|
The key to everything is
patience
You get the chicken
By hatching the egg
- not by smashing it
Arnold Glasgow |
We have always taken a patient
longer term approach to investing. Our prime objective has been
“consistent investment performance” and, as such, we preferred to be
the plodding, disciplined tortoise rather than the frenetic hare. Just
as Rome was not built in a day, we have always considered the road to
investment success to be one of painstaking fundamental analysis
combined with the patience of Job.
Invariably, this investment plan of
action is easier said than done. This is due to the fact that we are
constantly bombarded by economic, financial and political storms which
may temporarily set us off course. The challenge is to be alert,
flexible and persevering to recalibrate our positions toward our goal
of investment excellence. Notwithstanding this track we cannot simply
operate in a market vacuum; we must also be sensitive to client
concerns. Unfortunately, there may be times when our investment
approach may be zigging versus a hyped market which may be zagging.
This occurred in 1999-2000 when high technology and Nortel were the
flavour of the day. At that time we remained true to our deep-value
philosophy regardless of what might have been “in style.” This,
unfortunately, was not an easy task as we came under incessant
criticism for a period of over 18 difficult months.
Going forward, we must be patient
and cling to our investment principles despite the fact that we might
temporarily be out of sync with the market benchmark. The fact is that
we do not follow the crowd nor any standard index. We believe that
this course is consistent with our stated objective of uncovering
dirt-cheap value stocks and out of favour securities. As a result, we
are often early with the security purchase and must patiently await a
price catalyst. Recent successful examples of this strategy include
EuroZinc Mining Corp, Hudbay Minerals, Saxon Energy Services, Goody’s
Family Clothing, Cobra Electronics Corp. and Foodarama Supermarkets.
In all of these cases we thoroughly analyzed the companies, affixed a
12-18 month price target and patiently purchased these out of favour
securities at deeply discounted valuations. Although we recognized
that price appreciation might be slow in coming we were comfortable
with our analysis and were prepared to sit with these investments
until our price objectives were attained.
As we look ahead at the markets
over the next 12 months we are quite optimistic. We believe it will be
a stock picker’s market with plenty of mergers, acquisitions,
takeovers and privatizations. We have targeted our four ABC Funds’
portfolios to a fully invested position. We intend to remain true to
our investment style and disciplines; this will not change. We are
confident that over the long term our time-proven deep-value style
will continue to provide superior investment performance. In effect,
we are quite content to hatch the egg rather than smashing it.
