Warren Buffett and Saj Karsan
Saj Karsan, 31
Occupation: co-founder of an investment firm
The portfolio
Shares in H. Paulin & Co. Ltd., EnviroStar Inc., Microsoft Corp., Best Buy Co. Inc. and other companies.
The investor
Saj Karsan studied value investing under Professor George Athanassakos at the Richard Ivey School of Business, graduating with an MBA. During his studies, he and other classmates visited Berkshire Hathaway Inc. offices in Omaha and dined with Warren Buffett.
"The most striking thing about him was his humility," as Mr. Karsan recalls on his blog (barelkarsan.com). "He drove a couple of us to the restaurant, didn't bring an entourage with him, and didn't leave until all our questions were answered."
Mr. Karsan has also passed all three exams for the chartered financial analyst designation, and co-founded an investment firm focused on value investing.
Investing approach
"Basically, I am a long-term investor who considers buying stocks as if I'm buying a part of a business," Mr. Karsan says. "And most of all, I only buy if I believe there is a large margin of safety."
A margin of safety arises when a company's value on the stock exchange is substantially less than its net asset value. So even if a bankruptcy occurs and assets have to be sold, the proceeds should be enough to pay back investors.
Mr. Karsan often doesn't invest until the margin is substantial. For example, he added shares in H. Paulin & Co. to his own portfolio when its market capitalization was trading below not only the value of net assets, but also the value of net current assets (cash + inventories + receivables - total liabilities).
Mr. Karsan also invests in companies with solid earnings power, if undervalued according to measures such as the price-to-earnings ratio. Cases in point are Microsoft and Best Buy.
Best move
One of his better investments was in mortgage finance company Quest Capital Corp. (which became Sprott Resource Lending Corp. in September, 2010). The company had made some bad loans prior to the recession but they "were secured by decent real estate assets … and management was more interested in buying back shares with the cash flow that was coming in from the performing loans and foreclosures."
Worst move
"My investment in [mobile phone distributor]Orsus Xelent Technologies didn't work out so well. The main lesson I take from it is to avoid companies reliant on one customer."
Advice
"The future is uncertain … the best way to ensure investment success is to only buy when a large margin of safety is present." Mr. Karsan's blog has more advice, as well as summaries of his value analyses.
Special to The Globe and Mail
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