Patient Capital Quarterly Commentary – Q1 2023

The first quarter of 2023 saw global equity markets continue their positive momentum. The MSCI (USD) World Index rose 7.88%1, the S&P 500 (USD) posted a positive return of 7.50%2 and the S&P/TSX Composite Index increased 4.55%3 during the quarter.

For the one year period ending March 31, 2023, the MSCI (USD) World Index, S&P 500 (USD) and S&P/TSX Composite Index declined -6.54%, -7.73% and -5.17% respectively. Recently, we have added to several positions as equity investors have once again become concerned about rising interest rates.

Recent headlines have focused on a potential banking crisis. Silicon Valley Bank, (SVB) a California based bank catering to the high technology industry, was declared insolvent and failed. This bank failure was the largest since the financial crisis of 2008. SVB essentially failed because management invested in long dated bonds that dropped dramatically in value as interest rates rose. The large bond losses led to a capital deficiency and subsequent run on deposits. Subsequently, Credit Suisse, a Swiss bank, also lost investor confidence and had to be bailed out by its larger rival, UBS, and the Swiss government.

Equity markets reacted negatively as developments have unfolded at SVB and Credit Suisse. Investors fear that contagion may spread and that we may be on the verge of another financial crisis. We do not believe that we are on the brink of a widespread banking crisis. SVB appears to be an isolated case of a bad risk management policy and not large credit losses. In addition, the U.S. government has effectively guaranteed all deposits further limiting the potential for a broad-based run-on banks. Global central banks have also intervened in financial markets and guaranteed depositors to ensure that these isolated incidents do not metastasize into a global contagion.

Inflation remains a concern. Various economic data points provided differing insights on the increase in the rate of inflation. February and March data indicate that inflation pressures seem to be waning. However, this slowing rate of inflation was largely the result of lower energy prices. Underlying inflation, particularly in food and services, remains stubbornly high. These persistent price increases for basic goods and services indicate that the central bank is having a challenging time cooling inflation. As a result, there are expectations for further rate increases in 2023.

Lysander-Patient Capital Equity Fund continues to be well positioned for current market conditions. As of March 31st, 2023, the portfolio yield was 4.45% and other valuation statistics were more attractive than both the S&P/TSX Composite and S&P 500.

1. Source: MSCI.
2. Source: S&P.
3. Source: S&P/TSX.

Lysander Funds Limited (“Lysander”) is the investment fund manager of Lysander-Patient Capital Equity Fund (the “Fund”). Patient Capital Management (“Patient Capital”) is the portfolio manager of the Fund.  This document was prepared by Patient Capital as portfolio manager of the Fund.  In this presentation, “we”, “us”, and “our” means Patient Capital.  This document has been prepared solely for information purposes. Information in this document is not intended to constitute legal, tax, securities or investment advice and is made available on an “as is" basis. Neither Lysander nor Patient Capital make any warranties or representations regarding the information herein. Information in this document is subject to change without notice. Neither Lysander nor Patient Capital assume any duty to update any information herein. Certain information in this document has been derived or obtained from sources believed to be trustworthy and/or reliable. Neither Lysander nor Patient Capital assume responsibility for the accuracy, currency, reliability or correctness of any such information.

The indices are used for broad market performance comparisons. The S&P 500 Index tracks the stock performance of 500 large companies listed on exchanges in the United States. The S&P/TSX Composite Index is comprised of a basket of Canadian equities. The indices are presented on a total return basis.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

This document may contain forward-looking statements. Statements concerning a fund’s or entity’s objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition are forward looking statements. The words “believe”, “expect”, “anticipate”, “estimate”, “intend”, “aims”, “may”, “will”, “would” and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward- looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from current expectations. Readers are cautioned not to place undue reliance on these forward-looking statements. While Lysander and Patient Capital consider these risks and uncertainties to be reasonable based on information currently available, they may prove to be incorrect.

This document is not an invitation to invest in the Fund and does not constitute a public offering of sale. Purchases in the Fund can only be made through an Investment Professional on the terms in the applicable Fund’s offering document by eligible investors.  Each purchaser of units in a fund may have statutory or contractual right of action.

Source: MSCI. The MSCI information may only be used for your internal use, may not be reproduced or redisseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (

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