Barel Karsan – Worth Investing: Karsan Worth Funds: 2021 Q2 Outcomes

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Karsan Value Funds (KVF) is a value-oriented fund, as described here. Due to securities regulations, the fund is not open to the public at this time. Should that change in the future, there will be an announcement on this site.

For the second quarter ended June 30th, 2021, KVF gained $4.98 per share, increasing the value of each share to $40.86. This pre-tax 17% quarterly return bested the 8% returns of the S&P 500 and S&P/TSX, and the 4% return of the Russell 2000. Currency changes were once again a headwind, reducing returns by $0.33 per share in the quarter.

KVF’s string of good luck continued, as a number of holdings erupted in a positive way. BSEG and SGMD were illiquid holdings that turned into high-volume multi-baggers over the course of the quarter, while FRD was also a strong performer (discussed here). KVF no longer owns shares in these three firms.

Market prices are very frothy right now, calling for extreme prudence in my opinion. KVF’s cash balance continues to rise as positions are sold off. Without lowering standards, it does not appear possible to replace these positions with securities containing adequate margins of safety. So, patience is required as the supply of securities catches up with demand, which is a process that may eventually bring markets back in balance.

KVF’s income statement and balance sheet are included below (click to enlarge). Note that securities are marked to market value, and amounts are in thousands of $CAD:

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