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Tim McElvaine Chapter


Parsad
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Both my friends, Tim McElvaine and Francis Chou, are simply the two greatest guys in the value investing world.  Humble doesn't begin to describe these two.  I don't know who the four managers are that were selected to manage Berkshire's portfolio in Buffett's demise, but both of these guys would have been ideal candidates in my mind.  One was the genius boy wonder at Cundill, and the other was the genius boy wonder at Hamblin-Watsa.  Neither would ever say something like that, but I certainly can. 

 

Bob Thompson, in his book Stock Market Superstars, covers some of the best managers in Canada.  For some reason, I didn't notice this on Tim's site at www.mcelvaine.com, but he has an excerpt from his chapter available on there.  Thanks David Lau for pointing it out.  I had read it already, but didn't know it was available to the public.  Anyway, here it is and I think you'll enjoy it.  Cheers!

 

http://www.mcelvaine.com/Pdfs/2008%20-%20Tim%20McElvaine%20booklet%20(Thompson).pdf

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Both my friends, Tim McElvaine and Francis Chou, are simply the two greatest guys in the value investing world.

 

Sanjeev, I don't know these two gentlement personally and I am sure they are very fine individuals.  This being said, their track record, while very good, is very far from the best even in Canada (look at the record of Sprott and Lamarche for instance) and of course very very far from the best in the world.

And there got to be great guys outside Canada too that you probably don't know...

 

This being said, the book is great.  I had mentionned it earlier on this site some months ago.

 

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The track record doesn't necessarily tell the whole picture (although I am a fan of Sprott). Look at Seth Klarman, who underperformed the U.S. indices throughout the 90's, but who achieved his returns through much more sensible vehicles. Using nominal returns to compare managers is especially misleading with low-turnover or high concentration investors. Excellent results over a few years can make someone look like a genius, and great investments made early in a career can bolster results over a long period despite a lack of "true talent" in the manager. Imagine buying a swath of Berkshire Hathaway in 1975. You could have gotten away with mediocre performance in your non-BRK portolio for a long period.

 

My personal view is that the numbers only provide limited information. I need to hear from my money managers and get a sense of their decision engines. I would feel more comfortable with Francis Chou's above average results from prudent man investing than with George Soros' incredible results achieved through means that I don't understand using leverage that I wouldn't use myself.

 

Sorry for the double-shot coffee rant.

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You are right to mention that the track record in itself does not tell the whole story as different levels of leverage, concentration, even asset classes can be used.

This being said, the two that Sanjeev mentions while they handily beat the market long term are very definitely quite a few points below the best in class...

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Buffett mentioned a little while ago, that the type of investment manager they like as a CIO would be someone like Peter Cundill.  That's the only individual he's ever mentioned by name in the last couple of years, that would represent a realistic choice for them.  Tim was Peter's star pupil, and ran Cundill with Peter for several years.  He got the position by offering to work for Cundill for free.  Tim would probably still be there if Cundill was never sold to MacKenzie.

 

Now, I'm sure there are many people here who realistically could see someone like Prem Watsa in the CIO position.  Not necessarily Prem, but someone very much like him.  One of the highest regarded individuals by all the principals at Hamblin-Watsa has always been Francis Chou.  Prem has nothing but the highest praise for Francis as an investment manager.  Sam Mitchell, who has an incredible track record himself, is keenly aware of Francis' investment skills and acumen.

 

So, I'm not going to argue about whether these two fall into the category of "the best" or "most stellar track records", since the two best investment managers (Buffett, Watsa) I use as mentors, have already touted the likes of Tim and Francis. 

 

There are some people who manage money with impeccable numbers that are higher than Tim or Francis' records.  Where they are by far in the highest echelon of managers is when it comes to their ethics...something that a higher performance number will never indicate.  I think for a CIO for Berkshire, this characteristic outweights the absolute performance numbers.  Cheers!   

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Peter Cundill is also a global investor...and this was right around the time Buffett was investing a great deal abroad. Peter cundills longterm record is among the best in the world. If he was leveraged in an insurance company like Prem and Buffett his returns would be spectacular.

 

Dazel.

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Attached is Peter Cundill's track record when he was managing the Cundill Value fund. The MSCI World local currency benchmark is used as the fund had a policy to hedge its FX exposure. IMO, Tim and Francis would both be wonderful CIOs of a large asset pool.

 

 

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