Monthly Commentaries

Monthly Commentaries / April 30, 2019

Unpredictable Risk

In an interview last week, the great Charlie Munger said “more damage to the world comes from the cognitive glitches than does from malevolence.” Arthur Conan Doyle’s Sherlock Holmes noted “If you eliminate the impossible, whatever remains, however improbable, must be the truth.” And of course, Ockham’s Razor suggests that, all other things being equal, […]

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Monthly Commentaries / February 28, 2019

The Small Cap Bias

Accepting that investing is really hard, true investing – which we define as the allocation of capital to either entrepreneurs or company management requiring funds to exploit an opportunity to generate profits – in Canada is a monumental task. “No matter how great the talent or effort, some things just take time: You can’t produce […]

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Monthly Commentaries / January 31, 2019

The Decline of the Canadian Empire

“In the business world, the rearview mirror is always clearer than the windshield.” Warren Buffett With the recent acquisitions of Goldcorp by Newmont Mining and Solium Capital by Morgan Stanley, two more Canadian businesses have disappeared. Goldcorp joins a long list of Canadian miners to be scooped up by foreign acquirers over the past 15 […]

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Monthly Commentaries / November 30, 2018

Snakes & Ladders

“Let others believe markets can never be beat. Abstention on the part of those who won’t venture in creates opportunities for those who will.” Howard Marks from The Most Important Thing Snakes and Ladders is a classic children’s game, played between two or more players on a gameboard having numbered, gridded squares. A number of […]

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Monthly Commentaries / October 31, 2018


We tend to believe October was a revaluation exercise; simply put, as interest rates rise so do discount rates reducing the valuation of future cash flows. While the downturn has been sharp, liquidity tightening remains benign and market/economic fundamentals remain strong. However, as we write this note, the markets are showing an upswing. Whether it […]

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Monthly Commentaries / August 31, 2018

Late Cycle Bull Markets

While the equity investing landscape has admittedly turned more volatile in the past six months, we continue to believe most investors are so entrenched in “climbing a wall of worry” that they are missing a much more compelling story, as alluded to by Mr. Buckland. All this to say, for boutique equity investors like Laurus, […]

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Monthly Commentaries / July 31, 2018

The Head and the Heart

We have contended for some time that clients are best served owning small cap investments equally proportionate to traditional large cap investments. Investors, on the other hand, tend to perceive small cap investing as a volatile group, based on the actions of both a poorly constructed index and a group of poorly designed products. This […]

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Monthly Commentaries / May 31, 2018

Refining Knowledge

What investment style will be best suited to markets where returns are limited? This month we suggest that business culture and it’s ability to strengthen intellectual resources plays just as important a role in the sustainability of a client’s risk-adjusted return. “The strongest assumption behind the law [of active management] is that the manager will […]

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Monthly Commentaries / April 30, 2018


This months comment is a continuation of our series on future equity returns. There have been a number of articles published recently suggesting active management cannot outperform passive index returns as the “skew” – a handful of stocks which drive rising markets (think Amazon recently) – will always bias performance to the market. We contend […]

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Monthly Commentaries / February 28, 2018

Rethinking Asset Allocation

This month our comment looks toward the next couple of decades, contending that current market returns combined with a reversal to positive correlation may result in investment returns that don’t meet an investor’s future liability needs. At the very least, the fascination with index benchmarks will need re-thinking. “For new models of progress to arise, […]

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Monthly Commentaries / January 31, 2018

Measuring Quality

Made famous by Benjamin Graham back in the 1930s (who postulated that one’s loss would be greater buying a low quality business at a price that seems good value, than a high quality company at an excessively high price) and expounded upon by management consultants like Tom Peters (“In Search of Excellence”) and Michael Porter […]

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Monthly Commentaries / November 30, 2017

Why Capital Allocation Matters

As we noted in our last commentary, the intrinsic value of any investment rests on the free cash flow the business can generate over its remaining life, discounted back to present value at an appropriate rate. Obviously, one cannot actually know the precise timing and magnitude of cash flows even for the next few years let […]

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