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Patient Capital - December 2010 letter


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http://www.patientcapital.com/newsletters/newsletter-2010-12.pdf

 

As you might expect we are of a different mindset. We believe that now is the time to be

very cautious. The past year’s strong returns have increased valuations to levels that we

feel are extremely risky. ...

 

...Strongly rising markets are a double edged sword. We have enjoyed the recent strength in

the markets as we have taken substantial profits in many of our holdings over the past

several months and most of our remaing holdings have shown strong appreciation. On the

other hand, current circumstances make it difficult to find investments that meet our very

high standards of value and quality.

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Vito worked for Hamblin-Watsa previously.  He's a superb investor!  Read the articles enclosed with this post.  

 

People have very short memories when markets start to move up.  Today investors can do no wrong and everywhere you look there is one genius fund manager after another.  They are willing to accept lesser premiums for increased risk...Maida doesn't invest that way.  Cheers!

 

 

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Sanj...thanks for the articles.  One quality that leaps out of Maida's character is patience -- obviously the name of the firm comes from this.  I keep a copy of speaking notes (link below) by Seth Klarman in my laptop bag.  Like Maida, Klarman sets a great framework for patiently managing a portfolio for the great opportunities that come along.  It's possible to have outstanding returns with reduced risk by being patient.

 

http://1-2knockout.typepad.com/12_knockout/files/Seth_Klarman_MIT_Speech.pdf

 

-O

 

Vito worked for Hamblin-Watsa previously.  He's a superb investor!  Read the articles enclosed with this post.  

 

People have very short memories when markets start to move up.  Today investors can do no wrong and everywhere you look there is one genius fund manager after another.  They are willing to accept lesser premiums for increased risk...Maida doesn't invest that way.  Cheers!

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very interesting, these are the first and only performance figures that I have seen for the past decade that do not have one single down year while the market has crashed twice! the overal results are not spectacular but extremely steady and very safe....

 

out of interest, does anyone know why mr maida left hamblin watsa? sounds like that was the perfect place for someone with his skills and mindset....

 

regards

rijk

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Vito worked for Hamblin-Watsa previously.  He's a superb investor!  Read the articles enclosed with this post.  

 

People have very short memories when markets start to move up.  Today investors can do no wrong and everywhere you look there is one genius fund manager after another.  They are willing to accept lesser premiums for increased risk...Maida doesn't invest that way.  Cheers!

 

 

.

 

Thanks for the articles, Sanj. Maybe I'm too shortsighted, but the 10 year returns bother me. The investor would've performed about the same as the index, but with less risk. That's all well and good, but the past 10 years have really been value investor heaven. I would think a great value investor would've been able to beat the index by more than his fees during this past decade especially. With that being said, the fact that he has not had a down year during this decade is absolutely remarkable.

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Paul, I think value investors these days have too many articles and too many investment managers around.  Only 1% of managers beat the indices by 3% of more over the long-run, so there aren't that many that can beat the market period.  Maida's clients are probably investors who cannot handle significant volatility, are closer to retirement age, and would rather invest with a manager who provides a modest advantage but with minimal risk.  That's rare!

 

For example, look at Mark Sellers...nice guy, good investor, has killer numbers for a few years and then boom...puts the whole thing in Contango and closes his fund.  There are a number of value investors like this...many would have closed their funds if world governments did not stimulate aggressively and boost asset prices.  They just would not have been able to continue to manage money when they were 50% below their high watermark.  It's just fortunate for many that the market recovered so rapidly. 

 

Investors are spoiled today...most think they are geniuses after this run-up...yet I remember that very few at the bottom in February 2009 were buying aggressively or even buying at all.  Cheers! 

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