One of Canada’s most influential value investors stood at a podium in front of a few hundred people at a conference in Las Vegas last month to deliver his next compelling investment idea.
Four times in the previous two years he had stood at that podium, presenting a total of six stock picks. All six have been winners, producing an average return of 80%.
His name is Guy Gottfried. Few people know his name outside of the couple hundred devoted followers who shell out $4,000 to hear him and other top hedge fund managers speak at the Value Investing Congress. But with each winning stock pick, his reputation grows.
Gottfried is the founder and manager of Rational Investment Group, a value-oriented investment fund based in Toronto. The fund employs a risk-averse, research-intensive value methodology to uncover securities exhibiting material upside potential along with minimal risk of capital impairment. Prior to launching Rational, Gottfried was an analyst at Fairholme Capital Management – a fund managed by Bruce Berkowitz.
Long-time $100k Portfolio subscribers will recall that Berkowitz is the manager of the $8 billion Fairholme Fund (FAIRX). At the time Fairholme was a top-performing fund, earning Berkowitz the prestigious U.S. Equity Fund Manager of the Year award from Morningstar.
The mutual fund was also a top performer in our portfolio, returning 51% between February 2009 and June 2011.
Berkowitz was renowned for his Warren Buffett-like investing approach, uncovering great companies at reasonable valuations. His strategy helped Fairholme outperform the S&P 500 for six straight years. Now, one of Berkowitz’s disciples is achieving the same kind of success using Buffett’s principles.
What’s remarkable – and somewhat baffling – is how little Gottfried is in the spotlight despite his growing celebrity. He doesn’t do TV interviews – you never see him on CNBC, Fox News or Bloomberg. There is almost nothing about him on the Internet. He hardly even promotes his own investment fund.
But he does appear twice a year at an exclusive investment conference. Professional investors flock to the Value Investing Congress to hear presentations from the likes of Bill Ackman, Leon Cooperman and David Einhorn. Lately, this reclusive, little-known manager from Toronto has outperformed them all.
I witnessed Gottfried’s rising popularity first hand at a recent Value Investing Congress in New York. During the break after his talk, I noticed a crowd of people gathering around him to discuss his presentation.
When I asked another attendee what all the fuss was about, he explained that while Gottfried may not be a household name, he is one of the conference’s main attractions. People have taken notice not only of the performance of his picks, but also the depth and consistency of his analysis.
Six consecutive winners and 80% average returns tend to get investors’ attention. Especially when you consider that the average holding period for those recommendations is just 13 months.
Value Investing Congress attendees are lucky: he only shares his favorite investment ideas at this exclusive biannual conference. I was captivated by Gottfried’s research analysis. The quality of his investment idea was the best of the 20 presentations I heard.
Gottfried obviously has a talent for managing money. And I like the fact that this long-term value investor presents his very best stocks at this exclusive conference.
His Rational Investment Group fund is averaging 28% annualized returns. That kind of performance would attract an influx of investors in the U.S. But the firm remains small and off the radar, thanks to its location in Canada and Gottfried’s desire to avoid publicity.
In my mind, Guy Gottfried is on a path to becoming the Warren Buffett of Canada. While he’s still early in his career with just four years of track record, his 28% return is outpacing Buffett’s average 19.7% return.
In my latest issue of the $100k Portfolio, I present a stock that was recommended by Gottfried just last month at the Value Investing Congress. The stock fits perfectly into our investment portfolio and strategy, and could be another big winner.
Sometimes it makes sense to invest alongside one of the best performing and most overlooked money managers in the world.
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