Old West Investment Management 4Q18 Commentary “Our Time Has Come”

Old West Investment Management commentary for the fouurth quarter ended December 31, 2018, titled, “Our Time Has Come.”

This first appeared on HiddenValueStocks

Q3 hedge fund letters, conference, scoops etc

Dear Investor,

We founded Old West Investment Management slightly more than ten years ago, in November of 2008, right in the middle of what is now known as The Great Recession. The stock market reached its bottom on March 9, 2009, and what followed was one of the longest and strongest market runs in history. In past letters I have repeatedly bemoaned the fact that trillions of dollars have flooded into market index funds with little or no regard for valuation.

The reason this letter is titled “Our Time Has Come,” is because the next five to ten years will be entirely different than the past five to ten years. As we saw this past December, trillions can be lost in just a matter of weeks. I believe valuation does matter, and company fundamentals and financial analysis make or break the outcome of an investment. At Old West, our sweet spot is rigorous financial analysis of companies, and sourcing investment ideas based on stocks trading at significant discounts to their intrinsic value. If you contrast this with blindly buying the overall market in an index fund, there is no question in my mind which is safer. I predict we will outperform the market by a wide margin over the next several years, and we are excited to watch this unfold. Value investing has been out of favor during this bull market, but it is about to become very popular. The growth versus value debate is not new, and over the long run value investing is the clear winner. We at Old West are reluctant to be labeled growth or value because we are attracted to both strategies. We have little interest owning a company that doesn’t have high prospects of growing revenue and earnings, and simultaneously we have a hard time overpaying for a company. Who doesn’t love a bargain?? Warren Buffet said that for him, growth and value are joined at the hip. We agree.