For the second quarter ended June thirtieth, 2022, KVF misplaced $1.80 per share, decreasing 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 features which elevated returns by $0.04 per share within the quarter.
KVF’s relative outperformance was largely as a consequence of the truth that it was the “growth-y” names which have taken the most important hits on this market decline. Up to now, anyway.
Additionally serving to returns this quarter was KVF’s publicity to the shares of tanker firms. These vitality transporters have tremendously risky shares because of the excessive fixed-cost nature of the enterprise, which ends up in large swings in features and losses in any given interval. A couple of quarters in the past, these traded at large reductions to the values of their property (i.e. ships). However since Russia’s invasion of Ukraine and the next redistribution of vitality flows that adopted, these ships have been again in demand. Shares of INSW and STNG have proven large features not too long ago and are not in KVF’s portfolio.
With the overall market decline has come a terrific alternative to purchase some shares at nice costs. Because of this, KVF’s money place is within the very low single-digits, which is a giant change from current quarters.
More often than not in the course of 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 obtainable in case of a (additional) market decline. Alternatively, there are occasions when the worth obtainable is so good that it is value placing as a lot money as doable to work. The final time KVF went to this degree of money was March 2020 in the course of the peak of the Covid pandemic fears, and that ended up understanding very effectively.
Moreover, the worth of money declines over time due to inflation. So whereas the optionality of getting it round is nice, it is also vital to place it to work when the market is providing worth, as I imagine it’s on the present time.
KVF’s revenue 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: