Peter Cundill’s Profile
The Canadian born investor, Peter Cundill, plunged into the world of financial markets while he was still at McGill University, which he graduated from in 1960 with a degree in Commerce. Cundill recalls his first investment of worth $500 in a speculative mining stocks, he lost money in only 48 hours, which proved to be an exceptional learning experience. Cundill earned the designation of Chartered Accountant and then Chartered Financial Analyst before moving from Montreal to Vancouver to become the President of AGF Investment management; he worked at the company for four years from 1972 till 1975.
During that time he was also a partner in the company called the Vanan Financial Management Ltd. which in 1975 took over the All-Canadian Venture Fund. In 1977, Cundill established his very own Vancouver-based firm named Peter Cundill & Associates Ltd. and renamed the All-Canadian Venture Fund to Cundill Value, when the fund became the flagship of his newly established firm. Peter Cundill & Associates, now named Mackenzie Cundill Value Series A after a strategic partnership of PCA with Mackenzie Financial Corporation, best epitomizes the bottom-up value investment outlook of Peter Cundill.
Peter Cundill was awarded the Analysts’ Choice Career Achievement Award for the best mutual fund manager of all time in 2001. At the award ceremony which recognized his 35 plus years of contribution and expertise as a fund manager and value investor, he was referred to as the ‘Indiana Jones of the Canadian Money Managers’, a title which was acknowledged by Cundill with great pleasure. Cundill’s expertise even gained recognition from Warren Buffet, who claimed Peter Cundill had the traits of a good successor and possessed the kind of credentials required that would be suitable for Berkshire Hathaway’s next chief investment officer.
Observing the multi-dimensional personality of Peter Cundill, it is evident that he enjoyed life to the fullest. By no means did he limit himself from challenges or new experiences. He had an innate child-like curiosity and explored various aspects of his interests. His love for travelling turned him to one of the best global investors, and his rapacious reading habit lead him to the writings of the great Benjamin Graham. Cundill also enjoyed and challenged himself withvarious sports such as handball, rugby, skiing and hiking; being a dedicated marathon runner, at the age of over 40 he was capable of completing 22 marathon races including ‘Sub 3 hour’ (running the marathon under three hours).
His contribution was not limited to the financial world, but to the world of academia and literacy. Being a philanthropist, in 2008, he founded the Cundill Prize at McGill University to recognize the non-fiction publication for authors who have a great impact on literary, social and academic fields.
Despite of his recent death on 23rd January 2011 due to a rare neurological disease, the legacy and investment philosophy of Peter Cundill is kept alive by the firm he founded in 1975 and the numerous contributions made by him in the world of finance and academia.
Peter Cundill’s Investment Philosophy
The book written by Christopher Risso-Gill (a close colleague of Peter. Peter was going to write an autobigraphy but asked Christopher due to Peter’s health issues) There’s Always Something to Do: The Peter Cundill Investment Approach’ captures and compiles the investment style of Peter Cundill. The investment approach adopted by Peter Cundill was inspired by the writing of Benjamin Graham. He wasa deep value investors and liked companies which were ignored or rejected by the general public. His success lies in the fact that he remained true and consistent with his value investment approach.
His fund returned 15.2% annually for 33 years, from 1975-2011. The investment team under Peter Cundill focused on investing in stocks which were trading at a price lower than the value of their net assets. Additionally, the firm aimed not only to look for these undervalued stocks but also research to determine potential of catalysts which would eventually unlock value for stakeholders. Good understanding of the business and the management of the company, and the company’s ability to generate earnings and have steady cash flow were given priority when deciding on the companies to invest in. He liked companies trading below book value, paying dividends, and trading near their historic lows. Peter judiciously checked out the debt for off balance sheet financing to assess the company’s true debt load.
Patience was the virtue highly praised and practiced by Peter Cundill. According to Cundill, patience was the most important trait for the success in the field of value investment. His achievement as a deep bottom-up value investor can be attributed to his ability of distinguishing between being stubborn and being patient. Peter stated that having faith in the future of the invested company based on positive results of extensive research on the certain company is patience, but holding on to the company despite of unfavorable analysis outcomes is being stubborn.
Furthermore, being a confident opportunistic global investor, at one point in time, Peter Cundill’s portfolio consisted 50% of Japanese stocks. He did not limit himself to any area. Before, Japan he invested in various Swedish companies including Volvo in the 1960s. He also invested in German blue-chips, and African oil companies.
According to Cundill, one of his biggest mistakes was over-investing in stocks during the early 1990s, a time when his portfolio consisted of around 200 company stocks, which resulted in a 9.5% loss.
Another factor which gained the attention and interest of Peter Cundill was corporate debt. He realized great earning potential in companies suffering from outstanding debt but possessing strong balance sheet.
Peter also looked at distressed sovereign debt. In early 1995 the market for Brady Bonds (U.S. dollar loans to financially-distressed countries) collapsed when the Mexican peso was devalued. Panama bank debt was trading for $0.35 on the dollar. Peter calculated that the assets of Panama were worth more than enough to cover the debt load.
Peter bought millions of dollars of Panama’s debt. Only one year later, Peter sold the bonds for close to par and a return of over 150%. He later invested in the distressed debt of Argentina and Ecuador in the 90s.
Although, Peter was a value investor, and was not macro oriented he had some spectacular macro-calls. One example: In 1969, Peter stated “If these mainland Asian countries, and especially China, were to ever get their act together economically like Japan they could rival the whole North America and the rest of the developed world without even blinking”. This quote came while Taiwan had the “Chinese” seat on the UN Security Council! China is now the second largest economy in the world. Peter also predicted the bursting of the Japanese bubble in 1987, two years later the economy went into a recession that has basically lasted until today.
Peter Cundill’s Book
There’s Always Something to Do: The Peter Cundill Investment Approach’ by Christopher Russi-Gill, chronologically elaborates on the investment style of Peter Cundill. The underlying theme of the book is value investment approach of his, which was inspired by Benjamin Graham and his writing Security Analysis. The book was to be written by Peter Cundill himself, but as his health deteriorated, he had no choice but to ask the author, Russi Gill, his friend of over three decades, to write on his behalf. The book provides reader with a compelling outlook on the financial world and illustrates the analytical methods adopted by Cundill to outperform the financial market. The title of the book is inspired by the quote of Irving Kahn, another one of Cundill’s close companion, “There’s always something to do. You just have to look harder, be creative and a little flexible,” which perfectly epitomizes the investment philosophy of Peter Cundill.
Peter Cundill’s Quotes
“The most important attribute for success in value investing is patience, patience, and more patience. The majority of investors do not possess this characteristic.”
“There will be losing years; but if the art of making money is not to lose it, then there should not be substantial losses.”
“To put money into anything, anywhere, provided that the downside is measurable and acceptable and the chances of a good profit appear to be better than 50%. I will not take gambles, but it is part of my job description to be ready to take very carefully calculated risks.”
“I think that intelligent forecasting (company revenues, earnings, etc.) should not seek to predict what will in fact happen in the future. Its purpose ought to be to illuminate the road, to point out obstacles and potential pitfalls and so assist management to tailor events and to bend them in a desired direction. Forecasting should be used as a device to put both problems and opportunities into perspective. It is a management tool, but it can never be a substitute for strategy, nor should it ever be used as the primary basis for portfolio investment decisions.”
Peter Cundill’s Interviews and articles
Peter Cundill’s obituary.
Stockholder Meeting Briefs (Limited View)
Cundill lectured at the Richard Ivey School in 2005. Watch the video here.