Value investing comes in different colors. So do those who practice the craft.


Our style was recently described by a partner as “value with a venture flavor”. We found this right on the mark, as set forth by the following review of our listed shareholdings.


In Canada, Gear Energy and Peyto Exploration & Development were straightforward bets on the recovery of the domestic oil and gas industry. Both producers were selling at enormous discounts to their average earning power and proven reserves value—the latter being assessed out of otherwise conservative assumptions. Their market value has now tripled and they are paying us annual dividend yields north of 25% on acquisition cost.

Petrus Resources, our latest investment in the Canadian oil patch, does not return capital to shareholders yet. But it grew production threefold in three years and has no plan to stop. It is also fully controlled by the Gray family, who all together own over three-quarters of equity capital after they refinanced the company’s formerly troubled balance sheet.

Don Gray—chairman of Gear, Peyto and Petrus—sports an outstanding thirty-years track record of growth, profits and integrity. When he pours the majority of his net worth into a new production vehicle, we pay attention, in particular when it happens at a multi-decades low for the natural gas sector.

Our pharmaceutical investments, Idorsia and Knight Therapeutics, steward formidable asset—a blockbuster-rich pipeline and premier research capabilities at the former, an unparalleled distribution infrastructure in Latin America at the latter—and are led by entrepreneurs of the highest caliber.

Before Idorsia, Martine and Jean-Paul Clozel built Actelion from a garage business to the most profitable biotech in Europe in the course of an entrepreneurial adventure that started in the wake of Roche’s decision to cut funding for their cardiovascular research. Twenty years later, as a condition for letting J&J acquire Actelion, the Clozels required that its promising R&D assets got spun off into a new corporate vehicle. Enter Idorsia.

According to the Clozels, there is in Idorsia’s pipeline the potential to build “a second Actelion, if not a better Actelion”. Actelion was sold for $30bn. Idorsia was introduced on the Swiss exchange at a valuation of $1.5bn. Martine and Jean-Paul, along several directors, have been steady buyers of the stock since then; the Clozels have also granted exceptionally favorable financing terms to the company through a convertible issue.

On the other side of the Atlantic, Jonathan Goodman turned Paladin Labs into one of the most phenomenal entrepreneurial stories in the Canadian healthcare sector. Or, as he once put it, into “an overnight success that took no less than 19 years”. After selling Paladin to Endo, he immediately went back in business by founding Knight, retaining most of his senior management team.

We got interested in Idorsia when its valuation narrowed down to the low-case potential of its soon-to-be-approved insomnia treatment, discounting virtually all of the ten other assets, and in Knight as its licensing and distribution franchise was essentially selling for a multiple of five times operating earnings once adjusted for surplus cash and equivalents.

In a like manner, but coming with a much higher dose of risk, earlier this year Cambridge-based Generation Bio—another pharmaceutical investment, but one that accounts for only a negligible part of our assets—saw its enterprise value melting to a point where it did zero justice to the promising platform of non-viral genetic medicine it has developed.

Evaluating the latter remains out of our reach. By contrast, after having followed him for a decade, recognizing the exceptional credentials of Geoffrey McDonough—CEO of Swedish Orphan Biovitrum between 2011 ans 2017, and before that President Europe at Genzyme—fell right in our sweet spot. The steep discount on the company’s net cash balance was another factor that fell within our circle of competence.

Run and majority-owned by superb operators, industrial enterprises Tessenderlo and Groupe Guillin are market leaders in their respective segments. Valuation-wise, they both got themselves tarred with the wrong brush—Tessenderlo in the midst of its merger with Picanol, which is going to streamline the opaque ownership structure, and Guillin as it had to cope with a terrifying but temporary rise of input costs.

Similar principles guided our investment in Daily Journal Corporation, the Los Angeles company presided by Berkshire Hathaway vice-chairman Charlie Munger. Daily Journal’s portfolio of marketable securities and real estate properties covered virtually its entire valuation at the time of our investment, leaving just a modest multiple on its burgeoning information technology business serving courts in the United States, Canada and Australia.

Daily Journal’s growth remains hidden behind extraordinarily conservative accounting practices. We very much welcome the nomination of Steven Myhill-Jones as chief executive officer of the company, and look forward to increasing our investment in it if market conditions allow it.

A speciality distributor of furniture hardware with 112 centers and soon half of its business in the United States, Québec-based Quincaillerie Richelieu, which caters primarily to a clientele of professionals, sports a pristine M&A record, high insider ownership—with half of its workforce being shareholders—and a thoughtful expansion strategy under the guidance of chief executive Richard Lord.

The company has grown earnings per share at a 15% clip over the last decade, yet it saw its shares trading at just twelve times earnings on momentary inventory concerns at the time of our investment—notwithstanding its strong balance sheet, healthy margins and abundance of consolidation opportunities.

In the software space, we bought shares in Topicus right after its partial spin-off from parent Constellation Software on a simple premise—over a decades-long horizon, since the two companies have similar businesses, owners, investing playbooks and operating philosophies, an investment in “childco” has every chance to yield results as satisfactory as those “parentco” delivered to its shareholders.

Though such bet would look bold to an investor unfamiliar with Mark Leonard’s record, or to one dealing with a client base to whom he must report on a weekly, monthly, quarterly or even annual basis, it made all the sense of the world to us, patient holders benchmarked not against the index but our own inner scorecard—especially as Topicus insiders were themselves piling up.

Finally, Tanzania-based and BVI-domiciled Orca Energy, run by Jay Lyons in the footsteps of his regretted father David, has been paying us a 30% annual dividend yield on our original acquisition cost for some years, on top of providing satisfactory capital appreciation.

We look forward to seeing our company—now our oldest shareholding, with our first batch of shares bought almost ten years ago—secure a licence renewal before 2026. If it fails to do so, we’ll consider ourselves more than adequately compensated and call it quits.