The Fund
Our Philosophy“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”
– Warren Buffett, Chairman & CEO Berkshire Hathaway
The Power of Compounders
Fundamentally, we believe in holding compounders for the long term and thus we won’t trade in and out of names. We believe that great management teams think much like portfolio managers– they carefully consider capital allocation and they make a point of knowing the intricacies of their businesses and industries. We expect the management teams of our companies to be able to put capital to work to further increase their profitability as opportunity arises. These opportunities may be based on the uniqueness of their businesses, the dynamics of the industries in which they operate, or the overall condition of the financial markets or economies.
Put another way, we are always on the lookout for management teams that can compound their growth to deliver outstanding returns.
Reasonable Valuations
We attempt to buy outstanding businesses at a reasonable price, rather than inferior businesses with low relative valuations. We evaluate businesses based on their expected future earnings.
High Returns On Equity
We believe return on equity is the best proxy for growth and so we seek out companies with recurring or growing ROEs of 20% or more. Typically, this also means that companies have a superior business or maintain a competitive advantage.
Outstanding Management Teams
We look for exceptional managers with real skin in the game. We especially like companies who are led by founders, experienced operators, and those who own substantial stakes in their business. We like it when a CEO’s interests are aligned with ours.
Proprietary database ranking
Once we have identified a company that meets our initial criteria, we make several adjustments to company/analyst earnings forecasts in order to take into account non-cash items. Subsequent to the adjustments being made, we enter the relevant data into our proprietary database where each company’s ROE, valuation and share price momentum are scored in relation to all other stocks in our universe.
Analytics
Those stocks that achieve the highest aggregate scores in our database are then subject to comprehensive quantitative analysis, which includes extensive earnings modeling as well as scenario analysis.
Management Evaluation
Our final step involves face to face meetings with company management, channel checks and discussions with industry analysts. If this process is successful, the position is added to the portfolio, constantly monitored and actively traded.
why invest with dkam?
Differentiated Portfolio
We are a Toronto based North American long-short equity fund with a small cap bias. We invest in great businesses and aim to achieve compounding long-term returns. We have extremely low overlap with major indices and believe our unique portfolio is part of the secret to our success.
Our Portfolio
UNIQUE AND DIFFERENTIATED
As of October 31, 2022.
Our portfolio has almost no overlap with major indices and ETFs(1)
Portfolio Overview
As of October 31, 2022
1. According to Bloomberg index weight tracker as of October 31, 2022 using various ETFs as proxies for the indices.
2. Represents the SPDR Dow Jones Industrial Average ETF, an ETF which seeks to track the investment results of Dow Jones Industrial Average (ticker: DIA).
3. Represents the iShares Russell 2000, an ETF which seeks to track the investment results of an index composed of small-capitalization U.S. equities (ticker: IWM).
4. Represents the iShares S&P/TSX 60 Index ETF, an ETF which seeks to track the investment results of the S&P/TSX 60 Index (ticker: XIU).
5. Represents the Invesco QQQ Trust, an ETF which seeks to track the investment results of the Nasdaq-100 Index (ticker: QQQ).
6. Represents the SPDR S&P 500 ETF, an ETF which seeks to track the investment results of the S&P 500 Index (ticker: SPY).