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There's Always Something to Do - The Investment Methodology of Peter Cundill

I am currently going through a list of must-read value investing books. I will continue to post summaries with passages and notes that I take away from these books and post them here as I finish them. Although rarely known outside of value investing circles, Peter Cundill is likely the most famous Canadian value investor of all time. I recommend his book for any aspiring investors to get a glimpse of the mentality needed to build a career in investing management as well as his thinking in regard to financial markets. The reason I was drawn to learn about him is two-fold: Peter is a Canadian investor like myself.  Peter has been recognized for his ability to find value in markets beyond North America - often investing in developing countries that many investors will not even consider. Although finding value in publicly traded stocks has gotten more competitive with increasing globalization and access to data, there are bound to be neglected opportunities if one is to look beyond the com
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Current Net-nets in Japan

As I write this at the beginning of September, the SnP-500 index - the index representing the 500 most valuable companies in The United States- marches on toward all time high levels. Other world stock indexes have rebounded rather quickly as well. The SnP-500, the FTSE100 (England), the Euronext index, and broad Canadian ETFs have all recovered most of the value that they lost after the catastrophic month of March, and now seem to be heading toward highs. Although many traders subscribe to the idea of buying something at a high price and selling it for an even higher price, riding the market's momentum can hardly be considered investing in my eyes. I would prefer to look into opportunities that have a lower chance of losing their speculative valuations, even if I am at risk of missing out on the gains of the Apples and Teslas of the world. So where is there value for nimble investors?  Carrying on with my discussion of net-nets from the previous posts, there is plenty of value for
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Performance of Net-nets as an investment strategy

One of my friends who is not well versed in investing recently asked me what I thought was the easiest way to make money in the stock market without doing much work. For this same reason I focused my previous blog post on introducing net-net opportunities as investments.  I have recently been investigating various studies that document the performance of net-nets in different countries. All of these studies report that portfolios of net-nets picked at random significantly outperformed the market indexes over the sampling periods. Most famous among these studies is the one by Henry Oppenheimer, conducted over the 1970-83 period. The most notable findings that should be interesting to investors are as follows: -Portfolios with an average of 35-50 stocks were constructed every year of the study with US stocks that were trading for 2/3 Net Current Asset Value (NCAV - or "net-nets") or lower. - Annual Geometric Mean Return from investing into this strategy was 28.5% per year. -Por
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The Two Investing Styles and net-nets

 Although countless investing styles have been used to pull profits out of the markets, I would argue that most investors will fall into either of the following two categories: - Balance sheet investing: the investor values the quality of the assets that the company owns and seeks to invest in the company when its net assets are relatively cheap. -Cash flows/ Earnings estimations: the investor seeks to find and invest in those companies that will yield strong profits in the future, and seeks to do so at an affordable price that will allow for his investment to appreciate when profits subsequently rise. Both of these approaches are perfectly valid for investing in public companies. It is to the preference of the investor to pick a style that best suits his skill set. I would argue that the first is more of a cerebral approach whereas the second may benefit from creative thinking, as well as from comparative and forward thinking. Net-net Investing: A simple balance sheet investing approa
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Purpose and Future Content of this Blog

Many investing blogs serve as tools for investors to dole out their thought process, order their ideas, and obtain feedback from others about potential investments. The purpose of this blog will be – at least in the beginning – a little different. The reason being that although I have made successful investments in the past, they have not occurred with such regular frequency that they allow for a very interesting blog. Further, the focus of my investing education at this moment in time is to explore different approaches within the value investing methodology as I reconcile my interests and temperament to a framework that makes sense to me. As a beginning investor, I think there is plenty of value in trying to emulate other prominent investors, and in looking at the exercise of valuation through different perspectives to determine which ones we are best suited for. Therefore, I am hoping the blog will instead be a good resource for other beginning investors like myself who are explo
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