Christopher Risso-Gill
104 highlights · 15 concepts · 32 entities · 2 cornerstones · 5 signatures
Canadian value investor and fund manager who built the Cundill Value Fund by finding deeply undervalued securities trading below liquidation value worldwide.
Canadian value investor and fund manager who built the Cundill Value Fund by finding deeply undervalued securities trading below liquidation value worldwide.
“Arbitrage and workout investing involves the pursuit of profit from an announced corporate event such as the sale, merger, recapitalization, or liquidation of a company.”
“current asset value per share as net-net working capital per share, and made it the sine qua non of his investment process.”
“The road of a value investor is a lonely one, inevitably contrarian and often placing the practitioner in the uncomfortable position of being stubbornly wrong in the view of the majority of the investment community.”
Peter reflecting on the psychological challenges of value investing
“You need to get into some situations which make your gut tight and your balls tingle.”
Peter on taking calculated investment risks
“Once you've done your homework properly and are absolutely convinced that an investment is right you should not hesitate or wait for others to share the adventure.”
Peter on conviction investing and timing
“You will inevitably have to take losses from time to time and then you must do it decisively – no vacillation and no self-flagellation; just a sober assessment of what went wrong and why so that the mistake is never repeated.”
Peter on loss management discipline
“The stock market is almost always wrong; once in a while it is right.”
Peter's life philosophy including market observations
“in the management of a common stock portfolio it was important, especially as an investor who favoured the bottom-up approach, to be conscious of the time value of invested cash.”
“How does one make one’s bones? One searches for the margin of safety in the balance sheet with cash-like instruments, extra hard assets, and little debt. I reiterate – the price should be at a low. One should pay only for low earnings multiples and free cash flow.”
“current asset value per share as net-net working capital per share, and made it the sine qua non of his investment process.”
“[Not strictly a technique, just common sense, though psychologically quite tough to do]”
“doesn’t know the difference. •Seek balance through harmonizing the different aspects of life: physical, spiritual, emotional, sexual. •The physical world is illusion but deal with it as if it were real. At every moment in all societies contradictions are developing and these inevitably lead to discontinuities. In his book “Beyond the Mexique Bay,” Aldous Huxley wrote, “Life is a series of routines punctuated by orgies.” It is and it should be, and neither Huxley nor I mean it in the purely conventional sense. •The Roman stoic philosopher Seneca said a lot of useful things. Here are a few: “Happiness is balance; to teach is also to learn; knowing is better than remembering; we are born unequal, we die equal; to govern is to serve, not to rule.” •Be passionate but avoid zealotry. •Be politically correct. Be a Bubba. Use Bill Clinton as a role model. Wear sackcloth and enjoy pain. Lead an opulent lifestyle. •Own a house. Enjoy hotel rooms. •Travel to extremes. Consider each resting place a sanctuary and a home. •Strive for high levels of awareness. Enjoy brain moments. •Be responsible but remember that the ultimate freedom is the utter absence of obligation. •Be highly principled, but be flexible and above all fair. •Be optimistic, or be pessimistic but above all be realistic.”
“•Can it be purchased at an attractive price? The price you pay matters. Even the world’s greatest business is not a good investment if you pay too much.”
“Rit = αi + βiRmt + Σit”
“We will normally dispose of an investment position in the following circumstances: •When we deem the market price to be significantly in excess of its underlying intrinsic value. •If we see evidence of factors that are likely to significantly lessen its sustainable competitive advantage. •Where we believe that we have been intentionally deceived by company management whether through their comments or in the financial statements. •In circumstances where we find a new investment idea that we judge to be better than an investment position that we already own and where we have no excess capital available for deployment.”
““Lack of physical activity destroys the naturally good condition of every human being, while movement and methodical physical exercise save it and preserve it.” (Plato)”
“PETE’S TIPS FOR A GOOD LIFE •Exercise between half an hour and two hours every day. Do more on Saturdays. Take one day off every two months. Keep your body fat at less than 10%. •Don’t be afraid of eating junk food but eat lots of fruit as well. If you choose to eat fat-free yoghurt, make sure you complement this with plenty of hot-dogs, hamburgers and French fries. •Sleep a lot. •Read even more. •Drink alcohol two days a week; once in a while to excess. •Cigarettes are bad. Cigars after a meal are good. •Be curious. Never stop learning. •Once a year run a marathon. Once a year do something that scares the shit out of you: a bungie jump, the Cresta run, white-water rafting. •Laugh a lot but be reflective. •Strive for balance through contradictions. •Be a warrior. Be a priest. Be a monk. Be a hedonist. •Reason and passion go together but not reason before passion. •Rotate between day-dreaming and acute awareness. Do reality checks and focus on detail. •Think positive thoughts even when you’re lying to yourself. The brain”
“current U.S. accounting abuse. •I think, but don’t know, that current earnings estimates are very optimistic. Can we confirm or deny? Do the estimates conform to our sense of reality? •There must be some industries where expectations are very high. This would include the North American money management industry. How should one play this? •If you were designing a basket what would you include? Those with hefty recent acquisitions must be good candidates potentially. I await your thoughts.”
““History of the Crusades.””
“R represents the return of a security i over a time period t, a is the anticipated return of a security i, βi is the degree of sensitivity the security manifests in relation to changes in the overall market, Rmt is the broad market return over period t and Σ it is the actual risk return of the security i over period t and has a mean of zero with variance expressed as Ơ2ei.”
