Friday, October 4, 2024

Karsan Value Funds: 2024 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, 2024, KVF lost $1.17 per share, reducing the value of each share to $75.84. This represents a 1.5% pre-tax loss, comparing poorly with the S&P 500, the Russell 2000 and the S&P/TSX, which were all up in the mid-to-high single-digit range.

One stock accounted for about 600% of this quarter's loss, meaning the rest of the portfolio was quite positive. That stock was KVF's largest holding, which fell from $16 to $11. Its price is still ten times higher than KVF's initial cost basis, and the business itself is doing fine. But because it had become such a large position due to its appreciation, when it fell it had a huge effect on KVF's returns.

Last quarter, I felt like a fool for selling so much of it as it appreciated over the last few years. This quarter, I feel like a fool for not selling more of it. The market is fickle, as are opinions that are based on it!

Mitigating this quarter's loss was an incredible stroke of lucky timing on shares of Audiovoxx. Just as I completed purchasing shares of the company (for the reasons outlined here), it announced a potential sale of the entire company, sending the share price dramatically higher.

Currency gains also helped returns by $0.23 per share in the quarter.

There remain some attractive prices for companies in the small-cap space. KVF has been building some positions in companies that will hopefully generate strong returns in the years to come. But the short-term remains unpredictable. Losses can continue for several quarters or even years. The important thing is to continue to be opportunistic with pricing in order to secure the kinds of margins of safety that deliver strong returns in the long run.

KVF's income statement, balance sheet and pre-tax/post-fee returns since inception 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...

Have you published a list of current holdings?

Saj Karsan said...

No