Karsan Value Funds (KVF) is a value-oriented fund, as described here. Due to securities regulations, the fund is not open to the public at this time. Should that change in the future, there will be an announcement on this site.
For the first quarter ended March 31st, 2014, KVF earned $1.63 per share, increasing the market value of each share to $18.36. As both the S&P 500 and the TSX Composite rose in the low to mid single-digits, this was an excellent result in both relative and absolute terms.
These overall results for the portfolio are unlikely to be sustainable. A great deal of the outperformance this quarter was due to luck. The market happened to react positively to the interim reports of many companies in the portfolio. Sometimes these volatile market reactions hurt returns (as they did last quarter) and other times (such as this quarter), it works out in our favour. What counts is how the portfolio will do over the long-term.
Speaking of luck, the fund's returns this quarter were also aided up by the weaker Canadian dollar. Had the USD/CAD exchange rate ended the quarter at the same level at which it started the quarter, earnings per share would have been $0.46 lower. Currency movements will continue to play a large role in determining quarterly returns, but their effects on long-term returns are much less significant.
The fund's portfolio also benefited from strong gains in the shares of Lakeland Industries and Income Opportunity Realty (as discussed here and here). As a result, KVF no longer owns shares in these names.
Offsetting the gains experienced this quarter were losses in the shares of RadioShack. The fund no longer holds shares in this company, as discussed here.
As equity market share prices continue to rise, it is getting harder and harder to find value in North America. This does not bode well for future returns. To keep the portfolio's margin of safety high, you can expect more international names in the portfolio, as has already taken place throughout the last couple of years.
KVF's income statement and balance sheet are included below (click to enlarge). Note that securities are marked to market value, and amounts are in thousands of $CAD (except share and per-share amounts):