Value Investing – The Problem with Most Hedge Funds
In my very first blog, my closing sentence was “In the mania to get the latest and the best, most Hedge Funds are too busy by half to see value and how to achieve great returns.”
Value Investing Compared to Leverage, Margin, and Fancy Gimmicks
Cymor Strategic Growth Funds has a philosophy of searching for value and buying value, subject to a number of other criteria. To compare results of different types of investing philosophies, we quote the June 7, 2010 article in Forbes “Behind The Velvet Rope”.
“…the fad of the moment:- publicly available funds that pursue hedge-fund like strategies. Marketed under monikers like absolute return, market neutral and equity long short, such funds aim to earn positive returns regardless of how the stock market fares. These funds often short stocks, speculate on currencies, own bonds, and borrow money to amplify their bets.”
“All told, 106 such funds, with $37 billion under management, were on the market in April (2010). Over the past five years they have returned 2.6% annually on average….
What this means is that after taxes and inflation, you actually lost money over the five years.
The Cymor Strategic Growth Fund Philosophy
• Pick the sector that provides an irreplaceable product – natural resources.
• Pick stocks of companies rather than the resources themselves – stocks multiply the effect of the need for natural resources.
• Pick ‘junior’ companies – companies that have the potential to create big wins are those that have the biggest upside. Large companies already have realized much of their value in their stock price.
• Look for companies that represent a buying opportunity – we do not buy undervalued stocks simply because the market has not recognized them yet. Many of these stocks are known as ‘orphans’, that is, the market has ignored them, and the likelihood is that the market will continue to ignore them. Owning a stock that is undervalued, and will remain undervalued, is for investors that have other motives.
• Look for stocks that have a large upward potential and have not been recognized as such, but there are factors that will likely create this market recognition in a reasonable time frame.
• Rely on your own instincts in choosing a stock; meet management, hear a presentation, visit the site, do whatever due diligence seems warranted in that situation.
The Trend is Your Friend
• Never ignore the trend n the general market. ‘The Trend is Your Friend’
By Larry Cyna
Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and continues as a strategic consultant to selected clientele.
He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC’s with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section.
He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder’s Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants.
He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm.
Mr. Cyna is well known in the Canadian Investing community. He is invited to, and attends presentations given by public companies usually 3 or 4 times each week. These presentations are intended by the various hosting companies to present their inside story to sophisticated parties and Investment Managers for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being a part of this keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.
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