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The key to everything is patience.
You get the chicken
By hatching the egg
- not by smashing it.

Arnold Glasgow

We have always taken a patient longer term approach to investing. Our prime objective has been “consistent investment performance” and, as such, we preferred to be the plodding, disciplined tortoise rather than the frenetic hare. Just as Rome was not built in a day, we have always considered the road to investment success to be one of painstaking fundamental analysis combined with the patience of Job.

Invariably, this investment plan of action is easier said than done. This is due to the fact that we are constantly bombarded by economic, financial and political storms which may temporarily set us off course. The challenge is to be alert, flexible and persevering to recalibrate our positions toward our goal of investment excellence. Notwithstanding this track we cannot simply operate in a market vacuum; we must also be sensitive to client concerns. Unfortunately, there may be times when our investment approach may be zigging versus a hyped market which may be zagging. This occurred in 1999-2000 when high technology and Nortel were the flavour of the day. At that time we remained true to our deep-value philosophy regardless of what might have been “in style.” This, unfortunately, was not an easy task as we came under incessant criticism for a period of over 18 difficult months.

Going forward, we must be patient and cling to our investment principles despite the fact that we might temporarily be out of sync with the market benchmark. The fact is that we do not follow the crowd nor any standard index. We believe that this course is consistent with our stated objective of uncovering dirt-cheap value stocks and out of favour securities. As a result, we are often early with the security purchase and must patiently await a price catalyst. Recent successful examples of this strategy include EuroZinc Mining Corp, Hudbay Minerals, Saxon Energy Services, Goody’s Family Clothing, Cobra Electronics Corp. and Foodarama Supermarkets. In all of these cases we thoroughly analyzed the companies, affixed a 12-18 month price target and patiently purchased these out of favour securities at deeply discounted valuations. Although we recognized that price appreciation might be slow in coming we were comfortable with our analysis and were prepared to sit with these investments until our price objectives were attained.

As we look ahead at the markets over the next 12 months we are quite optimistic. We believe it will be a stock picker’s market with plenty of mergers, acquisitions, takeovers and privatizations. We have targeted our four ABC Funds’ portfolios to a fully invested position. We intend to remain true to our investment style and disciplines; this will not change. We are confident that over the long term our time-proven deep-value style will continue to provide superior investment performance. In effect, we are quite content to hatch the egg rather than smashing it.