Friday, October 8, 2021

Karsan Value Funds: 2021 Q3 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 second quarter ended September 30th, 2021, KVF lost $0.03 per share, reducing the value of each share to $40.83. Pre-tax return on equity was a positive 1% this quarter, but after tax returns were negative because a tax charge was incurred this quarter as the tax rate estimate for the year has increased. Going forward, tax rates are likely to be less predictable than they have been in the past, resulting in somewhat lumpy tax charges from quarter to quarter.

This pre-tax 1% quarterly return bested the 0% returns of the S&P 500 and S&P/TSX, and negative 5% return of the Russell 2000. Currency changes aided returns by $0.29 per share in the quarter.

Profits were realized in shares of AYSI (which was bought out by its management), NWHM (another buyout), GRIN (a strong market for some shipping rates has led to increases in profits and subsequently large gains in share prices for these stocks) and ASH on the Australian exchange. KVF no longer owns shares in these companies.

Losses were realized in shares of SAL in London. This company has not been able to recover from the pandemic, and is at risk of bankruptcy in my opinion.

Prices for securities remain elevated. It's difficult to find value out there. Avoiding FOMO and the accompanying relaxation of standards (i.e. margins of safety) is key in this environment in my opinion.

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:

2 comments:

Anonymous said...

Are the holdings public? Thanks!

Saj Karsan said...

No