For the first quarter ended March 31st, 2021, KVF gained $4.99 per share, increasing the value of each share to $35.88. This pre-tax 18% quarterly return bested the 6%, 8% and 7% returns of the S&P 500, S&P/TSX and Russell 2000 indices, respectively. KVF’s result would have been even better but for currency losses which reduced returns by $0.29 per share in the quarter.
Not a lot went wrong for KVF this quarter. On the other hand, several companies whose shares KVF owned saw price spikes that allowed for some graceful exits. As a result, KVF no longer owns shares of Biorem, Resolute Forest, Citigroup, and Waitr Holdings, among others.
The returns of the last couple of quarters are unlikely to be sustainable. It is much harder to find value now than it was just a few months ago. KVF’s cash balance continues to grow, as it has been difficult to find appealing investments as fast as KVF has been bailing out of investments that are reaching what I estimate to be fair value. As such, I’m not nearly as optimistic now as I have been in recent years.
Investor/speculator appetites for risk are high, therefore this is a time for prudence.
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: