Friday Morning Coffee 151: Shipping away

210521 Friday Morning Coffee

Friday Morning Coffee 151: Shipping away

Luxembourg School of Business is organizing on a yearly basis a course on value investing where I had an opportunity to teach again with professor Jos van Bommel and Thomas Kaspereit. Aim of my part of the presentation is to show to students, who are partly in an exec program, how we apply the concepts of value investing in our investment processes and portfolio management.

One question I received was on portfolio turnover in the Fund. Over the last 20 years I apply our investment approach, it took on average 4 to 5 years for Mr Market to recognise the fair value of an investment and the margin of safety to close. This resulted in a portfolio turnover of roughly 20% with 40 holdings in the Fund. Idea is to invest at a 40% discount to the estimated fair value of an investment and hold on to the position till the stock price reaches fair value. As the underlying business continue to generate cash and dividends during the holding period, we are being “paid” for waiting for the underlying fair value to be recognized in the share price.

(see attached pdf)