Patient Capital Quarterly Commentary – Q2 2022

Concern over rising inflation was the major theme during the second quarter of 2022. Investors started to conclude that inflation was not going to be transitory and instead might be a persistent problem into the future. Consumer Price Index (CPI) readings were reported at approximately eight per cent or more in Canada, the U.S. and Europe during the second quarter. Supply chain issues because of the war in Ukraine and the pandemic, high energy and food prices and very tight labor markets all contributed to the multiyear high inflation rate. As a result, the focus was on how high inflation would go and how much would interest rates have to rise to tame inflation. Central bankers may have been late in anticipating the significant impact that very loose fiscal and monetary policies over the past several years would have on inflation. They may now have to raise interest rates at a much faster rate and much higher than originally thought. As a result, equity investors became fearful that the economy would experience a severe recession or see a repeat of the stagflation that occurred during the 1970’s.

The war in Ukraine took a back seat to the concerns over inflation and interest rates in the second quarter. However, the impact of the war on agricultural supplies and commodities continued to remain unabated. European countries, in particular Germany and Italy, are extremely vulnerable to gas shortages in the coming months as Russia threatens to cut off gas supplies to Europe in response to Western nations’ sanctions. This threat has been a significant contributor to rising energy prices and will likely keep gas prices at elevated levels for some time.

During the second quarter of 2022 many markets around the world experienced negative returns. The MSCI (USD) World Index declined 16.05%1 while the S&P 500 (USD) dropped 16.10%2. The S&P/TSX Composite Index fell 13.19%3. The second quarter declines brought the indices into negative territory on a one-year basis: the MSCI (USD) World Index, S&P 500 (USD) and S&P/TSX Composite Index fell 13.94%, 10.62% and 3.87% respectively. The Canadian market performed better on a relative basis due to the strength of the Energy sub-sector over the past year.

Despite the declines in equity markets during the second quarter and negative one year returns equity markets are still expensive. Market valuation indicators such as the Shiller P/E Ratio and the Market to GDP Capitalization Ratio remain near all-time highs. High valuations combined with rising interest rates imply substantial risk for equity markets today and into the future.

We believe Lysander-Patient Capital Equity Fund (the “Fund”) is well positioned for current market conditions. As of June 30th, 2022, the portfolio consisted of approximately sixty per cent cash. As of June 30th, 2022, the Fund’s equity dividend yield on equities of 4.59% and other valuation statistics were far more attractive than both the S&P/TSX Composite and S&P 500. During the quarter, the Fund added to several of its holdings, drawing down its cash holdings by approximately ten per cent. Series F of the Fund posted a return of -2.9% during the quarter. The Fund’s large cash balance helped the Fund outperform the MSCI, S&P 500 and S&P/TSX Composite indices by substantial margins.

On November 1, 2021, the portfolio manager of the Fund changed from 18 Asset Management Inc. to Patient Capital Management Inc. and the investment objective of the Fund no longer had a Canadian equity securities focus. These changes could have affected the performance of the Fund had these changes been in effect throughout the performance measurement period.

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.

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. The indicated rates of return are historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns.

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 Funds 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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