Value Investing

Data is Backward-Looking; Value Investing is Forward-Looking

“We purchase securities selling significantly under intrinsic value that have a high probability of increasing in price for reasons related to developments in the company’s affairs, not to the movement of share prices in general.” ~ Benjamin Graham, Statement to the Committee on Banking and Currency United States Senate, March 1955

Proven, Repeatable Process

We believe the best returns are achieved through an investment approach applied sensibly, methodically - and consistently. In other words, a proven, repeatable process.

At Kingwest, our strategy is value investing, a concept that provides the dual attributes of being both inherently safe, and providing an opportunity for capital growth. That foundation is a springboard for what sets us apart: the ability to go deeper than most.

Traditional value investors only search for opportunities statistically. They look at line items, such as low multiples to earnings, sales, cash flow or book value, sometimes combined with rising earnings estimates. Then, they review these businesses to see which have the pre-determined attributes necessary to qualify as a “good business.” Those that pass the test, they buy. This is a static approach.

The Kingwest Approach is Dynamic:  We search for securities that may be mispriced due to a change that is taking place. Then, we do the due diligence necessary to confirm that it is cheap (or overvalued). Finally, we look for something that will cause the market to change its expectations about this security.

At Kingwest, we’re long-term investors in businesses. We invest when the share price is at least 40% less than our assessment of intrinsic value. We prefer businesses where value is increasing. We sell when the share price approaches our target return, and continue to reinvest in other opportunities where the discount to intrinsic value exceeds 40%.

The Kingwest Difference: Many value managers talk about free cash flow. We take it to the next level, given the dynamic nature of commerce. The reinvestment of cash incorporates return, risk and timing. It is how companies can create value, in the long run.

We Go Deeper

We act like a business owner, determining when to take risk and when to preserve capital. Above-average gains in good times are not proof of a manager's skill - it takes superior performance in bad times to prove that increases were earned through acumen, rather than by taking additional risk.

We look to what a business could be capable of in a “normal” environment, focusing on these critical steps:

  1. Successful investing is about taking a position contra to conventional wisdom. We understand the conventional wisdom, know our own viewpoint - and the evidence we require to be certain that our point of view on any given investment is right.
  2. Market inefficiency is key. We believe less efficient markets exist in which dispassionate application of skill and effort should pay off for our clients.  It is in such markets that we will invest.
  3. Consistently excellent performance can only be achieved through superior knowledge of companies and their securities.  Our investment process is entirely bottom-up, based upon proprietary, company-specific research.  Due diligence starts with what you know - the resources and people in place, the environment, the nature of the change occurring and the likely consequences of those developments.

Our track record over the long term demonstrates the validity of our investment approach.

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Member of the Canadian Investor Protection Fund, TSX and IIROC.
Kingwest & Company is registered with the Securities Commissions in the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario and Quebec in the categories of investment dealer and investment fund manager.