“as a value investor it is unavoidable to have a certain quantity of small positions either because one remains unconvinced for the present of the share’s intrinsic worth or because … it is very attractive but difficult to buy.”
“Arnold Weinstock”
“– The share price must be less than book value. Preferably it will be less than net working capital less long-term debt. – The price must be less than one half of the former high and preferably at or near its all time low. – The price earning multiple must be less than ten or the inverse of the long term corporate bond rate, whichever is the less. – The company must be profitable. Preferably it will have increased its earnings for the past five years and there will have been no deficits over that period. – The company must be paying dividends. Preferably the dividend will have been increasing and have been paid for some time. – Long-term debt and bank debt (including off-balance sheet financing) must be judiciously employed. There must be room to expand the debt position if required. In addition, studies should be made of past and expected future rates of profitability, the ability of the management and the various underlying factors and hypotheses that govern sales volume, costs and profit after taxes. To the best of my knowledge, this investment philosophy would have outperformed every mutual fund in Canada.”
“in order really to succeed in any business one needed to develop the instincts of an owner rather than just an employee.”
“Aρρα was the actual percentage price appreciation, Jρρα the anticipated percentage price appreciation and V a variable to which Peter gave a weighting.”
“WHAT MAKES A GREAT SHORTING POLICY? Not so long ago Peter Ackerman wrote an insightful piece asking rhetorically “What Makes a Great Buy?” In the wake of Nortel this is an attempt at the flip side. •You must have overvaluation to start with. High book values and price earnings ratios with non-existent or very low dividend yields are a good”
““Achtiname,””
“L’Oustau de Beaumanière in Les Baux de Provence.”
“Confidence is the issue and how to re-establish it when it wavers.”
“John Martin’s “Plains of Heaven””
“Current assets to current debt, net profits as a percentage of net sales, net profits as a percentage of net tangible worth, net profits as a percentage of net working capital, net sales to tangible net worth, net sales to net working capital, average collection period, net sales to inventory, fixed assets as a percentage of tangible net worth, current debt as a percentage of”
“•Work on your spiritual progress. Don’t let your curiosity flag and make sure you laugh a lot. Life is a game – a series of connected experiences. If you can teach yourself to see the good and the bad just as episodes in the pageant it becomes more bearable.”
“magnificent Iguazu Falls.”
“to evaluate an arbitrage or work-out situation we must answer four questions: •How likely is it that the promised event will indeed occur? •How long will our capital be tied up? •What chance is there that something still better will transpire (an example would be the emergence of a competing takeover bid) •What will happen if the event does not take place? (Examples would include antitrust action or financing glitches).”
“½ million Americans own stocks and that’s more than the whole population of Canada!”
“The MARKET P/E RATIO is about 13 times. Price to Book Value is 4 times. Dividend yield is over 4% and inflation 12%.””
“Through the long years I sought peace. I found ecstasy, I found anguish, I found madness, I found loneliness. I found solitary pain that gnaws the heart, But peace I did not find. Now old and near my end, I have known you, And, knowing you, I have found both ecstasy and peace, I know rest. After so many lonely years I know what life and love may be, Now if I sleep, I shall sleep fulfilled.”
“The essential concept is to buy under-valued, unrecognized, neglected, out of fashion or misunderstood situations where inherent value, a margin of safety and the possibility of sharply changing conditions create new and favourable investment opportunities”
“assuming that their businesses are worth six times earnings before interest, depreciation and tax. There is more, because about 150 companies with market caps of $125 million or more are trading at below net-net working capital. That is approximately the same number as there were in the US in 1975 and some of these are very big businesses indeed. In over a hundred instances you can end up paying less than nothing. Some of them have net cash almost equal to their market value. In our calculations we assume that they sell their share portfolios and that they are then taxed on this at 50%. I’m not even sure that we should be deducting the tax to establish our margin of safety, but we do it anyway. Then we net out the short and the longterm debt. We don’t include receivables or inventories in the computation and when we have done all that we can still find over”
“The importance of continuing to learn throughout life was a recurring theme.”
“to make this business profitable by employing and associating with thoroughly competent people, proper financial controls, attention to detail, a determination … to be decisive; no speculative ventures either for the clients or the company … Trust and teamwork are vital combined with the ability to think independently … coolly assessing the realities and pursuing values that are not transitory. I now believe that it is in equity markets that solid value may be most readily found among what is neglected, unfashionable and apparently boring.”
“introduce some form of terminal value forecasting based on liquidation or SOP [Sales and Operations Planning] forecasting.”
“My beauty My strength My Fair lady My laughter My good sense My Mama bear My companion My True Love My Bird of Paradise.”
“It is customary among investment analysts to apply standard percentages to all of these classes but I think that this is a dangerous over-simplification and I believe that it is essential to work through the minutiae because it is precisely by so doing that hidden assets or problems may be uncovered.”
“Peter had continued to assess his principles of value investment and reached conclusions slightly at odds with purist Benjamin Graham theory.”
“Schopenhauer”
“He says that the important differences in the human condition of individuals can be pared down to three clear distinctions: •What a man is – his personality in the broadest sense, including his looks, health, strength, intelligence, moral character, education and temperament. •His possessions of every kind.”