In this Investor Insight session, we interviewed Robert Gignac, founder of Forterra Investment Management and former lead portfolio manager of small- and mid-cap strategies at CIBC Asset Management. Gignac discussed his investment philosophy, emphasizing a long-term, fundamentals-driven approach that focuses on valuation discipline, management alignment, and capital allocation. Forterra’s portfolios are concentrated (15–25 positions), prioritizing businesses with recurring revenue, durable competitive advantages, and strong management execution.
Gignac described his “blue-collar roots” approach, noting that he often walks factory floors to understand how businesses operate, and treats research as business analysis rather than stock analysis. He said this hands-on method, combined with over 30 years of investing experience, gives him a deeper understanding of how value is built over time. His firm’s independence allows Forterra to align directly with clients and invest alongside them, maintaining a three- to five-year perspective that avoids short-term market noise.
The main portion of the discussion focused on Firan Technology Group (FTGFF), a Canadian aerospace and defense supplier with two operating divisions: Circuits and Aerospace. Gignac highlighted FTG’s 20-year customer relationships, qualification barriers, and global manufacturing footprint as key competitive advantages. He noted that the company’s long-term programs with Boeing, Airbus, and defense contractors function like annuity-style revenue streams that make the business more predictable and difficult to replicate.
He pointed to several near-term catalysts, including the integration of the Flight acquisition, new defense and commercial program wins, and organic growth from Boeing and Airbus production backlogs. He also expects margin expansion as plant utilization rises and some manufacturing is insourced. With a clean balance sheet, strong return on invested capital, and a pragmatic CEO in Brad Bourne, Gignac projected a three-year price target of $20, with potential to reach $24 if new programs or acquisitions materialize. He acknowledged potential risks, such as customer concentration, execution, and leadership succession, but viewed them as manageable given the company’s depth of management and industry positioning.
Gignac closed with a brief pitch on Velan Inc. (VLN.TO), a family-controlled industrial valve manufacturer with a niche in nuclear and defense applications. The company has been largely overlooked due to limited analyst coverage and prior ownership structure but is now leaner and better positioned after divesting its French subsidiaries. Gignac believes Velan could again become a takeover target for Flowserve, which previously attempted to acquire it before the deal was blocked by French regulators.
He estimated Velan’s intrinsic value in the $24–$28 range, versus roughly $16 at present, based on improving margins, lower liabilities, and the resurgence of global interest in nuclear infrastructure. Both FTG and Velan, he concluded, fit Forterra’s preference for asymmetric opportunities, companies with limited downside, durable fundamentals, and long-term compounding potential that may deliver outsized returns through disciplined execution and strategic flexibility.
