The following is from the January 2014 issue of value investor insight and is an interview conducted with Charles de Vaulx and Charles de Lardemelle of International Value Advisers.
“They’re finding equity bargains scarce, but one indicator of mar- ket sentiment followed by Charles de Vaulx and Charles de Lardemelle of In- ternational Value Advisers is not yet flash- ing red: “When caution is out the window, our funds are not as well liked and we see redemptions,” says de Lardemelle. “We’re not seeing that yet.”
Investor loyalty at IVA, now with $19.5 billion in assets, has been well earned. Since their launches in October 2008, the firm’s International and Worldwide funds have respectively beaten their bench- mark since inception on October 1, 2008 through January 31, 2014 by 537 and 367 basis points on an annualized basis.
Casting a wide net for underappreciat- ed value, de Vaulx and de Lardemelle are finding opportunity today in such areas as R&D outsourcing, pharmaceuticals, ho- tels, casinos and satellites.”
Two key excerpts that jumped out at my upon reading the interview were the following:
“One of the most effective ways to compound wealth is to minimize drawdowns.”
“For each stock we arrive at an estimate of intrinsic value, but equally important is de- fining the worst-case value.”
It is also interesting to note the investment in Eutelsat a global owner and operator of a fleet of satellites whose capacity is leased primarily to providers of television, radio, Internet and mobile communications services.
“Eutelsat is #1 in Europe, for ex- ample, where it generates nearly 70% of its revenues and has 37% market share. In general, the competitive dynamics are positive. The last time the supply/demand balance and pricing got out of whack was in the early 2000s, but we consider that far less likely today with the global market having consolidated to three well-run and shareholder-focused competitors.”
Full PDF File
Value Investor Insight January 2014