‘ ¥ es Castlegar News February 19, 1986 BUSINESS CUNDILL MAKES LIVING MAKING OTHERS MONEY VANCOUVER (CP) — Peter Cundill sees more opportunities to make money when the stock market falls than when it soars to new highs. Cundill, who manages one of Canada’s best-perform ing mutual funds out of offices in Vancouver and London, is planning to spend a fair amount of time this year in Hong Kong and other parts of the Far East, not because the region's economy is booming but because it's in a bit of a slump. “You know,” the gangly 47-year-old former accoun. tant said in s recent interview, “the worst stock market in the world in the last little while has been in Singapore.” Cundill is always looking for value — undervalued com| whose shares he can snap up cheaply before other in their His investment philosophy is based on the old adage of selling when others are buying and buying when everyone else is selling. “The amateurs look at the target, the professionals look over their shoulder,” is how he describes it, although with his gentle manner, long elegant hands and Cundill has managed, over 10 years, to chalk up an average annual rate of return on the value fund of 25.2 per cent, while the Toronto Stock Exchange 300 composite index has had an average annual increase of 16.5 per cent. The fund bases its investment philosophy on a formula known as net-net working capital, buying stock for less than could be recovered, on a per-share basis, if the assets were liquidated. Cundill sells at least half of the stock when its price doubles, possibly hanging on to the rest if he thinks it will continue to rise. WELL TESTED “Capital that has been invested based on these well-tested precepts has not only survived depression, war and inflation but has been enhanced, which is the reward of the prudent investor,” he said in his prospect: us. The investment policy has created problems, like what happened in 1980 when ‘oil and gas stocks skyrocketed and Cundill couldn't find any that were undervalued enough to meet his criteria. Cundill, who says he sticks to fundamental analysis and doesn't try to guess what the market will do, confesses to being a little puzzled by the conditions he sees these days. “The time when it was easy to sell was in 1983 when all sorts of issues went away beyond what appeared, on any kind of valuation basis, to be justified. I don't find a for wearing s he doesn't image of a professional gunman. FOR OTHERS Cundill makes his living making money for other For the last 10 years he has been managing the Cundill Value Fund and fund watchers say he has shown a flair for being right more than wrong. Cundill quotes John Templeton, who with 30 years of i the Ti funds is the grandfather of the mutuals in Canada, as describing good natic over-valuation in terms of securities now. But there aren't as many bargains as we used to have, particularly in North America.” Right now, Cundill is holding more than 20 per cent of his portfolio in cash and looking for attractive secondary issues that have not had the same increase in their share prices as the big industrials. He's interested, for example, in B.C. Resources Investment Corp., the troubled child of the British Columbia government that is heavily involved in the resource industries and burdened with high-interest debt. times. fund managers as those who are right three out of five times, while the others are right only two out of five It’s trading at its all-time low, and meet Cundill's axiom to “buy when things are so bad they can't get Cars big buy in 1985 OTTAWA (CP) — Con- sumers spent a record $128 billion last year, but higher taxes and rising interest rates could sober them quick- ly. ‘New and used cars as well as household appliances were the big buys of the year but said. However, those purchases are sensitive to interest rate changes because they're of- ten made with borrowed money or with interest ear- ned or investments. Alasdair McKichan, presi. dent of the Retail Council of Canada, said “1985 turned out significantly better than we had expected at the be- ginning of the year.” “Of course, the sector which did most favorably was the automotive sector,” he said. “When you delete the automotive sector, the fig- ures are still good but not quite as dramatic.” The recent surge in inter- est rates, if sustained, could “unnerve the consumer.” However, McKichan said he's hopeful, as is Finance Minister Michael Wilson, that the rise in interest rates is temporary. PRESENTS THREAT While tax increases in the Feb. 26 budget would be a threat, McKichan said the growth in employment over the last few years, which has made consumers more con- fident, is the key to continued consumer confidence. That optimism has encour. aged them to start spending some of the savings they amassed when they feared for their jobs, he said. Last year, the value of sales rose 24.4 per cent for U.S. sawmills efficient too MISSOULA, MONT. (AP) — Western sawmills in the United States are about as efficient as those in Canada, the U.S. International Trade Commission has in ployees in both countries, disputes the new figures, saying they contain “serious calculation errors.” The efficiency issue is a part of the debate a major revision of its 1985 investigation of charges that Canadians compete unfairly in American lumber markets. The new finding supports claims of sawmill owners in western states, who say the Canadians are able to charge less for lumber because of government subsidies, not because they're more effici ent. On a national level, Can adian mills are 26 per cent more productive than their U.S. counterparts, the agen- cy says. However, producti- vity is “about equal” in the U.S. West and British Colum- bia, Canada's primary lumber-producing region. The new efficiency figures contrast sharply to an Octo ber 1985 report in which the trade commission said Can adian sawmills are 60 per cent more efficient than those in the United States. The International Wood- workers of America, repre- senting 100,000 sawmill em- over tariffs or other trade barriers aimed at curbing lumber imports from Canada. Nearly one-third of the lumber ‘sold in the United States comes from Canada and U.S. lumber producers have charged the Canadians with unfairly subsidizing their industry through low publie-timber prices. Canadian industry repre- sentatives say a strong U.S. dollar and greater sawmill efficiency are the keys to Canada's success in the mar- ket. In its revised report, the trade commission says, “U.S. and Canadian mills having a similar production level and product mix tend to have near equal production per employee.” In Montana, Idaho, Oregon and Washington, for exam- ple, lumber production per employee was 404,106 board new car dealers, 23 per cent for used car dealers and 23 per cent for household ap- pliance stores. Overall, retail sales rose by 10.6 per cent, though if the automotive sector is exclud- ed the increase was 7.5 per cent. With last year’s inflation rate for retail merchandise at about three per cent, some- what lower than the 4.4 per-cent inflation for the country as a whole, even the non-automotive sectors en- joyed a healthy real sales growth of about four per cent. In fact, Statisties Canada official Lina Di Pietro said, even adjusted for inflation, retail sales last year were at their highest level since the agency began recording them in 1972. While McKichan said it would be unrealistic to expect a repeat of last year's sales growth, he's confident that if interest rates ease and there are no further tax increases, 1986 will be a good year for consumers and retailers. Robert Best, a spokesman for the Consumers Associa- tion of Canada, is not as confident. “We're concerned (that) consumers will have less dis- posable income this year,” Best said. The May 1985 budget in- cluded a one-per-cent in- crease in the federal sales tax plus its extention to products not previously taxed. (FAL CON PAINTING & DECORATING 2649 FOURTH CASTLEGAR 8 .C vin 2s! CASTLEG °.0 canue 2007, GAR NEws k Morrison Bays see it, I'll findit! avENUE Carol Magaw Dianna Kootn ik off ADVERTISING SALES OFFICE 365.5219 CASTLEGAR CHEVRON feet in 1962. That comp with 427,460 board feet in British Columbia. 8 Hour Survival Course 2-YEAR W.C.B. CERTIFICATE Time: 8 a.m 4p.m Place: Clay Castle Doate: Soturday. 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