Why this $9.4-billion money manager is buying TMX Group and selling Verisign

Unlike many money managers today, Robert Taylor doesn’t own a single Magnificent Seven stock in his portfolio and hasn’t made any big bets on artificial intelligence.

Still, the senior vice-president and chief investment officer at Canoe Financial LP has delivered high single- and double-digit returns for his clients in recent years without fear of missing out.

“The key in market environments like this is to stay disciplined; to stick to your process. You don’t want to start to shift your style and let the market dictate what you should be doing,” says Mr. Taylor, who oversees about $9.4-billion of his firm’s $22.5-billion of assets.

His concern is that too many investors are chasing the same expensive stocks, especially in the technology sector.

“It’s the most tech-heavy market that we’ve seen since the late 1990s,” he says. “There are a lot of extremes being registered in so many areas, which to us suggests there’s a major shift that could be coming.”

Mr. Taylor believes the shift will be away from growth stocks toward value stocks and growth in commodities such as energy and mining.

“We could also go into a period in which passive strategies and indexes could begin to underperform,” he says. “That’s why you need a differentiated and balanced portfolio.”

Mr. Taylor describes his style as “quality, with a value tilt” and a focus on “analyzable businesses with less lofty expectations.”

With this approach, Mr. Taylor’s $2-billion flagship Canoe Equity Portfolio Class, Series F fund has returned 8.7 per cent year to date as of Nov. 30. Its one-year return is 6 per cent, while its three- and five-year annualized returns are 10.5 per cent and 16.8 per cent, respectively. The performance is based on total returns, net of fees.

The Globe and Mail spoke with Mr. Taylor recently about what he’s been buying and selling:

Name three stocks you own today and why.

Toromont Industries Ltd. TIH-T, one of Canada’s largest Caterpillar dealers, is a stock we purchased in December, 2024, at around $114 a share. We added to it when it sold off a bit earlier this year.

We think it’s an attractive business with low cyclicality and strong margins that grows nicely over time. When we bought the stock, we felt the market was concerned about weakness and new equipment sales, but was ignoring the strength of its product and support business, which is a better business and performing quite well.

TMX Group Ltd. X-T, one of Canada’s largest exchanges that includes the Toronto Stock Exchange and the TSX Venture Exchange for equities, and the Montreal Exchange for derivatives, is a stock we bought in March, 2024, for $35 a share.

It’s a high-quality company with a deep moat across all segments, which has allowed it to generate very consistent, strong margins and strong return on invested capital. The mix of the business has been shifting toward higher-growth areas such as its Trayport energy-trading platform. It also has a custom indexing business, VettaFi. Its core derivatives business is also a secular growth driver. It has a strong management team that we think has been a good capital allocator.

Headwater Exploration Inc. HWX-T, an oil producer in Western Canada, is a stock we bought in February this year at $6.70 a share. There was a notable event for the company this year: It tested a water flood, which is when you inject water into a well and, if successful, it can reduce the decline rate of an oil well. It means you don’t have to drill as many wells going forward and you need less capital to grow.

Headwater also has a great management team and great assets. The water flood makes it even better than what the market had envisioned for the company earlier this year. We have a fairly large weighting of energy stocks in the portfolio today. Energy has been a laggard, and we think there’s a catch-up coming.

Name a stock you’ve sold recently.

Verisign Inc. VRSN-Q, the Reston, Va.-based company that’s effectively a toll road on domain names that end in .com, is a stock we bought in April, 2024, at US$189 a share.

Like many other businesses, VeriSign experienced higher-than-normal growth during COVID and then a slowdown in the pandemic’s aftermath, which we felt was temporary. The stock re-rated and went from extremely cheap to more on the expensive end of its valuation historically. We sold it in April, 2025, at US$254 just because we found more attractive opportunities elsewhere.

This interview has been edited and condensed.

Editor’s note: A previous version of this article said the Canoe Equity Portfolio Class fund had $1-billion in net assets. The fund has $2-billion.