The Cundill investment team in Vancouver meets bi-weekly to discuss the previous fortnight's investment assignments and to review prospective investment candidates for the upcoming two-week period. Once a quarter, a formal review of all portfolios is undertaken by the entire Cundill investment team. At these meetings, the discussion also includes specific stock ideas, countries and global sectors of interest, currency directions and any other issues of interest relating directly to the investment process.
Core/focus meetings are held when a security is identified that is appropriate for a number of accounts. The idea is more thoroughly vetted by the entire investment team at one time and then voted on. The vote to add a new “CORE” must be unanimous.
In screening potential investments, the Cundill investment team perform the following steps: prepare a detailed “sum of the parts” calculation and attempt to estimate the break-up and liquidation value, with the goal of determining the investment’s intrinsic or fair value. Assess the negative and positive aspects of the investment, taking into account some of the following factors:
Liquidity
Capitalization
Competitive position
Management’s history
Corporate governance issues
Operating characteristics
Market and industry trends
Past experience
Prepare a conclusion and recommendation of the suitability of the investment for inclusion in a Cundill Group Account.
Present each recommendation for inclusion in a NAV summary sheet for circulation to all of the portfolio managers within The Cundill Group.
In conjunction with the above, various members of the Cundill investment team will normally:
- Conduct interviews and company visits with management.
- Consult with other investment professionals and brokers.
- Consider accounting anomalies or variances in foreign accounting practices.
- Consider trading patterns or “events” which have, or might prospectively, affect the security’s market value or liquidity.
- Assess possible catalysts that could unlock shareholder value.
Particularly in smaller markets and for privately-issued securities and distressed debt, research depends to a greater extent on information from “friends,” brokers, peers in the industry, the business press, face-to-face meetings with companies and other contacts. The Group maintains an extensive network of relationships in the investment community worldwide. Some of these are formalized relationships such as information-sharing and research alliances, which provide a constant flow of ideas or to obtain feedback regarding internally generated ideas.
The Group's style leads to long average holding periods – often three to five years or more. The Group also maintains an informal “watch list” which includes virtually all former portfolio holdings (monitored for current developments).
