COMMENTARIES ARCHIVE

The Price of Certainty

July 19, 2019

If lower interest rates drive asset prices higher, why does the Japanese stock market trade at only 13x earnings despite the Japanese 10-year bond currently yielding -0.11%?

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Ground Control to Major Tom

May 24, 2019

US unemployment is the lowest it’s been in five decades, consumer credit is at its strongest levels since the early 2000’s and the S&P 500 has recently been flirting with all-time highs. Yet, economy sensitive stocks like autos, homebuilders and banks remain significantly below their 2018 peaks.

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The Past Isn’t What It Used to Be

March 22, 2019

At a recent client meeting, a question was posed: “Does book value remain a useful metric for evaluating QV Global Equity Strategy holding Berkshire Hathaway?” It’s a good question that reveals a broader theme.

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Some of These Things are Not Like the Others

November 02, 2018

After a multi-year rise in global equities, “where to from here?” is a natural question which investors may be asking in the wake of October’s abrupt market correction.

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Fundamental Defense

July 20, 2018

High corporate debt levels, a flattening yield curve, and a lengthening economic expansion are just a few of the concerns worrying investors of late.

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What Matters

March 16, 2018

Twitter feeds, blogs, Reddit, email pop ups, CNBC, Jim Cramer. In a world awash with information, it can be difficult to discern the relevant from the irrelevant.

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Around the World in 573 Words

November 24, 2017

Ear to the Ground With businesses in the global equity strategy having reported third quarter (Q3) results, we’d like to share a few corporate updates which offer insight into the economy’s health.

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Value Creation in Consumer Staples

July 21, 2017

‘Accelerated shareholder value creation’ has been a common bombast associated with global consumer staples companies in 2017.

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Disruptors and the Investors Who Love Them

April 21, 2017

Displacement and disruption have become prominent themes for investors in the last few years - and not without cause. By market capitalization, many of the companies driving large scale disruption in traditional business models are now among the largest constituents in the S&P 500.

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The Price You Pay

December 16, 2016

In 2012, good quality healthcare stocks were cheap. The S&P 500 healthcare index traded at an average price-to-earnings ratio (P/E) of only 12.7x and the QV Global Equity Strategy was able to add wonderful businesses like McKesson Corp., Varian Medical Systems and Aetna Inc. to our existing holdings in the sector at very attractive valuations.

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Back to School Blues

September 16, 2016

Stocks go toward stimulus as schoolboys from their books, But stocks from stimulus, toward school with heavy looks

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To Have and Have Not

April 22, 2016

Joe and I recently attended the annual Raymond James investor conference in Orlando, Florida. With over 300 companies presenting, the conference is a great opportunity to gauge the operating climate of multiple industries.

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What Comes Around

March 18, 2016

Last January, history found itself at odds with bullish market forecasters. As 2015 began, consensus was predicting that the S&P 500 would rise for the seventh consecutive year - a feat that had never occurred going back to 1871.

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Obscurity in the Average

November 20, 2015

Interpreting averages and aggregates can be a lot like peering at the ocean from an airplane. Both offer a glimpse of something large from a little window, but neither allow much comprehension of the swells or troughs which make up the entirety.

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European Ruminations

July 10, 2015

In June I had the opportunity to meet with European management teams and attend corporate presentations at investor conferences in Paris and Berlin. Below are a few observations from the trip:

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What a RIOT!!!

June 12, 2015

How much would you pay for the letters RIOT stenciled in black blocks letters on an aluminum panel? If you were the one who recently purchased this piece of art from a Sotheby’s auction, your answer would be $29.9 million. Strangely, this amount isn’t entirely surprising given that the same artist sold a blank canvas stenciled with the letters FOOL for $7.8 million in 2012.

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Standing Room Only

March 20, 2015

In early March I attended the 36th annual Raymond James investor conference in Orlando, Florida. It is an event which QV has attended for many years because it showcases over 350 companies throughout multiple industries over three short days.

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If Something Cannot Go on Forever, It Will Stop

January 16, 2015

In the context of the current bloodletting in commodity prices, the dry wit of the tautology above is eclipsed only by its veracity. Named after its economist Herbert Stein, Stein's Law holds true with other asset prices as well.

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Roman Poets and Investment Legends Agree

October 31, 2014

Taken from a 2000 year old treatise on the art of writing poetry, this sage maxim adorns the opening passages of Security Analysis by Benjamin Graham

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Great and Getting Better

August 15, 2014

Great businesses can be classified as having enduring franchises whose stable earnings grow shareholder value consistently over time.  However, achieving such status is rare, as it requires durable competitive advantages which are generally ha...

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Value in Corporate Romance?

May 30, 2014

Thus far in the second quarter, the global value of merger and acquisition (M&A) activity has reached its highest level since 2007. While this is good for matchmaking bankers, studies show that M&A, especially for large transformative deals, can often corrode rather than create shareholder value.  Investors however, have generally reacted to recent M&A with fanfare in the assumption that value creation will be delivered even as acquirers make purchases at all-time high prices. Unfortunately such activity is often a hallmark of late cycle behaviour, and one which we can’t help but view with skepticism.

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Digging a Hole

February 21, 2014

Last weekend I had the good fortune to go on my first cat-skiing trip at K3 Mountain in BC. For those who have never been, it is absolutely bucket list material (75cm of fresh powder helps too). Although our guides ensured we were never exposed to even the remote possibility of danger, the trip began with an avalanche safety lesson followed by a test where our group used avalanche transceivers to locate and extract two dummies buried in the snow.

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Driving in the Fast Lane with the Rear View Mirror

January 10, 2014

The economy has been improving. US manufacturing data has shown robust expansion since the summer. Nondefense factory orders have reached all-time highs. So has the For-Hire Truck Tonnage Index. The yield curve remains steep. Unfortunately these data points offer little insight into future stock returns. The stock market is a discounting mechanism – it leads the economy. As such, 2013’s returns likely represented the market factoring in better growth and lower uncertainty.

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IPO - It's Probably Overpriced or Inapparent Pocket of Opportunity?

December 13, 2013

As a general rule we tend to view Initial Public Offerings (IPOs) with a good deal of caution at QV.  Our wariness is derived by a good body of empirical evidence which shows that in general, long term returns associated with investing in IPOs are subpar.

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The Virtue of Not Doing

June 21, 2013

For many of us, a state of temporary inaction is often a foreign notion, or at least at odds with modern culture’s hi tech assisted obsession with constantly doing and the instantaneous gratification it affords.  In a recent report by Kleiner Perkins Caufield & Byers, a top venture capital firm in Silicon Valley, the company estimated that every day the average smart phone user checks their phone 150x (we wonder who these people are and how they get anything done?).  Although this statistic would help us understand the source of an epidemic in carpal tunnel syndrome, the idea that a tool intended to enable us has become a perpetual preoccupation of our time reveals something striking about our incessant urge to constantly do.

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