Breakfast with one of Canada's finest value investors

Geoff Cook - CFP, CHAIP

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 A few weeks ago we had the privledge of chatting over breakfast with one of Canada's investment legends Dave Taylor.
Dave is from the school of Value Investing with a history of consistent outperformance and risk adjusted returns. 

Dave Taylor is a perfect example of one of few investment managers we would trust with our capital. He is a disciplined investor who has conviction and sticks to what he is really good at. Making money with less risk than the market using the value approach of buying a dollars worth of assets for 50 cents. Dave may not always beat the market on the upside, but will offer alot of downside protection when markets are falling.

Here are some comments from the meeting;

- Alot of people are focused on dividend paying equities. Although we want to buy companies that not only pay dividends, but grow dividends, we are not willing to overpay for a company just because they pay a dividend. We want to own high quality dividend payers, just not pay crazy prices for them. I love dividend payers, I want my whole portfolio to be dividend payers, but I am not going to overpay for them.

- Alot of people have been focusing on the same income providing sectors over the last few years. Tables may turn, and you dont want to be the last one at the party.

- At this time we have the highest quality portfolio we have had in a long time.

- We are buying stocks that are cheaper than the market. This is what we are supposed to do. We can find stocks that are trading at discounts that the market doesn't want because investors are all short term focused.

- I dont need to buy only small cap names to get decent returns.

- Oil and gas is going to improve and manufacturing is going to improve. There is alot of great secular plays even though the global economy is weak.

- We are finding deals outside Canada right now. We are 30% - 40% outside Canada. Our mandate allows us to be up to 49% outside.

- I manage a tight book of investments 22 - 30 holdings. I will boot out my 25th best idea, if a better one comes along. A lot of holdings proves indecision.

- The US banking sector is cleaned up. They have paid their TARP, and cleaned their balance sheets.

- Trucks and Cranes are 5 years older than they are supposed to be in the manufacturing sector. Companies are scared to make moves, they want to hear that Europe is better. Once news switches they will start employing and start buying.

- I dont get involved in calling the price of oil or currency because I cant add value there. Turn on the TV there is thousands of people talking about this.

- I make money on fear and capitualation. I identify good companies and wait for people to screw up, and start getting scared. The average investor will always sell a stock on the way down, and love buying stocks on the way up.

   Dave Taylor has recently left a large investment firm to start managing money at IA Clarington. He went from managing over 8 billion dollars to managing hundereds of millions.

When a money manager gets to a large amount of assets under management it becomes very hard to buy and sell the investments they want due to liquidity, trading, and market capitalization of available stocks to fit in the portfolio. This last point is especially prevailant in a value investors portfolio who may only hold 20 stocks.

Now Mr. Taylor gets to run a nimble portfolio like he used to.

Daves move to IA Clarington is a great opportunity for investors. Here you have a best in class money manager that built an empire, left, and now is  back to where he was day one.

Dave says "I feel like I did years ago when I started at Dynamic".

Taylor can not only talk the talk but has proven he can walk the walk. Just look at the awards he has chalked up over ther years...

Canadian Lipper Fund Awards

The Lipper Fund Awards program honours funds that have excelled in delivering consistently strong risk-adjusted performance, relative to peers.

  • 2012 Global Equity Balanced (10 yr) 
  • 2011 Canadian Focused Equity (5 yr, 10 yr) 
  • 2011 Global Neutral Balanced (5 yr) 
  • 2010 Canadian Focused Equity (5 yr, 10 yr) 
  • 2010 Global Neutral Balanced (1 yr) 
  • 2009 Canadian Focused Equity (5 yr, 10 yr) 
  • 2009 Global Equity Balanced (10 yr) 
  • 2008 Canadian Focused Equity (3 yr, 5 yr) 
  • 2008 Global Equity Balanced (10 yr) 
  • 2007 Canadian Equity (3 yr) 
  • 2007 Canadian Income Balanced (3 yr) 

Canadian Investment Awards

The prestigious Morningstar Canadian Investment Awards showcase leaders in the investment industry.

  • 2010 Best Canadian Equity Fund 
  • 2009 Best Canadian Equity Fund 
  • 2006 Best Canadian Equity Fund

For more details on Dave Taylor check out his website, or information on IA Claringtons page.
To see news and videos on Dave Taylor click here
To see his track record check out The Dynamic Value Fund of Canada.

- Note that Dave left Dynamic in October of 2011 so recent numbers are not his.

When dealing in financial matters, you are urged to consult an advisor for legal, tax or investment advice. Every effort has been made to present information in a clear, exacting manner. However neither the publisher nor the authors can be held responsible for any losses incurred due to the actions of any individual as the result of this post or any errors or omissions contained herein.

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