Veritas Recommendation System
What Buy, Reduce and Sell Mean
Our recommendation system has three tiers:
• Buy: Expected to generate a meaningful positive return or outperform our analyst’s sector coverage over the next 12 months.
• Reduce: Expected to underperform our analyst's sector coverage over that time.
• Sell: Expected to generate a meaningful negative return.
While other firms may tell you to Buy or Hold 90% of the time, our recommendations can be roughly balanced between Buy or Reduce/Sell at any given time. Our track record proves this works.
Last year, we made 81 Buy recommendations and 53 Reduce/Sell recommendations, with the Buys outperforming the S&P/TSX composite index (including dividends) by 443 basis points, while our Sells underperformed the index by 591 basis points.
Returns calculated using model portfolios that include all Veritas calls in each category (Buys/Sells). Veritas Buy and Sell returns reflect equal-weighted portfolios that are rebalanced each month and on dates where recommendations change. Sell recommendations include Reduce recommendations when Reduces were added to our rating system in 2021. CAGR = Compound Annual Growth Rate Returns for each rating and the benchmark include dividends. Time period December 31, 2021, to December 31, 2022. Source: Bloomberg data, Veritas Investment Research
V-List Model Portfolio
What is the V-List?
Veritas' track record is measured through our V-List, a model portfolio that has outperformed the S&P/TSX Composite Index by 366 basis points (as of December 31, 2022, from inception on October 31, 2004).
The V-List is a concentrated portfolio of 12 to 25 companies recommended by Veritas Investment Research as the best investment opportunities drawn from our firm’s research.
Stocks are selected based on their potential for long-term capital appreciation, using bottom-up fundamental analysis and a strict review of accounting and disclosure practices to identify companies with defensible competitive advantages and the ability to generate meaningful cash flow.
V-List Model Portfolio vs S&P/TSX Index Since 2004 Inception
“Our level of due diligence is deeper. Our analysts cover fewer names, and they spend more time looking at the details associated with those names.”
– Anthony Scilipoti, President and CEO
“Our companies generate more cash, so they can either directly return more cash to investors, or if they’re in growth industries, they can invest in growth.”
– Darryl McCoubrey, Head of Research
Our Long-Term Buy, Sell and V-List Performance
Veritas Sells underperformed by 4.52% CAGR
Veritas Buys outperformed by 3.58% CAGR
V-List Buys outperformed by 3.35%CAGR
An equal-weighted portfolio of Veritas Sells would have underperformed the S&P/TSX index by a compound annual growth rate of 4.52%.
An equal-weighted portfolio of Veritas Buys would have outperformed the S&P/TSX index by a compound annual growth rate of 3.58%.
Our model V-List portfolio has outperformed the S&P/TSX index by a compound annual growth rate of 3.35% since inception (Oct. 31, 2004).
March 25, 1999 to October 31, 2023
Returns are calculated using model portfolios that include all Veritas calls in each category (Buys/Sells//V-List). Veritas Buy and Sell returns reflect equal-weighted portfolios that are rebalanced each month and on dates where recommendations change. Sell recommendations include Reduce recommendations when Reduces were added to our rating system in 2021. V-List portfolio returns reflect published weighting changes and recommendation dates, rebalanced monthly and on recommendation changes. CAGR = Compound Annual Growth Rate Returns for each rating and the benchmark includes dividends. All our calls are backed by published research that is available to our clients. Source: Bloomberg dates, Veritas Investment Research
V-List Review: Defensively Positioned for Sticky Interest Rates
A Webinar With Anthony Scilipoti & Nigel D'Souza
In this five-minute video, our President and CEO, Anthony Scilipoti, and Senior Analyst of Financial Services, Nigel D'Souza (both on our V-List Selection Committee), discuss the performance and thinking behind our V-List model portfolio. They discuss:
Background: We started the V-List in 2004 as a model portfolio of our Top Buys. It contains 12-25 larger-cap and liquid names. It is equal-weighted and rebalanced at the end of every month.
Veritas' overall track record: Our 449 Buy recommendations since 1999 have outperformed the S&P/TSX CAGR by 375 basis points, while our 504 Sell recommendations have underperformed by 441 basis points. In 2022, our 81 Buys outperformed the index by 443 basis points, while our 53 Sells underperformed by 591 basis points.
V-List performance to January 31, 2023: The V-List has outperformed the S&P/TSX CAGR by 347 basis points since its inception in 2004.
Stock selection: Examples of how names such as Canadian Pacific Railway Ltd. (NYSE, TSX: CP) and Hydro One Ltd. (TSX: H) have outperformed peers and the index since we added them to the list.
"We have an exceptional track record of outperforming the TSX benchmark. That's driven by our focus on high-quality, strong balance sheet companies that are fundamentally resilient and less exposed to volatility and risk."
– Nigel D'Souza, Senior Analyst Financial Services
"We believe interest rates are going to remain sticky, that is that they remain higher than what people expect, and that's going to create an environment where stock selection becomes more important."
– Anthony Scilipoti, President and CEO