Despite tumult on financial markets, it was an uneventful year was for Standard.

The unpleasant news first: adjusted for dividends received, we lost roughly half of our original investment in listed real estate trust Washington Prime Group. This is our third foray in the now perennially distressed commercial real estate sector, and our third consecutive failure. There might be lessons to draw from such stubbornness.

The theme of this letter will be self-beating. For proof, via a related family-controlled vehicle, we made an investment last spring in French advertising group Publicis. Back then, as the pandemic broke out, Publicis, which owns a number of premier franchises in the creative business and carries negligible debt, saw its market capitalization shrink to levels not even seen in the depths of the 2008 financial crisis.

For a brief moment, its shares traded at just four times earnings, making no justice to an oligopolistic business that can adjust its cost structure at will, and remains protected by a formidable competitive advantage: for a fraction of the free cash-flow it generates every ear, it can acquire the young and thriving agencies that disrupt the industry—neutralizing competition, hiring talents and aggregating new accounts on the spot.

Publicis also sports a sticky, well-diversified and healthy portfolio of customers—in our view, healthier than its two closest peers’. Their corporate and government clients have no choice but to rely on the global agencies’ networks to launch coordinated, cost-efficient and impactful campaigns. There are not many global agencies with Publicis’ scale, and among those the French group has always been a standout in terms of creative prowess.

So we bought shares, yet again making an enormous mistake. Experienced practitioners know that assessing the odds of one specific situation is just one part of the investing business; the other part—the decisive one—is to size bets accordingly. And there we failed. Although our investment in Publicis almost doubled in value in the space of several months, we dramatically undersized our position; petrified by fear or ineptitude—or both—our financial commitment was in effect the smallest we made in eight years. As a result, the impact on overall performance has been negligible.

In other news, we doubled down on our shareholdings in the Canadian oil patch—adding to our positions in Peyto Exploration & Development and Gear Energy—despite the ongoing nuclear winter in the sector. Among larger, higher-profile capitalizations, we believe that oil sands titan Suncor may be one of the lowest-hanging fruits in equity markets today. We are currently in talks with a partner to structure an investment through a vehicle we would jointly oversee. Updates on this matter will be communicated in due course.