This is the final part of a three-part interview with Richard Fogler, Managing Director, Chief Investment Officer and PM of Kingwest & Company. The interview is part of ValueWalk’s Value Fund Interview Series.

Throughout this series, we are publishing weekly interviews value-oriented hedge fund, and asset managers. All the past interviews in the series can be found here.

As a Kingwest founding partner, Richard is the originator of the firm’s investment strategies.

Richard is an industry expert with over three decades of experience, and has invested through 7 major market cycles. You’ll see him regularly featured on national business and investment news programmes. He has authored articles for major industry publications and he makes note to help mold future minds as a guest lecturer for the Value Investing Program at the Rotman School of Management.

Kingwest & Company

Richard received a BSc in Economics from the Wharton School at the University of Pennsylvania. Later, he pursued post-graduate studies in Economics and Finance at the College de France and the Sorbonne Université de Paris. Today, he has risen as a respected figure of the market and holds membership at the Toronto Society of Financial Analysts.

The interview has been divided into three parts. You can find parts one and two at the links below!


Interview With Richard Fogler Of Kingwest & Company [Pt. 3]

Continued from part two….

RH: Kingwest runs a highly concentrated portfolio of approximately 25 securities in both Canada and the US. Why did you decide this is the best approach to take and what controls do you have in place to minimize the risk that a massive blow-up could eliminate years of returns?

RF: Yes, our portfolio includes 25 stocks. Like John Maynard Keynes, we believe that “As time goes on, I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes.” One does not reduce risk by owning a wide range of investments of which they know little, but rather by knowing more.

Equity investing is all about making good investments and avoiding bad investments. Investing well is hard. The thing that limits you most is knowledge. You can never know enough. And just as in sports the way a group plays together brings collective knowledge and enables you to make much better decisions. Our Team has been working together for over a decade and that lets us be better investors.

RH: You’ve already highlighted two of your current positions, General Electric and Quebecor in your guest post. Is there another position you can share?

RF: Rogers Communications is interesting.

RH: Could you walk us through your investment thesis here?

RF: This is a large Canadian cellular, cable and content company. Interestingly it owns a number of sports franchises and related facilities which in total are worth, along with some other silent investments, about 25 percent of the market capitalization. Yet the sports franchises go unnoticed because they throw off little cash. And since the sale of the LA Clippers the value of sports franchise is becoming more noticed. While this stock is up from our initial purchase we think it is still undervalued.

RH: The internet as a disruptive force is something that many investment managers are now factoring in when they consider prospective investments. Is this something you’re thinking about and what are you doing to protect Kingwest’s portfolio from this trend?

RF: The internet is changing peoples’ lives. That is very true for the way the economy operates. It has been very disruptive in retailing where ‘Amazon’ affects every segment, even if Amazon is not competing there yet. For example we have significant investments in shopping centre REITs in both Canada and the U.S. We are only in triple A malls as we feel while the middle will be squeezed, the higher end will continue to prosper.

Another investment that is on the right side of the internet disruption is GE which is one of the leaders in the Internet of Things (IoT). The IoT will be magnitudes bigger than the consumer internet and GE is at the forefront of this phenomenon. They have moved the company away from the financial sector (which accounted for half of the business just a few years ago) and regular manufacturing towards manufacturing business that will prosper in the digital world. So there are a couple of examples of how we take the internet into account but we always buy when the companies are cheap today, not on the basis of the growth tomorrow.