FAQs

What is the Investment Objective of the Goodwood Fund?

The investment objective of the Fund is to maximize total return through the purchase and sale of primarily North American exchange-listed or over-the-counter quoted securities.

In selecting long and short positions, Goodwood utilizes a "bottom-up" approach featuring intensive analysis of the individual company and associated industry conditions.

It is expected that the Fund will maintain no more than 35 holdings at a given time although this number may fluctuate slightly. This represents a relatively more concentrated approach to portfolio management to which Goodwood believes will enhance the total return over the longer term.

What is the difference between the Goodwood Fund and the Goodwood Capital Fund?

The Goodwood Fund is a Canadian long/short fund that commenced in October 1996. It is a mutual fund trust that is sold by an offering memorandum.

The Goodwood Capital Fund is a long only prospectus sold mutual fund. The Fund began in December 1999.

It is important to note that the long positions of the Goodwood Fund and the Goodwood Capital Fund are for the most part similar in name and portfolio weighting. The main difference is the Goodwood Fund's ability to make short sales.

What is the portoflio management approach to investing for the Goodwood Fund and Goodwood Capital Fund?

We use a "value approach" to investing which stresses the purchase of securities trading below our estimate of true, underlying worth. In selecting long positions, we expect to concentrate in the following general areas: (i) large capitalization companies with long records of profitable operations, high returns on capital employed and strong balance sheets, and which are trading below their intrinsic or fair values; (ii) small to medium capitalization, high growth companies that are not followed well by investors and are trading at price to earnings ratios and/or price to cash flow ratios appreciably below their going forward likely earnings and/or cash flow growth rates; (iii) securities of companies involved in corporate mergers, acquisitions and spin-offs; (iv) securities of distressed and bankrupt companies; (v) high yield instruments; and (vi) securities of companies in which Goodwood may take an active role (e.g., proposing an alternate slate of Directors, putting pressure on an incumbent Board of Directors to return capital to shareholders, etc.).

In selecting short sale candiates (for the Goodwood Fund) we expect to focus on companies that are experiencing deteriorating business and industry conditions, have leveraged and/or cash poor balance sheets and, are facing capital expenditure requirements in excess of their internal cash generation abilities.

Can I purchase units in the Funds directly from Goodwood Inc?

Yes. In fact we prefer unitholders to purchase the Funds directly with Goodwood as it allows the firm to have a stronger and ongoing communication dialog with the investor. Documentation can be downloaded directly from the New Accounts section on this website or alternatively, please call Katie Sherkey directly at 416-203-2012 or toll-free at 1-866-681-4393.

Additionally, investors may purchase units through their registered investment advisor.

Are the Goodwood Funds RRSP and RRIF eligible?

Yes, the Goodwood Fund and the Capital Fund are considered Canadian content for registered accounts.

How often are the Goodwood Funds valued?

The Goodwood Funds are valued every Friday and month-end. The weekly and monthly results are published in the majority of Canadian newspapers (business section). As well, the month-end results are updated on our web site and www.globeinvestor.com.

How often are unitholders communicated to?

We are strong advocates of being good communicators to our unitholders. Immediately following month-end, Goodwood forwards e-mail to all unitholders who have provided their e-mail addresses reporting the past month's results and a commentary on specific positions within the portfolio. If you would like to receive this monthly update, please provide Goodwood with your current email address.

Goodwood issues clients a quarterly statement and as well, we produce an Annual Report. In fact, all past editions of the Annual Report can be found on the web site.

Finally, every April, Goodwood is pleased to host an Annual General Meeting and invite all the unitholders to attend. We use this forum to review the results for the prior year and leave plenty of time for a question and answer session. Past years have been well attended and have proven to be an enjoyable affair for everyone.

What safeguards do unitholders have?

Goodwood Inc. does not act as the Funds' custodian. The securities and cash owned by the Funds are held with National Bank. The Fund is valued weekly and on month-end by Citigroup Fund Services, Inc., an independent fund accounting firm. Since inception (October 1996), the Fund has been audited annually by KPMG.

What is Goodwood's expectation for rate of return?

To avoid any potential misunderstandings, we want to stress to you that we have no idea what the Fund's rate of return in any one-year period may be. Stock investing does not lend itself to accurate predictions of return. What should be expected is to earn a return over the long run that is above the risk free rate of return (the risk free rate of return is commonly defined as the return of treasury bills issued by the Federal Government) thus justifying the extra risk incurred.

Why does the Fund prefer long positions to short positions?

The following three reasons are key:

1. A good long idea sometimes holds the potential for a double (100% return), triple (200%) or more of invested capital, while the most one can profit from a successful short idea is 100% (i.e., the security in question drops to $0.00).

2. Equity markets, with some notable exceptions, have tended to rise most of the time (i.e., let's go with the best odds).

3. Other investors are likely to recognize a good long idea faster than to act on a good short idea because management is often touting the positives (and usually not saying much about the negatives). Also, there is far more investment capital geared to buying stocks than shorting stocks.

How would I redeem my units?

Please call Katie Sherkey directly (416-203-2012, toll-free 1-866-681-4393) and she will assist you in processing your redemption request. Please note that we require written confirmation of your desire to redeem. The Goodwood Fund is subject to a 1% redemption fee if redeemed within the first 3 years of ownership, the Goodwood Capital Fund is subject to a 2% redemption fee if redeemed within the first 90 days of ownership, thereafter there is no charge.