SEPTEMBER 2020 — It would be correct to say that a number of us have had a little more “alone” time on our hands over the last 6 months and it is also correct to note that the online world provides many chances to waste said time. Which brings me to Mr. T of A-Team fame, who for completely nostalgic and personal family reasons, comes to the fore at particular times with his “I Pity the Fool” meme.
Translation, yes, we are still practicing the art of value investing, a discipline that has succeeded in demonstrating this calendar year that skepticism and prudence have not proven highly remunerative. But it’s certainly been a heckuva lot better than Q1. We have picked up absolute and relative ground slowly versus everything but a large cap growth index. But that too seems likely to change—based on history—and it could happen faster than one would expect.
So as we enter the fourth quarter, we remain EVER incredulous on many fronts as to what is happening around us, and while one is always contemplating change, rethinking positions, and attempting to make money free of marketing labels, we don’t see a lot of intellectual reasons to completely swap out an investment process and philosophical underpinnings that have “centuries” of demonstrated success. Pay a fair price for a great business, buy decent assets at distressed prices, find people who are stealing with you versus stealing from you, think longterm, don’t over diversify, don’t spend all your time doing what everyone else is doing, don’t panic at the bottom of the cycle. And now back to our regular programming.
While we will point to some versions of communal insanity or outrageous anecdotes that should be screaming caution, we will also point to the annoyance that it is our largest positions that are watching paint dry, and thus we are borderline bullish on our own relative and absolute performance, a circumstance that is not always the case. (Visit our website Thoughts tab— CoveStreetCapital.com/Thoughts and read our March 2020 piece on Viasat (Ticker: VSAT). And then re-read and ask yourself—I am passing on this to invest in Nikola?) And then pass it to your largest fund friends.