Why will someone sell you a dollar for 50 cents? Because in the short run, people are irrational on both the optimistic and pessimistic side. Peter Cundill More Quotes by Peter Cundill More Quotes From Peter Cundill They really can’t afford to be contrarians. A major investment house can’t afford to do research for five customers who won’t generate a lot of commissions. Peter Cundill investment research house I suspect that my thinking is an eclectic mix, not pure net-net because I couldn’t do it anyway so you have to have a new something to hang your hat on. But the framework stays the same. Peter Cundill framework hats thinking Try to pick a fund manager who has a well-defined strategy, has been through these things before, and go invest and stay with him. Peter Cundill strategy wells trying I bought stuff at 3.5 cents once and I thought it can’t go down to zero. It can. Peter Cundill cents zero stuff The price must be less than one half of the former high and preferably at or near its all time low. Peter Cundill all-time-low half lows One of the dangers about net-net investing is that if you buy a net-net that begins to lose money your net-net goes down and your capacity to be able to make a profit becomes less secure. So the trick is not necessarily to predict what the earnings are going to be but to have a clear conviction that the company isn't going bust and that your margin of safety will remain intact over time. Peter Cundill investing down-and safety We always look at the margin of safety in the balance sheet and then worry about the business. Peter Cundill safety balance worry We do liquidation analysis and liquidation analysis only. Peter Cundill analysis In every analysis you need to isolate what the real assets are and you must not forget to examine the franchise to do business, to review the character and competence of the management and to estimate the outcome if the whole business had to be turned into cash. Peter Cundill real character needs Long term debt and bank debt (including off-balance sheet financing must be judiciously employed. There must be room to expand the debt position if required. Peter Cundill debt balance long The company must be profitable. Preferably it will have increased its earnings for the past five years and there will have been no deficits over that period. Peter Cundill earning past years Curiosity is the engine of civilisation Peter Cundill engines civilisation curiosity There is almost always a major blip for whatever reason and we have learnt to expect it and not to panic. Peter Cundill panic majors reason
