For the second quarter ended June thirtieth, 2022, KVF misplaced $1.80 per share, lowering the worth of every share to $40.85. This pre-tax 5% quarterly loss bested the 16%, 14% and 17% losses of the S&P 500, S&P/TSX and Russell 2000 indices, respectively. KVF’s outcomes had been aided by forex good points which elevated returns by $0.04 per share within the quarter.
KVF’s relative outperformance was largely resulting from the truth that it was the “growth-y” names which have taken the largest hits on this market decline. To date, anyway.
Additionally serving to returns this quarter was KVF’s publicity to the shares of tanker firms. These power transporters have tremendously unstable shares as a result of excessive fixed-cost nature of the enterprise, which results in large swings in good points and losses in any given interval. Just a few quarters in the past, these traded at huge reductions to the values of their property (i.e. ships). However since Russia’s invasion of Ukraine and the next redistribution of power flows that adopted, these ships have been again in demand. Shares of INSW and STNG have proven large good points just lately and are now not in KVF’s portfolio.
With the overall market decline has come a terrific alternative to purchase some shares at nice costs. In consequence, KVF’s money place is within the very low single-digits, which is an enormous change from current quarters.
More often than not through the 13-year historical past of KVF, it has had a big money place. So it’s at all times considerably disconcerting when it doesn’t, since there isn’t any dry powder accessible in case of a (additional) market decline. Then again, there are occasions when the worth accessible is so good that it is price placing as a lot money as attainable to work. The final time KVF went to this stage of money was March 2020 through the peak of the Covid pandemic fears, and that ended up figuring out very nicely.
Moreover, the worth of money declines over time because of inflation. So whereas the optionality of getting it round is nice, it is also necessary to place it to work when the market is providing worth, as I imagine it’s on the present time.
KVF’s earnings assertion and stability sheet are included under (click on to enlarge). Word that securities are marked to market worth, and quantities are in 1000’s of $CAD: