Value investing is about identifying and investing in undervalued companies and holding the stocks until they grow to their estimated worth. Gino Ciavarella, a Portfolio Manager with one of Canada’s leading independent investment managers, Cumberland Private Wealth Management Inc., shares how you can benefit from this approach.
We cut through the noise in the market. We look for quality companies that have been overlooked because they are outshone by something louder in the market. And real bargains can especially surface when markets are uncertain. “Loud” stocks are often expensive and can drop in price suddenly. We avoid them.
Our process starts from the top down. We look at current events, international economies, tax policies, interest rates and other factors to determine where the opportunities are. A great example of this was the Beijing Olympics. Even before they were awarded, we started looking at companies that would profit from the infrastructure explosion that was sure to follow. It was a big win.
Then we go bottom up. We’re typically analyzing about 100 companies around the world. We look at fundamentals like free cash flow, debt/equity ratio, earnings, dividends and a host of other factors to determine their real value. If a company’s stock is trading below this value, we see long-term potential and a chance for our clients to benefit. For example, we determined there was a good opportunity in the “bricks and mortar” retail sector that was suffering from the Amazon effect. We saw surviving retailers that were significantly undervalued in the market so we invested, the companies bounced back, and our clients are profiting.
You need feet on the ground. We do our own research, visiting companies to find out first-hand what they’re doing and where they’re going. We look at their financial structures, business principles, plans for long-term growth, and much more. We also have to know—and trust—the management teams of potential investments. They’re the ones who are going to guide the ship.
It’s all about picking the right stocks. Our analysts know their buy recommendations very well. They challenge each other. Sometimes the discussions are intense. Knowing when to sell is equally important. At any given time, we have a pool of about 30 companies that we add to and subtract from according to our ongoing analysis. We draw from this select pool to create each client’s unique investment portfolio based on their given mandate.
We’re a safe harbour in rough waters. When markets turn south our clients are less affected than most. That’s because preserving clients’ wealth is a high priority for us.
We invest alongside our clients. Our team members invest their own capital in the companies they recommend—a strong signal that we believe in our research and process.
You win because we focus on not losing. It takes years to accumulate a portfolio of $ 1 million, and we know that preserving that capital is vital to our clients. So we strive to protect our clients’ wealth, while seeking growth opportunities that will result in capital appreciation over time. That’s our value proposition.
Gino Ciavarella CIM
Cumberland Private Wealth
Gino Ciavarella is a seasoned financial industry professional with more than 23 years of experience. He is responsible for managing discretionary portfolios for CDSPI clients, bringing his deep experience, solid investment knowledge and a highly responsive approach to clients.
The Top Service—and Performance—You Deserve
Affluent clients are looking for a higher level of attention for their portfolios. CDSPI provides this in partnership with Cumberland Private Wealth for dentists with $1 million or more to invest. Cumberland has been helping investors achieve their financial and lifestyle goals through customized investment portfolios since 1997, and now manages more than $3 billion for high net worth clients across Canada.
If you are interested in learning more about value-oriented investing and how your portfolio could benefit from this investment style over time, please call CDSPI Advisory Services Inc. at 1.800.561.9401 to speak with an Investment Planning Advisor.