There's Always Something to Do: The Peter Cundill Investment Approach

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#1
Editorial Reviews taken from Amazon

[Image: th_there_is_always_something_to_do.jpg?t=1300027528]

Product Description
Peter Cundill, a philanthropist and investor whose work has been praised by the likes of Warren Buffett, found his life changed forever when he discovered the value investment principles of Benjamin Graham and began to put them into action. There's Always Something to Do tells the story of Cundill's voyage of discovery, with all its ups and downs, as he developed his immensely successful investment strategies. In the context of recent financial upheavals and ongoing uncertainty, Peter Cundill's wise and frequently funny reflections are more important than ever. In a seamlessly assembled narrative drawn from interviews, speeches, and exclusive access to the daily journal Cundill kept for forty-five years, Christopher Risso-Gill outlines Cundill's investment approach and provides accounts of his investments and the analytical process that led to their selection. A book for everyday investors as much as professional investors and investment gurus, There's Always Something to Do offers a compelling perspective on global financial markets and on how we can avoid their worst pitfalls and grow our hard-earned capital.
Specuvestor: Asset - Business - Structure.
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#2
Found this book in the library today.

Going to start reading later on.
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#3
Before reading Graham's book, Cunhill had identified the following factors in his investment selection:
- book value
- dividend growth
- growth in earning per share
- frequency of senior management change/philosophy
- favourable/unfavourale industry environment
- degree of recognition by the investment public
- general economic environment
- available float
- flow of funds
- general level of interest
- equivalent money instrument
- time horizon
- feel of company

When he is going to take over the All Canadian Venture Fund (after reading Graham's book), he wrote to the investors that the new fund should only made if most of the criteria are met:

- Share price must be less than the book value, preferably less than net working capital less long term debt
- Price must be less than half of the former high and preferably at or near its all time low
- Price earning multiple must be less than ten or the inverse of the long term corporate bond rate, whichever is less
- Company must be profitable, preferably have increase earnings for past 5 years and no deficits over the period
- Company must pay dividends, preferably have been increasing and paid for some time
- Long term debt and bank debt (excluding off balance sheet financing) must be judiciously employed. There must be room to expand the debt position if required.

He had also defined the term "intrinsic value" as the price a private imvestor would be prepared to pay for the security if it were not listed on a public stock exchange.
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#4
(11-09-2013, 11:12 AM)NTL Wrote: Before reading Graham's book, Cunhill had identified the following factors in his investment selection:
- book value
- dividend growth
- growth in earning per share
- frequency of senior management change/philosophy
- favourable/unfavourale industry environment
- degree of recognition by the investment public
- general economic environment
- available float
- flow of funds
- general level of interest
- equivalent money instrument
- time horizon
- feel of company

When he is going to take over the All Canadian Venture Fund (after reading Graham's book), he wrote to the investors that the new fund should only made if most of the criteria are met:

- Share price must be less than the book value, preferably less than net working capital less long term debt
- Price must be less than half of the former high and preferably at or near its all time low
- Price earning multiple must be less than ten or the inverse of the long term corporate bond rate, whichever is less
- Company must be profitable, preferably have increase earnings for past 5 years and no deficits over the period
- Company must pay dividends, preferably have been increasing and paid for some time
- Long term debt and bank debt (excluding off balance sheet financing) must be judiciously employed. There must be room to expand the debt position if required.

He had also defined the term "intrinsic value" as the price a private imvestor would be prepared to pay for the security if it were not listed on a public stock exchange.

Nicely summed up. It's a great read and love the diary like passages. Almost feels like hearing from the great man himself.

What is consistent be it Peter Cundill, Walter Schloss and Ben Graham is the focus on low price. Price being the biggest determinant of value.

One thing I never manage to get my head around is the criteria on book value. Companies like service industries, PB will rarely (if ever) make it into their short list. Maybe in modern times, there should be a sensible way to add in a "capitalisation" element to off-balance sheet assets. In that way, an adjusted net book value that accounts for income-generating assets can be applied.

Anyway I digress. Pls get your hands on the book, it's good stuff.
A stock well bought is half sold - Ben Graham
Price is the most important factor to use in relation to value - Walter Schloss
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#5
A para from the book:

"Downdraft of that kind (referred to 1987) tend to be regarded as "gifts from heaven" for disciples of Ben Graham and value investors tend to hold significant proportions of cash at most times, so that they are in position to tale advantage. Of course, no true value investor would claim to be able to predict the swings of the market and would never make any attempt to time either buying or selling on the basis of other people's market predictions."
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#6
Finally finish with the book. In Chapter 21, the author listed the characteristics that are most common to most great investors, namely:

- Insatiable Curiousity
Keep the reading broad, beyond just the professional

- Patience
Patience, patience and more patience

- Concentration
Ability to focus and to block out distractions

- Attention to details
Never make the mistake of not reading the small print

- Calculated Risk
Prepare to take risk but never gamles

- Independence of Mind

- Humility

- Routine

- Mens Sana In Corpore Sano
A healthy mind in a healthy body

- Scepticism
An investment framework out to include a liberal dose of scepticism both in terms of market and company accounts

- Personal Responsibility
If you lose money, it isn't the market fault, it isn't any broker fault, and it isn't the fault of your research department or anyone else. It is in fact the direct result of your own decisions.
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#7
(21-09-2013, 09:45 AM)NTL Wrote: - Personal Responsibility
If you lose money, it isn't the market fault, it isn't any broker fault, and it isn't the fault of your research department or anyone else. It is in fact the direct result of your own decisions.

Perhaps the key is to be able to understand and accept that "losing money" is part and parcel of investing. It's all about making decisions based on all the available info (how much info we have depends on how much work we'd put in) plus knowing the risks and rewards and our own imputed probabilities.

More importantly, we have to be able to look at our performance based on the total portfolio and strive for a net positive result (I begin to understand that after reading Peter Lynch's books). Further, besides taking "Personal Responsibility", we have to be able to learn from our mistakes (if any) and just move on...

Simple? Tongue
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
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#8
(21-09-2013, 10:24 AM)KopiKat Wrote:
(21-09-2013, 09:45 AM)NTL Wrote: - Personal Responsibility
If you lose money, it isn't the market fault, it isn't any broker fault, and it isn't the fault of your research department or anyone else. It is in fact the direct result of your own decisions.

Perhaps the key is to be able to understand and accept that "losing money" is part and parcel of investing. It's all about making decisions based on all the available info (how much info we have depends on how much work we'd put in) plus knowing the risks and rewards and our own imputed probabilities.

More importantly, we have to be able to look at our performance based on the total portfolio and strive for a net positive result (I begin to understand that after reading Peter Lynch's books). Further, besides taking "Personal Responsibility", we have to be able to learn from our mistakes (if any) and just move on...

Simple? :

Haha...this is also good stuff......portfolio management!
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#9
It is mentioned many times in many sources that all we need to be right 60% of the time (assuming everything else equal) in order to win. Even the best makes mistakes, not to mention mortals like us.
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#10
Interesting mentioning of the 60%.

I could be over-generalising, but value investors tend to stick to investment thesis even when sitting on sizeable unrealised losses. Other than mistakes like fraud. Is it possible that value investors believe they are right > 60% of the time? The 60% might be true of traders, but a value investor will always fall back on the soundness of his/her original investment thesis even if the price falls further subsequent to purchase.

Definitely agree even the best makes mistakes.
Hoping to minimise costly mistakes is more attainable for us mortals.
A stock well bought is half sold - Ben Graham
Price is the most important factor to use in relation to value - Walter Schloss
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