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The Company: ABC Funds
This small operation is directed by Irwin Michael, an MBA from the prestigious Wharton School of Finance who has established a reputation as one of Canadas top value managers. He is highly disciplined in his approach and doesnt stray from it, even when the financial tides are flowing strongly against him as they were in the late 1990s. During that period, which he describes as the most difficult one he has ever encountered with his fundamental value approach, his funds languished and investors became restless. But the collapse of the high-tech bubble brought value investing back into style, and all three of his funds were among the top performers in their respective categories during the bear market and have flourished since.
Michael and his colleagues spend most of their working hours poring over balance sheets and income statements, looking for hidden value within a company. They have shown themselves to be especially adept at identifying companies ripe for takeover bids. For example, his funds have large positions in ShopKo Stores, a U.S. firm that has recently been a takeover target. None of the funds in the group has ever used options, futures, or other derivatives.
The company maintains its own website at www.abcfunds.com, as well as a one called The Value Investigator (www.value investigator.com). There youll find detailed analyses of many of the stocks in the ABC portfolios. Its useful reading.
Irwin Michael is also a regular contributor to Building Wealth's Internet Wealth Builder newsletter (www.buildingwealth.ca/Newsletter/index.cfm). In one of his columns for the IWB, he described his investing philosophy this way:
Value investing is literally a treasure hunt for value. Regardless of the economic, investment, and political environment, we must be unshaken in our conviction. We must abide by our fundamental value disciplines to sniff out undiscovered opportunities. In practice, we remain focused on value and continue to abide by our ABC Funds Ten Commandments of Value Investing. Our task of corporate information gathering includes fundamental company analysis and accounting pertaining to liquidity ratios, book value, cash flow and earnings per share. In addition, we look for valuable hidden assets such as tax-loss carry-forwards, overlooked real estate, and non-essential assets which may be sold or value-added. We must possess deep patience and have considerable stamina to withstand share price volatility. We must be prepared to be temporarily wrong in the short-run and to withstand the heat. To achieve long-term success, we believe strict investment disciplines should be followed.
(July 19/05)
The Details
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