Jason Donville, president and chief executive officer of Toronto-based Donville Kent Asset Management Inc.The Globe and Mail
Money manager Jason Donville doubled his portfolio returns in 2024 and expects another strong year for markets in 2025 driven by solid corporate earnings, a pro-business Trump administration and advancements in artificial intelligence.
“We see a lot of great value out there,” says Mr. Donville, president and chief executive officer of Toronto-based Donville Kent Asset Management Inc., who oversees about $110-million in assets alongside senior vice-president and portfolio manager Jesse Gamble.
He still expects volatility during Donald Trump’s presidency, including the tariff threats against Canada, Mexico and China that have reignited concerns about inflation.
However, Mr. Donville’s team believes it can offset those risks and capitalize on growth with its focus on small- to mid-cap companies instead of the large-cap names that many investors believe are overvalued. He looks to buy profitable, fast-growing companies with proven management teams.
“We have a track record of finding those companies relatively early and taking advantage of compounding growth,” he says.
The firm’s portfolio, which generally holds 25 to 30 companies, did especially well last year, returning 103 per cent. Some of the top holdings that drove the performance include Zedcor Inc. ZDC-X, Vitalhub Corp. VHI-T, Propel Holding Inc. PRL-T, Cipher Pharmaceuticals Inc. CPH-T and VerticalScope Holdings Inc. FORA-T. Its five-year annualized return is 5.4 per cent. The performance is as of Dec. 31 and is net of fees.
The Globe spoke with Mr. Donville recently about what he’s been buying and selling.
Name three stocks you own today and why.
Zedcor, which makes highly sophisticated artificial intelligence-driven security cameras, is a stock we first bought in January, 2023 at 63 cents a share and continue to buy. The Calgary-based company started as an oilfield equipment services provider and expanded to include security surveillance to help companies monitor expensive equipment at job sites. Zedcor has since expanded to construction sites and warehouses.
We think the stock is still under-followed and cheap because there’s a misperception Zedcor is just an equipment company. We believe the company is just scratching the surface of its addressable market. If the company hits its projections, revenue growth will continue in the 70-per-cent range in 2025 and earnings will double.
A major risk for the company is competition. Still, we believe Zedcor is different because it places and controls the equipment at the client’s location and receives a monthly monitoring service fee, while some competitors only sell towers and others outsource monitoring offshore. Zedcor could also be a takeover target down the road.
Enterprise Group Inc. E-T is a stock we bought in May, 2024 at $1.38 a share and continue to buy. Enterprise Group, based in St. Albert, Alta. [near Edmonton], started as an equipment leasing company and moved into the power generators business. Its generators run on natural gas.
We expect them to be a big player in the data centre business. Alberta is pitching itself as a place for data centres to be set up and run cost-effectively, noting how cheap the price of natural gas is. We expect Enterprise to continue to grow at a nice clip. The risk is someone comes up with a better generator, but it would take a while for a competitor to ramp up. Without factoring in potential M&A (Enterprise has made nine acquisitions over its lifetime), it should triple its earnings over the next two years. The company recently raised $30-million in new capital, and we’re excited for it to spend it. We expect earnings growth to be explosive over the next few years.
Vitalhub, the Toronto-based provider of software to the health care industry, is a stock we bought in May, 2019 at $1.60 a share. We like how its management team has balanced growth organically and through acquisitions while improving margins. The stock really jumped in late 2024 after the company reported strong profitability and cash flow [for its third quarter ended Sept. 30]. The market has finally started to realize how profitable the company is.
Vitalhub is currently sitting on a large amount of cash, which we expect to be deployed by the end of this year, which will help it continue to compound capital at high rates of return. We expect two or three acquisitions in the coming months. I don’t see any huge risks for this company because it’s highly diversified.
Name a stock you sold recently.
Kraken Robotics Inc. PNG-X, the St. John’s, Nfld.-based marine technology company, is a stock we recently sold, strictly based on valuation. We started buying the stock at 74 cents a share at the start of 2024 and it’s currently trading close to an all-time high of $2.93. It’s a great company that makes industry-leading battery technology and sub-sea robots, which are in high demand due to increased defence spending worldwide. At the current valuation, any bump in the road could result in a correction. We may add to our position again in the future based on future performance and valuation.
This interview has been edited and condensed.