Don Yacktman is plain vanilla value investing with a healthy side order of patience. His slow and steady approach has served them well performance-wise coming in #1 in the 5, 10, and 15 year time spans in the Large Blend category according to Morningstar. Here Yacktman talks with Steve Forbes about how he views the current investment environment and touches on a couple of the funds holdings. Yacktman's demeanor exudes patience and calm.
i agree with your tweet. not sure what's happening with mnggf or sttyf. sttyf is down 42% ytd. ryan o'connor's thesis made sense to me, but i am starting to wonder if there are fatal flaws i am not thinking about. would love to hear if you find anything behind these drops.
ReplyDeleteIn regards to mnngf, I would again say that I think it is getting tossed in with China/commodities/metals deceleration. Bc China's growth rate is slowing (it has to at some point / law of large numbers), it is extrapolated that any co's relying on commodities for cash flow will invariably have lower profits. I think that is what is unique about MNNGF is that it was intentionally structured NOT to be strictly levered to commodity price and consumption.
DeleteHarris Kupperman is engaging "picks & shovels" businesses in Mongolia that will benefit from general economic growth, not just copper prices or metals exports. In the gold rush of the 1840's in the Western US it was the Levi Strauss's and the providers of picks and shovels that continuously profited whether a miner struck gold or not. MNNGF is largely a real estate and insurance play. Those are two essential businesses that HAVE to grow as an economy grows, regardless of whether that economic growth is commodity related or not.
In general, yes, permanently impaired commodity prices would negatively affect Mongolia and MNNGF, but I do not believe MNNGF would or should be punished in the same proportion as a Mongolian mining operation. And commodity prices are prone to dramatic swings in price.
Also, always look at management's incentives. A quick check will tell you alot about the CEO of the company. The CEO and CFO take zero salary. They have invested their own money to purchase stock in the company, and that stock is their sole compensation. It's hard to get much more aligned with management than that.
I would also say that small caps are notoriously more volatile. If those type of fluctuations are not for you, then there is no shame in getting out and into something that better suits your risk tolerance. In times of extreme distress and discouragement is when a lot of bad investing decisions are made. Always understand what you'reinvested in and how that company makes its money.
I think in the long run MNNGF will do just fine, but due to its small nature and limited exposure in the investment world, it could languish for a while until more investors start to realize that the baby has been thrown out with the bath water.
***this is not intended to be investment advice in any way, shape, form or context. I do own shares of MNNGF. Always do your own research***
one interesting thing is that current shareholder base entered at prices far below current prices. if government falters with oyu tolgoi, etc., i wonder if they might lock in some profits while the stock trading above book. if this were to happen, you could get large drops as a small group of shareholders owns a relatively amount of this company. ryan seems to think shareholder base is pretty entrenched. we'll have to see.
ReplyDeletea positive seems to be that the china slowdown, commodities price pressure might be causing the government to be a little more foreign investment friendly as of the last week or so.
as for exposure, it looks like harris will be speaking at the next value investing congress i believe. hopefully that will help increase awareness.
Having to depend on a government not to screw something up is scary. But considering the impact these mines would have on the entire country, it's i everyone's best interest to get it right. I didn't know Harris was speaking at a VI congress. The awareness should help.
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