For the fourth quarter ended December 31st, 2024, KVF gained $1.22 per share, increasing the value of each share to $77.06. This represents a 2.1% pre-tax return, which exactly matches this quarter's S&P 500 return, while the Russell 2000 was flat and the S&P/TSX returned 3%.
The stocks in KVF's portfolio, however, performed worse than these numbers would suggest, as currency changes helped performance by $1.91 per share. In other words, KVF's stocks were down this quarter; the headline number only looks good because a weak Canadian dollar made our ownership in international stocks more valuable in Canadian dollar terms.
Returns this quarter were hurt by continued weakness in shares of ADF Group, a position that remains a 10-bagger and therefore remains a significant part of the portfolio despite continued sales. In addition, portfolio company Zytronic, trading at a large discount to its assets, appeared poised to go on a risky (i.e. expensive) endeavour to change its business model, causing KVF to sell its shares at a loss.
Helping mitigate these losses were strong returns in the shares of BK Technologies (BKTI), which had a run-up on strong results. KVF no longer owns any shares of this company.
Stock prices are high. It is difficult to find opportunities with large margins of safety. When such opportunities are found, it is often in smaller companies where it's difficult to buy shares at sizes that KVF needs in order to move the needle. As a result, KVF's cash balance has been rising. It is expected to rise further still this quarter as portfolio company VOXX has agreed to a buy-out, which will cause KVF's shares to be sold.
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:
No comments:
Post a Comment