Kurm Investments, Inc. performed very well in the quarter ended 30th April 2010. Such short-term performance is certainly pleasing but should not be the focus of attention. What is more important is that Kurm has outperformed the US indices over the long term. This is how Kurm Investments has been able to preserve and grow capital over the last twelve years.
In the quarter, the world had become confident about its progress away from the credit crunch and associated meltdown. However, we were very clearly able to see issues developing in Europe related to the Euro and its weaker member nations which have terrible fiscal and macro-economic situations. The US continues to produce mixed results. China’s bubble has now begun to crack. This has short-term consequences for many global exporters and for natural resources in general.
I have recently been on the first few of a number of investor trips around the globe, with the purpose of developing a feel for the underlying economics of businesses in various countries. My recent visits have covered India, Thailand, Vietnam, Singapore, Indonesia, Hong Kong, China, Kenya and Zimbabwe. On these trips, I have met analysts, entrepreneurs and intelligent, contrarian commentators. As a result, I have gained some insight into whether and how a value investor can invest in such jurisdictions with an aim at capital preservation and growth. It is not enough for me that there are good demographics and good prospects for growth in GDP – my concern is whether the shareholders in Kurm will be able to gain from such an adventure. Kurm is already invested in certain parts of South East Asia and I believe there are other opportunities.
The focus in Western Europe and North America is focusing on companies which have a tremendous long-term future, but whose enterprise values and market capitalisations are depressed due to the temporary distress of the business. There is significant exposure to US real estate and financial stocks as this is where there seems to be significant fear.
I want to leave with the oft-repeated phrases of Warren Buffett.
“Be greedy when others are fearful and fearful when others are greedy.â€
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