Sunday, November 20, 2011

Review of There's Always Something to Do: The Peter Cundill Investment Approach

Sorry to disappoint my value investor friends, but I was not very impressed by There's Always Something to Do, the biography (or should I say hagiography) of Peter Cundill by Christopher Risso-Gill. I wish that I had read this Amazon review before buying:

Unfortunately, that was all I was able to get out of this book. The diary entries that are mentioned in this book are very brief and kind philosophic talk on value investing and trading in general. Most frustrating is the lack of security analysis or the way Cundill would look at a company or a balance sheet.
It would probably be better to just read the Cundill annual reports. Nonetheless, I will comment on a few interesting areas:

Cundill was incredibly "elite" (in the bad sense of the word) for a guy I had never heard of. For a time, he worked in London and would travel supersonic to New York just for the afternoon for a lunch meeting. Of this practice, he said that the "Concorde is sort of a club in the air for the world's top 10,000." Top ten thousand what? Bureaucratic parasites? I imagine that most of the people who "commute" from London or Paris to New York are self-important blowhards. As far as I'm concerned, any day where you are on two continents is a complete write-off for thinking about investing.

This elitism is really blinding. In 1988, Cundill invites British politician Roy Jenkins to speak at his annual gathering. Cundill writes, "as ex-president of the European Commission and the man directly responsible for the negotiations that led to the formation of the common currency, he is well placed to make the case for it to a moderately skeptical audience." I don't know what was worse - that Cundill's conference audience was only moderately skeptical of the Euro, or that he wasn't skeptical at all.

The book actually anticipates Greek credit trouble, but says that if Greece defaulted "and the market in Greek bonds declined to 70 cents on the Euro, even on a purely historical basis the risk-reward ratio would have swung markedly in favor of the investor." Oops!

According to a chart of fund returns, Cundill's fund was obliterated in 2007 and 2008! Massive drawdown. He seems to be in the class of investors that struggled after 2000. Were these managers, like Bill Miller, really just optimized for a credit bubble?

The oil & gas section was interesting. Cundill negotiated a deal with a Russian oil company where the equity seemed extremely undervalued. He negotiated a very intelligent deal to invest in a convertible bond with a 12% coupon and a conversion price just out of the money.

Another concept that was sort of amusing, really a bull market indicator, was the idea of visiting every year whatever country had had the worst stock market performance. What if the performance was bad because the country was hit by an asteroid? Or someone like General Butt Naked had nationalized everything?

Rating: 2/5

Better use of time: think about whether there is any difference between an investment in Italian sovereign debt versus Italian home mortgage loans. Shouldn't investors be about equally concerned? If Italy leaves the EMU, won't both loans be redenominated into lira? And, therefore, sharply devalued? But the market is not concerned about PIGS retail lending... yet.


Taylor Conant said...

Great review. You took a completely different, more cynical angle on a book that truly was hagiographic. I think you read between the lines whereas when I was reading I wasn't able to concentrate much and kind of took the "big picture" lessons about value investing and the philosophy of being an investor.

But I like yours better and it resonated with me as familiar as I read it. I think I subconsciously noticed some of this stuff but wasn't able to put it all together in my original review.

Well done. The book was sloppily edited and expensive for what it is, it's probably closer to a 1/5 on second thought.

CP said...


It's unclear whether he was that unimpressive, or whether the biographer didn't do him justice.

But Cundill's dubious economic beliefs and unimpressive post-2000 record imply that he was overrated.