Maxime Lemieux, portfolio manager at Fidelity Investments.Karene Isabelle/The Globe and Mail
Maxime Lemieux’s passion for the stock market began at age 11, when his godfather started an investment club for him and three older cousins. It folded after two years, but he kept buying stocks and was thrilled to see how his savings could grow. In high school, he dabbled in options and later read One Up on Wall Street by legendary Fidelity manager Peter Lynch. At McGill University, he took a one-year investing program, where students ran real money from an endowment fund, before being hired by Fidelity. With a zeal for ferreting winners, his $6.1-billion Fidelity True North Fund has outpaced the S&P/TSX Composite Total Return Index since he took over in 2009. We asked Lemieux why his giant fund owns smaller companies, too, and is bullish on AtkinsRéalis Group.
What’s your strategy to try to beat your index?
We have a long-term horizon with a focus on quality companies, diversification and managing risk. The Alpha comes mostly from industrial, technology and consumer names that have differentiated products or services. We own stocks such as convenience store operator Alimentation Couche-Tarde, which is growing through acquisitions, and business information service provider Thomson Reuters, which benefits from subscription revenues.
Why do you also own gold names such as Agnico Eagle Mines and Franco-Nevada, a royalty play?
There are times when you can be bullish on gold. It has worked as an insurance policy when you had negative real interest rates and a weakening U.S. dollar. But more Chinese people are investing in gold because they’re wary of real estate and stocks, and central banks are buying, too. I am not making a call on gold this year, but the reality is that there’s uncertainty following the U.S. election. If there is geopolitical risk, that’s also a tailwind for gold.
Your fund owns small- and mid-cap stocks, too. Why?
When I joined Fidelity in 1996, I saw small companies, such as CGI and Couche-Tard, eventually became future darlings. Not all the ones I own will be 10- or 50-baggers, but we follow their stories quarter by quarter to decide whether to make a bigger bet. The payoff can even be short. We began buying Park Lawn, a funeral and cemetery operator, when its stock was under pressure, but it was acquired less than a year later, in June 2024. I bought Dollarama when it was an initial public offering in 2009, and it’s still in the fund. You don’t always get this kind of gift, but that was a clear winner.
Canada’s market rose 22% in 2024. What’s your outlook now?
It’s hard to see such a strong year again. There is risk from U.S. tariffs, uncertainty about a new government in Ottawa and future immigration policies, consumer debt loads and a sluggish Chinese economy. Some of my companies are global players, so they’re less impacted by U.S. tariffs. But I have reduced exposure or exited investments that might be affected. A positive year for the market will depend on earnings growth. A devalued Canadian dollar versus the U.S. dollar will help companies whose exports become cheaper.
Your fund is underweight financials. Why?
In 2024, we expected bank loan loss provisions would increase at a faster pace, but that didn’t materialize. Late last year, I think Canadian banks got a lift from U.S. financials, which rose in anticipation of a Trump victory and proposed deregulation. We are underweight banks but like Royal Bank as well as TD Bank, which has been hurt shorter term by anti-money-laundering issues, because they have significant U.S. exposure. We’ve been overweight property and casualty insurers, such as Intact Financial and Fairfax Financial, that have done well.
Why do you like AtkinsRéalis, formerly known as SNC-Lavalin, which was once embroiled in a corruption scandal?
I built my position gradually. A key reason was because the company exited lump-sum turnkey contracts that were losing money. In 2017, it had acquired well-run British engineering firm WS Atkins, and its cash flow has helped pay down debt. AtkinsRéalis also plans to sell its last stake in Highway 407 north of Toronto to focus more on its Candu reactor business. Nuclear is seeing a renaissance due to renewable energy demand and more power needed by data centres.
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