Contrary Cundill

09/17/2004 12:00 am EST

Focus:

Eric Roseman

Editor, The Commodity Trend Alert

"Despite a very difficult environment, we still suggest that investors hold global value stock funds, as part of their overall allocation," says Eric Roseman, editor of the Global Mutual Fund Investor. Here, he explains why all investors should look at fund manager Peter Cundill.

"Launched four years ago in the US, the Ivy Cundill Global Value Fund A (ICDAX ) is truly a remarkable growth-based fund. Probably no other value manager in North America since 1974 has earned better returns that Peter Cundill, a veteran Canadian money manager based in London, England, the Canadian-based flagship Mackenzie-Cundhill value Fund, launched in 1974, has earned 16.2% per annum over the last 30 years. Not many funds can match that performance. Born in Montreal, Peter Cundill, 65, is still virtually unknown in the vast $7.5 trillion American mutual fund industry. The combined Cundill funds at Ivy hold just $128 million in assets, modest given Cundill’s impressive long-term performance. I think that will change in the years ahead, Ivy Cundill Global value Fund Class A levies a 1.8% per annum in fees and is in line with the average total expense ratio levied by US-based global equity funds. Though not cheap by index standards, the risk-adjusted returns for Cundill are simply outstanding, especially over the last five years. As global stocks crashed between 2000 and 2002, Cundhill actually earned double-digit profits.

"Peter Cundill is a value-contrarian investor who regularly travels around the globe to visit his holdings, His stock picking analyst awards his portfolio with strong companies harboring solid cash flows and trading at or below book value. Many of these stocks, however, maintain high p/e ratios. But Cundill thinks that these ratios are of limited value in many foreign nations, especially Japan, where depreciation charges are high. He prefers his own method of isolating values. He borrows from the classic Graham and Dodd approach and seeks ‘assets’ not necessarily just earnings power. Cundill seeks companies that trade at a third less than break-up value. Over the last several years, the mutual funds he manages in Canada and the US have remained over-weighted in Japanese stocks and he still believes that the market offers good value. Some of the fund’s current top holdings include Kirin Brewery of Japan, Shiseido Japan, and Coca-Cola West Japan. In the US, where his weighting is low, Cundhill holds Loews and Diamond Offshore. Every long-term US and Canadian investor should hold a piece of Cundill in their growth portfolio. Only a few great money managers in the world as this good and capable of earnings consistent returns since 1974. Peter Cundill is one of them."

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