Walter Financial follows fundamental principles that encompass more than its investments, whether public or private. With our patient capital, we embrace a long-term vision and team up with businesses to grow with them and reach new horizons, side by side.
We see holding a stake in these businesses as forming a partnership. Our work relies on the strength of their business model most of all, but we go beyond a careful financial analysis.
For us, investing in a company also means investing in the people behind it. We believe that to help businesses grow, we need a solid management team.
Our four-pronged equity portfolio strategy has been developed to maximize the performance of our investments, but all of our portfolios are shaped by our entrepreneurial vision and our commitment to creating value through long-term growth and profitability.
High-performance businesses, regardless of market cycles
Walter Public Markets’ Diversified Public Equities portfolio comprises a limited number of market-leading companies, from here in Canada and around the world. Our underlying philosophy: A strong company run by agile and forward-thinking people will fare well even when the economy does not.
Selection criteria for portfolio companies:
- Superior business model
- Healthy cash assets
- Solid financials
- Value creation for long-term shareholders
Our analysts’ fundamental approach is to seek out:
- Long-term competitive advantages
- Exceptional management teams
- Outstanding performance
Hand-picked companies with long-term potential
The investments in our Strategic Public Equities portfolio represent larger amounts invested and they are concentrated in a small number of high-calibre businesses.
The one-of-a-kind approach employed by Walter Public Markets for the Strategic Public Equities portfolio is rooted in a permanent capital base, enabling us to:
- Embrace a long-term vision, knowing that capital can stay invested
- Strategically invest in large and often illiquid assets
- Become the second biggest shareholder in numerous public companies, after the founders, even holding board directorships at a number of them
We also act on more complex opportunities when we are in a position to add value.
Companies are carefully selected based on their:
- Management team
- Business model
- Long-term market outlook
VCA operates the largest network of veterinary clinics and laboratories in North America, with over 750 locations, 4,700 veterinarians and 600 certified specialists in 43 U.S. states and five Canadian provinces. VCA offers a comprehensive range of services, including basic care (grooming and dentistry) as well as more complex procedures (diagnostic imaging). VCA’s growth stems from the ever-rising cost of veterinary care, new additions to their service offering, acquisition of independent clinics and continued operational improvement.
Nearly 70% of American households have a pet and 95% of individuals consider their cat or dog an integral part of the family. As a result of the growing emphasis on animal health care, spending in this sector has significantly outpaced inflation over the past two decades. VCA offers basic and advanced services, supporting the company’s high margins and generating significant cash to invest in new clinics and technological platforms. Since 2010, VCA has acquired more than ten networks of clinics with 20 to 150 locations each.
By leveraging positive industry trends, VCA successfully doubled its sales and tripled its profits between 2010 and 2017, without any major share dilution. In September 2017, having identified the booming veterinary clinic market as a natural distribution channel for its pet food products, confectionery manufacturer Mars acquired VCA for U.S.$9.1 billion. Walter Financial saw a 100%+ return on its investment in the company, which was the second-largest position in the diversified portfolio when the acquisition was announced.
SodaStream is an Israeli multinational that manufactures household beverage carbonation appliances. The company enables its 14 million users to carbonate their own tap water with a CO2 canister-based device. SodaStream initially marketed its products to compete with soda pop companies Coca-Cola and Pepsi, but the company has seen great success in the past few years by pivoting toward the water market. Sparkling water is a healthier and less expensive alternative to sugary drinks. Consumers can also get creative by adding different flavours.
SodaStream’s propriety cylinders need to be replaced, generating regular income with high margins for the manufacturer. In an era where retailers are seeing less and less in-store traffic, these recurring visits from consumers also create a strong incentive for retailers to carry SodaStream products. This brilliant business model is perfectly positioned to leverage today’s worldwide shift toward healthier and more eco-friendly options.
After its sales skyrocketed by 50% between 2015 and 2018, SodaStream was acquired by rival PepsiCo. in 2018 for U.S.$3,2 billion. Walter Financial achieved a 2.5x return on this investment, which was the second-largest position in the diversified portfolio when the acquisition was announced.
Shopify is an e-commerce platform that enables both individuals and large companies to create their own online store. Non-experts can easily use Shopify, as the company handles most functions of the platform, including inventory management and online payments. In 2018, over 800,000 businesses generating a cumulative 40 billion dollars relied on the platform. Several software giants have tried to compete with Shopify, but the Ontario company has maintained an edge in its niche, with sales growing by more than 60% every year since going public in 2015.
Shopify is already one of the most successful web companies on the planet, and it is difficult to say how far it could go. Having started as a small website selling snowboard equipment, the Canadian web industry gem continues to enhance its service offering and has already developed into a unique digital ecosystem. The company’s growth is supported by a massive client base and spurred by its expansion to a wide range of new regions and technologies. Shopify is at the heart of the digital shift that is changing how today’s merchants do business and is one of the high-potential stocks in the Walter Financial’s diversified portfolio. Shopify’s market capitalization reached CA$26 billion as at January 31, 2019.
