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In the mid-1970s there was an advertising agency that had hit hard times. Its pension fund was shedding company shares, but Peter Cundill (BCom'60) was buying them up. So the president asked him, "What do you know that we don't?"

More important than Cundill's answer is the one that anyone who knew him could have offered: a lot.

With the instincts of a pirate and the skills of a forensic accountant, Cundill knew how to recognize investment opportunities in public companies that other less diligent players would miss.

He specialized in value investing, a practice that ascertains a company's true value beyond its share price. He chose companies that looked awful to everyone else, but were in good enough shape in his eyes to make a rebound. A company could have an indicted CEO, be in an industry no longer in fashion or be located in a country no one was paying attention to. But that didn't mean it couldn't still possess a valuable oil field, some prime real estate or future earning power. He had a formula to help him figure out a company's net worth, one that would allow him a margin of safety that lessened the risk.

"All I really need is a company's published reports and records; that plus a sharp pencil, a pocket calculator and patience," he said.

If after studying a company he found enough solid fundamentals, he would begin buying up shares, then wait until they climbed to a price that allowed him to sell them at a very good profit.

Read full article: , February 17, 2011