homes and offset the equivalent greenhouse gas emissions of more than 620,000 passenger vehicles for a year.

About Connor, Clark & Lunn Infrastructure

CC&L Infrastructure invests in middle-market infrastructure assets with highly attractive risk-return characteristics, long lives and the potential to generate stable cash flows. The firm has been an active investor and owner of renewable energy assets for more than 15 years. Its portfolio includes more than 60 hydro, solar, and wind facilities totaling 1.4 GW of clean energy generating capacity globally. CC&L Infrastructure is a part of Connor, Clark & Lunn Financial Group Ltd., a multi-boutique asset management firm whose affiliates collectively manage over CAD$100 billion in assets. For more information, please visit


Kaitlin Blainey
Connor, Clark & Lunn Infrastructure
(416) 216-8047
[email protected]