With 14 factories located across the United States and Canada, Lassonde is one of North America’s largest juice producers. In addition to marketing in-house brands like Rougemont and Oasis, the family-run company serves as a supplier for external retailers’ private label products. Lassonde also offers a selection of soups, sauces and broths. The major U.S. expansion that began in 2010 has been a huge success. Nearly 60% of the company’s sales are now generated in the United States, a figure that sat around 5% in 2010.
Lassonde’s exceptional operational expertise enables the company to generate significant liquid assets in a stable but low-growth sector. Those assets are reinvested to acquire independent producers, mainly in the United States, including recent additions Apple & Eve and Old Orchard Brands. Based on the additional volume resulting from these acquisitions and the quality of the company’s processing assets, Lassonde is able to optimize its factories, reduce supply costs and generate returns on equity vastly superior to those of its food industry rivals. For example, Lassonde posted an average 14% annual return on equity since 2010, creating value for stockholders on a continual basis. Even though the company has been in operation for 100 years and publicly traded for 30, it is still owned by the Lassonde family and its headquarters remains in Rougemont.
Lassonde is a keystone of Walter Financial’s strategic portfolio, thanks to its stable financial performance in an industry largely immune to economic cycles. Lassonde’s market capitalization reached CA$1.4 billion as at January 31, 2019.
Intertek is a global leader in quality assurance. Its services include inspection, testing and certification of a variety of products and services from every major economic sector. Private companies, governments and consumers rely on Intertek’s services and consulting expertise to meet many different standards of quality, hygiene and environmental friendliness. Intertek’s network comprises 43,000 employees working at more than 1,000 laboratories and offices in some hundred countries.
Today’s accelerating market globalization and international trade mean tighter regulations on imports and exports of consumer goods. For example, 600 to 800 new ISO standards are added every year. Thanks to the ever-increasing complexity of these certifications, Intertek enjoys reliable recurring income from its testing services, with very attractive margins. In addition, since the company’s business model requires little reinvestment in equipment or capital, Intertek is able to extend its expertise to new niche markets by acquiring small-scale independent firms with its cash flows alone. This consolidation model is extremely effective, as demonstrated by Intertek’s average 6% annual revenue growth and 20%+ return on invested capital over the past five years.
The inspection and testing industry is a favourite of Walter Financial, and Intertek is a vital component of the fund’s holdings in this strategic sector from outside of North America. Intertek’s market capitalization reached GB£8.3 billion as at January 31, 2019.
Savaria is a Canadian pioneer in the accessibility industry. The company designs, manufactures and distributes mobility products for people with disabilities, offering the most comprehensive line of lift platforms, adapted vehicles, adjustable beds and home and commercial elevators. Savaria sells directly to individuals from its 12 sales offices and through its network of over 500 distributors and partners. Founded in Québec in 1979, the company now generates 70% of its revenue outside of Canada, mainly in the United States, Europe and Australia.
By 2022, there will be a projected seven million wheelchair users in the United States—twice as many as a decade ago. Demographic trends and overburdened health care systems also mean that elder care is increasingly relegated to the home. These factors translate to a growing need for Savaria’s mobility products. The company is able to meet this demand thanks to an optimized supply chain, including its own manufacturing capacity in China. As a result of rigorous financial management and a cost structure below the industry average, Savaria has more than doubled its operating margin over the past six years, increasing its return on invested capital to over 15%. The company continues to expand its production capacity, product catalogue and distribution network, having acquired more than ten businesses within the sector since going public in the early 2000s.
Walter Financial has supported the company, which is helmed by the Bourassa family, for several years now. The aging population is an inevitable challenge, whose promising growth opportunities we can leverage through our substantial investment in Savaria. Savaria’s market capitalization reached CA$65 million as at January 31, 2019.
Our private equity investments are managed by our two specialized teams, based on the same long-term investment horizon.
The Walter Group’s long track record of entrepreneurial success has equipped us with the tools to build a winning corporate strategy and business model. We offer this expertise to top-tier firms with the potential to reach new horizons.
The businesses we select are ones we want to invest in today and grow with tomorrow.
Walter Capital Partners
Businesses to invest in today and grow with tomorrow
The Walter Capital Partners portfolio is composed of small and medium-sized companies that are:
- Already established
- Looking to grow
- In need of capital
- Seeking expertise to expand and succeed
Walter Global Asset Management
A growth-oriented platform for the asset management industry
Walter Global Asset Management aims to build long-term partnerships with forward-thinking independent boutique asset managers who are passionate about their mission, have an excellent track record and are open to partnerships that will leverage their capacity to manage more assets and sustain growth.
We occasionally invest in other asset classes in order to diversify our portfolio.
Walter Financial: A vision in action
To see the real impact of our vision, hear first-hand stories from entrepreneurs who have experienced our approach.