The Value Proposition: Sionna's Common Sense Path to Investment Success

Kim Shannon

Description

If you're looking for advice on how to make a fast buck and get an adrenalin high from investing, this book is not for you. If you're looking to build wealth over time, Kim Shannon covers a common sense approach that Sionna Investment Managers uses to manage money on behalf of its clients.

Shannon and her investment team follow a path well-established by the most successful value investors: Benjamin Graham, David L. Dodd, Sir John Templeton, Peter Lynch and the "world's greatest investor," Warren Buffett. However, Sionna has a unique take on value – one that addresses the idiosyncrasies of concentrated markets – like those within Canada.

Despite proven success, value investing struggles for respect, particularly during bubbles and declines when investors take cues from headlines instead of reason and experience. Shannon discusses the psychological impulses underlying mispriced stocks that become unmoored from their intrinsic value. Citing examples, she endorses understanding investment psychology and using relative value to buy illogically discounted shares.

Suited for investors at all levels, The Value Proposition reveals Sionna's quantitative and qualitative processes and a "Sherlock Holmes" orientation to reading financial statements and assessing a company's management. After 30 successful years in the hard knocks investment world, Shannon views herself fortunate to have found her calling managing money for institutions and individuals.

She describes the unlikely journey that led to an industry that has only recently attracted women. Her account of influential mentors, the merits of staying independent and her creation of a strong Sionna culture make for an engaging and informative read.

Sujets

• Economie gestion
• Economics
• Business
• Finance

Informations

• Publié par: eBookIt.com
• Date de parution: 09 septembre 2013
• Nombre de lectures: 0
• EAN13: 9780991836611
• Langue: English
• Poids de l'ouvrage: 6 Mo

Extrait

The Value Proposition:
Sionna's Common Sense Path to Investment Success

 
The Value Proposition: Sionna's Common Sense Path to Investment Success
Published by Sionna Investment Managers Inc.
All rights reserved. No part of this book may be used or reproduced by any means (graphic, electronic or mechanical), including photocopying, recording, taping or by any information storage retrieval system without the written permission of the publisher.
Copyright © 2013 Sionna Investment Managers Inc.
The advice included in this book may not be suitable for your situation. Consult a professional before investing.
For the most up-to-date information about Sionna Investment Managers Inc., please visit sionna.ca .
Sionna Investment Managers Inc.
8 King Street East
Suite 1600
Toronto ON M5C 1B5
[phone]
sionna.ca
Book design by H2 Central Marketing & Communications
Published in eBook format by Sionna Investment Managers Inc.
Converted by http://www.eBookIt.com
ISBN-13: 978-0-9918-3661-1


Sionna Investment Management Team
From left:
Teresa Lee, Small Caps
Mel Mariampillai, Gold
Kim Shannon, Chief Investment Officer
Marian Hoffmann, Dividends

If you're looking for advice on how to make a fast buck and get an adrenalin high from investing, this book is not for you. If you're looking to build wealth over time, Kim Shannon offers a common sense approach that Sionna Investment Managers uses to manage money on behalf of its clients.
Shannon and her investment team follow a path well-established by the most successful value investors: Benjamin Graham, David L. Dodd, Sir John Templeton, Peter Lynch and the "world's greatest investor," Warren Buffett.
However, Sionna has a unique take on value – one that addresses the idiosyncrasies of concentrated markets – like those within Canada.
Despite proven success, value investing struggles for respect, particularly during bubbles and declines when investors take cues from headlines instead of reason and experience. Shannon discusses the psychological impulses underlying mispriced stocks that become unmoored from their intrinsic value. Citing examples, she endorses understanding investment psychology and using relative value to buy illogically discounted shares.
Suited for investors at all levels, The Value Proposition reveals Sionna's quantitative and qualitative processes and a "Sherlock Holmes" orientation to reading financial statements and assessing a company's management.
After 30 successful years in the hard knocks investment world, Shannon views herself fortunate to have found her calling managing money for institutions and individuals. She describes the unlikely journey that led to an industry that has only recently attracted women. Her account of influential mentors, the merits of staying independent and her creation of a strong Sionna culture make for an engaging and informative read.
KIM SHANNON
Kim Shannon, CFA, MBA, has more than a quarter-century of experience as a value investor, serving since 2002 as chief investment officer and president of the firm she founded, Sionna Investment Managers Inc. The recipient of multiple accolades, she has brought her acumen to leadership roles with what is now known as CFA Society Toronto. And, she is a frequent speaker and volunteer, sharing her investment expertise with countless not-for-profit organizations.

"Kim has grown from being a skilled practitioner of value-based investment management skills to achieving mature mastery of her art."
– Dian Cohen, corporate director
Introduction

WHAT'S IN A NAME: WHY "SIONNA"?
There's a certain lore associated with the name chosen by well-known companies...

