Friday, January 8, 2016

Karsan Value Funds: 2015 Q4 Results

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 fourth quarter ended December 31st, 2016, KVF gained $0.16 per share, increasing the value of each share to $20.30. However, the portfolio's returns were actually negative this quarter, as KVF experienced currency gains of $0.31 per share that propped up results.

KVF's porfolio returns thus trailed the S&P 500's approximate 5% return this quarter, but were ahead of the S&P/TSX returns of about -2%. For the year as a whole, however, KVF gained 5% while the S&P 500 was flat and the S&P/TSX lost nearly 12%.

For most of the year, KVF's portfolio benefited from not containing companies exposed to commodity industries. However, as that industry takes it on the chin, it has become attractive from a value perspective. As a result, KVF now has exposure to those industries, and it was that exposure that took a bite out of the quarter's results. This unforced error didn't help returns either.

In the long-term, I believe there is a lot of value in the commodity space, but in the short-term the prices of those companies may continue to take hits.

Helping mitigate this quarter's losses was a gain in the shares of King Digital, as discussed here.

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):

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