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A View From Here April 2011

April 28, 2011 • Print This Article

"To my knowledge there are no good records that have been built by institutions run by committee. In almost all cases the great records are the product of individuals, perhaps working together, but always within a clearly defined framework. Their names are on the door and they are quite visible to the investing public. In reality outstanding records are made by dictators, hopefully benevolent, but nonetheless dictators." - Peter Cundill

First Quarter Review

With the end of the first quarter now in the books, most accounts saw increases well in excess of 5% and almost all long-term accounts reached all-time highs. Even better, this performance has extended strongly into April. These are numbers we remain quite proud of and if you would like a report, please let us know and we will forward one to you.

There's Always Something To Do

I recently finished reading an interesting book on a trip to New York entitled; "There's Always Something to Do", the story of the investment life of Canadian value investing legend; Peter Cundill. The book takes us on a 40-year journey through the annals of investing with specific examples to highlight things that worked well and conversely, not so well. It is an excellent read for anyone who follows the investment process. I particularly enjoy these types of 'fireside' books and this one contains some fantastic quotes. There are many parallels to the way we invest for your accounts by concentrating our holdings into companies we know very well and avoid popular investment themes.

"My best advice to individual investors can readily be summed up into two closely linked precepts. Be patient and don't be greedy."

I have some copies at my desk, so those who are interested, please let me know and I would be happy to forward a copy to you.

The Hardest thing to do is hit the Sell Button

While March was successful in terms of our overall performance, we found it most prudent to close out our investment position in Imvescor at a loss. Too many management changes, uneven earnings, and changes to the Board of Directors, have finally pulled the last straw for us and we have lost confidence. We learned that not all dysfunctional investments with a large management equity stake are a failsafe one... despite the low valuation. They can turn out to be what people term as a "value-trap". Good riddance and upwards and onwards!

China's Ghost Cities

Perhaps the strongest investment theme today is the emergence of China and how to participate in this unique growth. With this in mind, I found this Australian video fascinating. It's a report on China's Ghost Cities and suggests that the growth in China in anticipation of an emerging middle class may be very misleading. While I have not witnessed this firsthand, there is a definite investment theme built around what many call the "China Growth Story." And we like to stay away from themes because we believe as Peter Cundill pointed out; "Sooner or later, the markets will do what it has to do to prove the majority wrong."

The takeaway from this is that as long as they keep buying commodities and western know how, why should anybody care? However, you have to wonder what happens from an investment perspective when or 'if' the music stops.

http://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities

It's so nice to see Spring in the air as it felt like a long and cold winter...but at least it was a profitable one.

All Good Things,

Adam

Filed under: Uncategorized

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation ("MRCC"). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des ├ępargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

 

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