Tim McElvaine is the founder and President of McElvaine Investment Management Ltd. Tim established The McElvaine Investment Trust in 1996 and acquired The McElvaine Limited Partnership (previously Cundill Capital Limited Partnership) in the summer of 2000. Tim developed his value-oriented philosophy during his 12-year career with Peter Cundill & Associates Ltd. where, amongst other capacities, he served as Manager of the Cundill Security Fund (1992-99), Co-Manager of the Cundill Value Fund (1998-2003) and Chief Investment Officer (1998-2003).
He recently spoke to students at the Ben Graham Center for Value Investing. I heard the lecture and found it compelling and a must see for any student of value investing. The Q/A is really awesome. Some of the topics covered are
His thoughts on Gold as an investment
Portfolio concentration: he does 4,6,8% positions. Build them slowly. Value stocks dont go up that fast. Takes his time to build his positions.
Talks about 2 investments and compares them
Opinion on oil – None. You don’t need an opinion on everything.
How to get a job: What to do v/s what not to do to get noticed. Send a current investment idea.
Toughest part is knowing when to sell
– specially slow drip where the value goes down slowly.
– fall is easier to sell out of.
3 year horizon
Investing in Ireland.
Having your own account while managing others money is not a good idea as pe him.
How he was able to raise capital for his funds.
– slow, tests your passion
– suddenly people start sending money
– its not only good performance
– took him forever to get to 10 million. then went to 100 million relatively quickly.
Does he hedge currency risk? he does. to reduce volatility but Browne’s study showed not much difference over multi-year performance
3 – 4 reasons to buy is plenty: He does not want 20 reasons
Simplify your thought process. value guy focus is margin of safety. focus on big stuff. not minute details. too much information makes u over confident.
How does he avoid value traps?
– value trap is not where stock is flat. its where NAV is going down. He looks at that.
Which valuation method does he like the most?
– liquidation value can be tough to judge
– private market value is his favorite. likes asset protection to go with it
How value investing has changed?
– lot of competition.
– likes going in messy situation when all hell breaks loose.
– take price risk in short term. mos.
Him being away from Toronto?
– away from noise
– turns off PC at times. 100s of mails a day. figure out how to unplug.
How does he control his emotions?
– It ain’t a game. stock does not know you own it. If you are a multi year investor, you don’t need to be glued to the prices
– Do for a walk. Don’t trade.
– Write down why you buy a stock.
Thoughts on activist investing
– its difficult. He does not like it.
Does he invest in technology stocks?
– He does but its tougher for him. Would he invest in facebook? good luck with that.
– He did buy apple. Sold apple (AAPL).
What is potential of value investing in singapore / india? educating people there or even starting a business there.
– Find people who trust you and understand you.
– Talking to momentum investor about value…u may never be able to explain to them ur style.
What is most important thing you learned in investing and life in 25 years?
– Relationships matter.