Friday, October 7, 2011

Karsan Value Funds: 2011 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 third quarter ended September 30th, 2011, KVF lost $0.83 per share, reducing the value of each share to $12.14. This was a rotten quarter in absolute terms; but relative to the overall market, shares of KVF outperformed. For example, while the S&P 500 was down more than 13% for the quarter, shares of KVF were down just over 6%.

A portion of KVF's relative outperformance was due to weakness in the Canadian dollar in US dollar terms. Had USD/CAD exchange rate finished the quarter at the same level at which it started the quarter, earnings per share would have been 67 cents per share lower. This helped reverse some of the large currency losses the fund has experienced in recent quarters.

In any case, this quarter's outperformance (or last quarter's underperformance) is meaningless for a value fund such as KVF. The success of this long-term oriented fund should be judged over a period of several years, as chance plays a large role in short-term results.

Market sentiment is decidedly bearish at this time. As a result, there are a number of issues which appear to be undervalued from the point of view of a long-term business owner. This plethora of cheap companies has allowed the fund to increase its securities holdings at attractive prices. This bodes well for the future, though not necessarily the immediate future: in the short-term, the direction of stock prices is unpredictable. But history has shown that those who buy when sentiment is gloomy and prices are low are rewarded.

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 $CAD:


Paul said...

Nice job yet again, Saj! :)

Anonymous said...


Here's an idea for you: Startek (SRT). Have you ever checked it out? It's now my largest holding other than BRKB. I think it's an incredible value at today's price (it was down 10% today for no reason I'm aware of). There's a VIC writeup on it, and there's also some good analysis at this website:

- aagold

Saj Karsan said...

Hi aa,

It doesn't look familiar. If I have any thoughts on it I'll post back here.

Saj Karsan said...

Hi aa,

The customer concentration is too much for me. Though the company might be fine, this is too risky for me

SBTrades said...

Geez, look at SRT now, good thing you passed on that one!!!

Ouch !!!