Friday, October 4, 2019

Karsan Value Funds

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 third quarter ended September 30th, 2019, KVF lost $0.21 per share, reducing the value of each share to $26.39. This flattish return was in-line with the usual indices quoted here, as the S&P 500, TSX 60 and Russell 2000 were all either up or down on the order of 1-2%.

There is some good value to be found in the market, particularly outside the US and especially among smaller issues. As a result, KVF's cash levels have dropped to multi-year lows. There is no guarantee that this leads to price appreciation in the short-term or even the long-term. However, I like the odds of many of the companies in our portfolio, and hopefully that bodes well for the future.

Included in this quarter's result was an $0.11 loss due to the strength of the Canadian dollar this quarter versus the currencies of the stocks owned by the fund.

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:

3 comments:

Anonymous said...

Almost exactly flat over a year or am I not reading that right?

Also, I’m curious if you have ever looked at Terra Firma ($TII.V)?

There is a bit of a write up / discussion here so I won’t rehash but less than .6x book, 7x EPS, 4% yield and has maxed out the NCIB for the past two years and ROE trending higher.

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/tii-v-terra-firma-capital-corp/

Saj Karsan said...

That's correct, Anon.

I don't know that one, but I'll take a look thanks!

Saj

Anonymous said...

My pleasure!

A common trap people fall into worn TII.V is that they think it’s super levered because of the syndicated loans but none of those are recourse to the company. net debt to equity is closer to 0.5x.

I think it gets closer to book value or they sell within a year as Great Gulf has an option expiring in August to double their stake at $8.50/share. That seems like a good price for them to bid.

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