To my fellow shareholders,
The second half of February was good for CV Capital. Not only did some of our stocks post good results during the reporting season which saw their share price rise, I also managed to make our first investment. I actually made two new investments for CV Capital.
The first company is a very profitable financial institution listed in an emerging market which is trading on a very low multiple given its growth and profitability. The reason it is cheap is due to the current difficult economic conditions of the jurisdiction it operates in and the fact that this jurisdiction is very much “off the beaten path”. This jurisdiction is rich in energy and therefore still hurting from the low energy prices. In my opinion, one of the key things of investing in a financial institution is to understand its culture towards risk. From my research and speaking with an ex-CEO, I believe this financial institution has a conservative risk culture.
The second company is a gaming company. I’ve been following this company for 2 years and they had some issues in 1HY18 which saw their share price falling more than 60% from last June. At these levels the stock is very cheap and I believe that the issues are temporary. The year to date results for February 2018 suggests that the issues have largely been resolved. We’ll have to wait for a trading update to confirm.
As a general rule, I rather not disclose the names of the stock until I have bought enough shares for the portfolio. Some of our investments are quite illiquid and a few more buyers in the market can easily drive up the price.
Our performance (before any costs) since inception to 28 Feb 2018 is as follows:
| 15 Jan 2018 | 28 Feb 2018 | Return | |
|---|---|---|---|
| CV Capital | 1.00 | 1.03 | 2.8% |
| STW Benchmark | 56.7 | 56.52 | (0.3%) |