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Hi, Charles. Hi, Chuck. First, I appreciate your openness and honesty about explaining what's been going on and reasons for the underperformance. Charles, one of the things you were talking about was some of the U.S. names -- HP, Staples, Dell, and a pattern. And you had said that part of that pattern was that the stocks were trading with free cash flow yields of 7-13%. And versus cash, that seemed to be attractive. Yet it obviously didn't work. So I'm just trying to understand what the takeaway is or what the lesson learned is, if there is one, to try and avoid that type of thing in the past -- in the future.
Charles de Vaulx: Thanks for your earlier comment and, by the way, as you know, all of us at IVA own quite a bit of the fund, and so we, too, have to explain ourselves to our spouses as to why we are not up 10 percent this year!
{...See transcript for their full response...}
Also from elsewhere in the Q&A:
It's really just so far this year, especially for the Worldwide Fund, that performance has been disappointing. One, because we, rightly or wrongly, did not want to be fully invested in light of all the risks described by Chuck, and also we made a few investment mistakes. We went through those earlier on the call, and we hope we've learned from those mistakes and will try not to repeat them.
I think what has been very pleasing is the fact that when we started the firm, we went on record saying that we were mindful of capacity constraints. We want to remain multi-cap investors. If one day the best bargains are in small stocks, we want to be able to buy them. We think it's the case today in Asia. In Asia today, the best values are among small stocks.
It was very pleasant for us to be able to close our Funds to new investors a year and a half ago. And I think what's even more pleasant is our realization that we have attracted, by and large, money from very sophisticated advisors and institutional investors out there.
If you think about it, our investment strategy is unique. It's somewhat unorthodox. It's very eclectic. We oftentimes will deviate from the benchmarks. We can lag quite a bit in an up market and so we need clients that truly espouse our investment style -- global, flexible; an investment style whose core premise is that if you can minimize losses, if you can minimize drawdowns, gains will take care of themselves, and that is one of the most powerful ways to compound wealth over time.
Reply to @Kenster1_GlobalValue: Clearly poor stock picking picking contribute to this year's lagging performance. Also the gold and large cash positions did not help.
Comments
http://ivafunds.com/sites/default/files/downloads/Value Investor Insight - August 31, 2012.pdf
http://www.ivafunds.com/sites/default/files/downloads/Morningstar Analyst Report - August 17, 2012.pdf
http://ivafunds.com/sites/default/files/downloads/IVA Funds Conf Call Transcript September 13 2012 - FINAL.pdf
Here was a good question by a listener:
Hi, Charles. Hi, Chuck. First, I appreciate your openness and honesty about
explaining what's been going on and reasons for the underperformance.
Charles, one of the things you were talking about was some of the U.S.
names -- HP, Staples, Dell, and a pattern. And you had said that part of that
pattern was that the stocks were trading with free cash flow yields of 7-13%.
And versus cash, that seemed to be attractive. Yet it obviously didn't work.
So I'm just trying to understand what the takeaway is or what the lesson
learned is, if there is one, to try and avoid that type of thing in the past -- in
the future.
Charles de Vaulx: Thanks for your earlier comment and, by the way, as you know, all of us at IVA own quite a bit of the fund, and so we, too, have to explain ourselves to
our spouses as to why we are not up 10 percent this year!
{...See transcript for their full response...}
Also from elsewhere in the Q&A:
It's really just so far this year, especially for the Worldwide Fund, that
performance has been disappointing. One, because we, rightly or wrongly,
did not want to be fully invested in light of all the risks described by Chuck,
and also we made a few investment mistakes. We went through those earlier
on the call, and we hope we've learned from those mistakes and will try not
to repeat them.
I think what has been very pleasing is the fact that when we started the firm,
we went on record saying that we were mindful of capacity constraints. We
want to remain multi-cap investors. If one day the best bargains are in small
stocks, we want to be able to buy them. We think it's the case today in Asia.
In Asia today, the best values are among small stocks.
It was very pleasant for us to be able to close our Funds to new investors a
year and a half ago. And I think what's even more pleasant is our realization
that we have attracted, by and large, money from very sophisticated advisors
and institutional investors out there.
If you think about it, our investment strategy is unique. It's somewhat
unorthodox. It's very eclectic. We oftentimes will deviate from the
benchmarks. We can lag quite a bit in an up market and so we need clients
that truly espouse our investment style -- global, flexible; an investment style
whose core premise is that if you can minimize losses, if you can minimize
drawdowns, gains will take care of themselves, and that is one of the most
powerful ways to compound wealth over time.