...Search Wikipedia for "company name etymologies" and you'll get links to fascinating individual entries under every letter of the alphabet. Some are prosaic and fairly obvious (the combined first names or surnames of the business partners), and some have evolved into globally known acronyms or abbreviations that are more memorable than their word-form origins. Others are creatively invented sound combinations that strike a chord with their intended audiences.
When it came time to give Sionna its name, I knew that naming the company after myself went against my preference for building a team culture. At the same time, there was the genuine challenge that every other conceivable name relating to investments appeared to have been taken – and those that weren't were probably not worth taking. It doesn't require an MBA to know that the name of a company is intrinsically important to securing its place in the market, to its positioning with its clients and prospects and, ultimately, to its success. A corporate identity is the brand that all other sub-brands rely upon for their foundation – even if the brand strategy keeps them separate, there's still a relationship. No matter what, you are known by your name. So, your selection had better be sound, and it should say something that creates a compelling connection between your organization and its audiences.
I faced a dilemma. After some thought, I decided to try to solve it by asking my father to check his Gaelic dictionary for equivalents to English words that meant something to me. I asked him to look up "trustworthy," "dependable," "value" and "consistent" – in other words, the very words that define the values I hold dear in both my professional and personal life. These words articulate the principles that have become the foundation for the company I built.
What my father found (and Wikipedia confirms) is that "Sionna" is closely associated with wisdom. The mythological origins of the word also capture the notion that we are transformed by the knowledge we gain in the pursuit of wisdom. And in a final discovery that was pure serendipity, I learned that "Sionna" is the Gaelic source for "Shannon."
The name for Sionna Investment Managers was, in some sense, fated. It was original. It was free from branding conflicts that keep intellectual property lawyers preoccupied. It was associated with my belief in applying wisdom to investment decision-making, and it afforded me a cloak of privacy while honouring my family origins. My only hope is that everyone we encounter will agree that the name of the company is fitting and that we are truly worthy of it.

FOREWORD: BY DIAN COHEN
Warp speed and video-game wild: that's stock trading today. It's driven by computer programs, organized from server parks as big as football fields that power "bots" through so-called "dark pools"...

...These are places in cyberspace where investment banks such as UBS and Goldman trade huge stock lots (or "whales"), invisibly and without immediately roiling the markets, faster than you can say "nanosecond." The only thing "regular" investors see are the final prices.
It's an open question whether this kind of market can allocate investors' capital to where entrepreneurs can use it to create new value. Arguably, equity markets have become a machine for chasing paper gains and bonuses for the button-pushing traders rather than the source of oxygen for a renewed industrial revolution.
Yet surprisingly, amidst all the high-tech, light-speed transacting and photon-thin margins that characterize digitally driven stock trading today, one reliable path to building a nest egg with equities remains accessible to the average investor. And it doesn't even require a computer. It only takes common sense and discipline. That's Kim Shannon's "common sense investing secret," which, following an extensive apprenticeship and career in value investing, she has pursued with dedicated rigour for 10 years as head of Sionna Investment Managers in Toronto.
I first met Kim when I was national business editor at CTV. We were both young professionals (well, to be honest, I was 25 years older), both on our way up in a world that was almost exclusively dominated by men. Today that's no longer the case. We both felt we had to prove that women could do better – not just as well, but better – than the guys. And in our own way, I think we succeeded. Just as I spent more time than most of my male colleagues getting to know senior managers of Canada's leading companies and understanding how their businesses worked, Kim did the same from her vantage point as an investment analyst, investment officer, fund manager and finally CEO/CIO of her own firm.
Both of us had our male mentors and perhaps took their insightful messages to heart more than some of our male colleagues. I was finding ways to make executives feel more comfortable on TV, so they would tell us things they might not if they were too uptight. For Kim, it was diligent research and then confronting top management of her target companies for an explanation of the issues she uncovered. Sometimes these encounters got a bit tense. Some of the best pages in this valuable book are those in which Kim describes her meetings with some of the world's toughest and most prominent CEOs.
It's no secret that the last few years have been terrible for equities. As I write, it appears we're not yet out of the woods. The near future looks seriously accident prone. The best we can probably expect after years of recession and weak recovery is more low growth as western economies try to de-leverage their debts and Asian growth slows.
But the micro picture contains better stories than that: new companies with new technologies building whole new industries as they emerge from the rubble of the last few years. Some familiar names, too, with strong management teams, are reconstituting their business models and beginning to find streams of free cash as they reorganize and become more efficient. As growth slowly returns, more companies that are now just hoarding cash will reinvest and expand. Finding these companies takes research. Understanding their strengths and evaluating their new potential also takes experience. As their dividend payments grow, so will