May 08, 2019

Reflections on Value

I was fortunate to attend the Ben Graham Centre’s 2019 Value Investing Conference in Toronto this April for the first time and I was greatly impressed by the content and high-quality, deep-thinking speakers and audience members. 

A highlight from the conference for me was an absorbing conversation hosted by Fairfax CEO and Chairman Prem Watsa and Kiril Sokoloff (Founder & Chairman, 13D Global Strategy & Research) about the opportunities and risks faced by world economies and stock markets. One of the key takeaways from that – and other discussions through the conference – was that opportunities in Emerging and Frontier Markets look increasingly attractive for the long-term investor. 

Sokoloff also shared the remarkable anecdote that in the 1970s a triplex in Manhattan was sold for one dollar, as the owner felt that the maintenance costs were too high. Oh, to have been that buyer!

The message that resonated most with me was delivered in the opening remarks by Dr. George Athanassakos, the conference organizer and Ben Graham Chair in Value Investing at Ivey Business School. Athanassakos described his research in which he conducted in-depth interviews with 19 successful value investors in Canada and the United States, from which he concluded that character, in particular, temperament, played a significant role in successful value investing. His study’s key conclusions were that:

• Value investors tend to be low-key, contrarian, patient, disciplined, and willing to do things out of the ordinary;
• Genetics and family upbringing played a role; however, in the right environment, character can be honed in;
• Humility, integrity and independence were also important common qualities; and
• Broadly speaking, the act of value investing is closer to a “profession,” versus the stewardship of an asset management business

 

It was extremely satisfying to hear this messaging, since these values reflect both my values and those of my peers at Leith Wheeler. As a firm, we collectively underwent an exercise in 2018 to define those values and agreed on “Integrity, Investment Discipline, and Independence,” three ideals that not only carried a nice alliteration but reflected the DNA of what’s important to us in managing portfolios, our teams, and our business. Athanassakos’ character attributes of successful investors similarly (eerily) describe our investment teams – a collective of people able to weather and ignore market noise and then wade in when others are unable to see the value.

We haven’t strayed from these ideals over the last 37 years and our clients have benefited from it. It’s good to see the academic community confirming we’re on the right track.