Experience. Intelligent Investing.

MARCH 2016
The Hirsch Performance Fund was up 4.10% for the
month of March.
The first quarter of 2016 was painfully eventful.
Februarys short squeeze of over-sold commodity
stocks has meant that Canada is finally leading
global markets higher (along with other resourcebased markets) after under-performing for 5 years
running. It is unlikely that we have seen the end of
volatility or that we can avoid a lengthy bottoming
process, but I suspect we might have seen the
nadir in the resource sectors. Investors might
decide that we are close enough to the trough in
the energy market and thus it might be wiser to
start accumulating long positions rather than face
another painful short squeeze.
From the very first day of the year markets plunged
in a delayed reaction to Yellens poorly timed interest
rate increase a mere week before Christmas, and
kept spiraling down on a slew of weak economic
data reports. No sooner were investors convinced
that the U.S. economy will not be able to avoid an
imminent recession, there was a short squeeze of
oversold resource stocks followed by a massive
dash to trash! All of a sudden cyclically challenged
stocks became cheap and highly sought after
value gems. As if that wasnt sufficiently difficult to
process, Valeant underwent a fresh sell-off phase
precipitated by numerous negative developments,
further depressing valuations in an already out-offavor sector.
Growth by acquisitions was the one constant
theme markets continued to appreciate. News of
acquisitions made by proven integrators became
rewarded by freshly minted record high stock
prices, as in the case of Boyd and CCL. Cara stock
responded well to its own St-Hubert deal, despite
the need for financing. Investors became excited
about integration prospects, enhanced by growth

HIRSCH PERFORMANCE FUND

opportunities stemming from St-Huberts expertise
in selling its branded food products into the grocery
channel.
It has been a while since I have introduced a new
theme into my portfolios. I am seeing early signs
of rising inflation expectations, which would be
entirely consistent with later stages of the current
(albeit fragile) economic cycle. U.S. core CPI at 2.3%
seems unremarkable until one considers that it has
occurred against a backdrop of relatively strong U.S.
currency and declining energy prices. If oil prices
continue to rise off the first quarter bottom for the
rest of the year, this would eventually translate into
higher input costs throughout the economy. As
well, since the beginning of this year, numerous
U.S. states have begun phasing in minimum wage
increases.
Rising inflation expectations would of course help
explain the recent Gold price break out, and so
would the negative interest rates in many parts of
the world. The combination of both phenomena
is just plain difficult to comprehend and renders
choosing the right investments a bit of a challenge
for investors everywhere. If an inflationary
environment were to develop in the U.S. over
time, commodities would become relatively more
attractive as an asset class, especially against bonds.
What happens under President H. Clinton? Status
quo.
Thank you for your continued interest in the Fund.
For further information, please contact your regional
Arrow Capital Management representative.

Sincerely,
Veronika Hirsch
Portfolio Manager
Arrow Capital Management Inc.

Commissions, trailing commissions, management, performance and other fees may be associated with this investment. Investors should read the offering memorandum before investing. Unless otherwise stipulated returns are for
Series A units in Canadian funds. Except as otherwise noted returns are historical compounded total returns including changes in the unit value and reinvestment of all dividends or distributions and do not take into account the sales, redemption, distributions or optional charges or income tax payable by the investor that may affect the compound growth
rate and are not intended to reflect the future value of the fund. Past performance may not be repeated. Offering of units
in the Hirsch Performance Fund are made pursuant to the Confidential Offering Memorandum (OM) only to those investors who meet certain eligibility or minimum purchase requirements. Important information, including the funds fundamental investment objective is contained in the OM which may be obtained from Arrow Capital Management Inc.
36 Toronto Street, Suite 750 Toronto, Ontario Canada M5C 2C5 Tel: 416.323.0477 Tel: 1.877.327.6048 Fax: 416.323.3199 www.arrow-capital.com

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