For the third quarter ended September 30th, 2020, KVF gained $1.77 per share, increasing the value of each share to $25.98. Adjusted for taxes and currency, this represents a return of about 8.5%, which matched the S&P 500's return for the quarter, and was slightly better than the Russell 2000 and S&P/TSX indices, which were up in the low to mid single digits.
The market's gains continue to be driven by technology growth stocks. Many of these are companies with strong moats, but their valuations are such that it is difficult to ascertain whether there are margins of safety in their prices. Nevertheless, market sentiment can drive their prices up (or down) substantially in any period. Since KVF does not play in that arena, it is a good result when our boring, zero-glamour portfolio can keep up when the market has a strong quarter.
Helping drive this quarter's results were strong gains in the shares of Culp and Wabash (as discussed here and here, respectively), in which KVF no longer owns a position. KVF has also substantially whittled down its shares of Beazer Homes, which were purchased at the height of the pandemic fears.
While large cap prices are relatively high, valuations are much more reasonable among small caps, as has been the case for some time. You can expect KVF to continue investing in that area until that changes.
Currency movements buoyed returns by $0.04 per share this quarter.
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:
Do deferred taxes include deferred capital gains taxes on unrealized gains (both short and long term)? Long time follower. Hope you're well.
Yes, that is correct.
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