Doublecheck the Postscript
July 6, 2018

Doublecheck the Postscript

Technology and evolving with the times

On June 28, 2018, the Pender Value Fund turned five. In this second of three part series, David Barr and Felix Narhi, co-managers of the Fund, discuss fundamental questions relating to what value investing means, and how this concept has evolved over time. Technology has played a key role in improving and driving change in investing, while also impacting more and more industries in subtle but significant ways and necessitating change over time. David and Felix reflect on the growth of the Pender investment team from two to eight and how expanding the circle of competence  has contributed to the Fund’s ability to enter new parts of the market. Felix also shares a secret from Benjamin Graham hiding in the postscript to The Intelligent Investor. Tune in to find out more.

Key Takeaways

2:18The flat earth society of value investing. The word "value" carries with it so much meaning. How has value investing evolved from the traditional, flat earth society outlook to how Pender incorporates value as part of its process today?
6:09David shares some differences in value investing of the past and present, and how technology has influenced these shifts.
7:31Felix highlights how Warren Buffett has shifted his approach over the decades to maintain his incredible track record in investing.
8:50Warren Buffett says there are two important chapters in the book, The Intelligent Investor. Felix reveals the third nugget that emphasizes the evolution of value investing. Did Ben Graham really violate his own "hard rules"? Hint: Double check the postscript.
11:12Domino's, the technology company: Technology is no longer a stand-alone sector, but is touching almost all industries. Many companies are successful because they embrace technology ahead of peers. They are basically technology companies, but don't show up as such in their industries. How has Pender's thinking on this evolved over the last five years?
16:24What doesn't go into the portfolio is just as important as what goes into the portfolio. What did Felix see in the utilities sector that he identified as disruption and risk, rather than opportunity?
19:40Leveraging the compressed spring. How Pender has built out the investment team to expand its circle of competence and how everyone's great ideas contribute to the Fund.
24:45Fundamentals were improving, but stock prices were going nowhere. David and Felix discuss why it's important to stay patient when everyone else is getting impatient.

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