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Value Investing with Legends

May 22, 2020

Today’s conversation is with Kim Shannon President and Co-Chief Investment Officer at Sionna Investment Managers. Kim founded Sionna Investment Managers in 2002 and has more than 35 years of industry experience, and previously served as the Chief Investment Officer and Senior Vice President at Merrill Lynch Investment Managers Canada. Kim is also a board member with the Canadian Coalition for Good Governance, the author of The Value Proposition: Sionna's Common Sense Path to Investment Success, and the recipient of numerous awards, including Morningstar Fund Manager of the Year (2005).

I've been looking forward to meeting Kim for quite a while and I finally had the opportunity to do so recently at a panel that we did during the last Berkshire shareholder meeting. Kim has had a fascinating career so far, with a unique perspective as a rare woman in the asset management industry. Near the end of her undergrad degree in science, Kim had an opportunity that showed her a new side to a career in business. That realization set her on an entirely new path toward the investment industry, where she worked her way from the very bottom to top positions at Merrill Lynch Investment Managers, eventually opening her own firm.

On this episode, Kim and I discuss why she became a believer in value investing, the importance of mentorship for building your reputation and career, her approach to portfolio construction and investment philosophy, and so much more!


Key Topics:

  • Kim’s journey from a degree in science to a corporate career in the investment world (2:50)
  • Why Kim became a believer in value investing (4:23)
  • The value of viewing business as more than the profit motive (5:42)
  • How worked her way up from the bottom at Royal and Sun Alliance to being pursued by Merrill (7:02)
  • The state of the asset management industry for women in the early 1980s (11:02)
  • How mentorship helped Kim build her reputation and career (11:36)
  • Why the meritocracy of the asset management industry is beneficial for women (13:00)
  • The deteriorating situation for women in the asset management industry (14:49)
  • Shocking statistics for women in leadership positions in the industry (16:04)
  • The mission of Variant Perspectives (16:41)
  • The principles Kim has built into Sionna’s investment approach (19:11)
  • Kim’s approach to search, using a quant model as the first step (23:28)
  • How Kim’s team performs fundamental analyses on potential investments (27:57)
  • How knowledge analysis is structured at Sionna (30:20)
  • Why being a specialist can increase your biases (31:32)
  • Sionna’s perspective on assessing relative value (32:37)
  • The importance of the financial services sector (34:04)
  • The unique aspects of value investing in the Canadian market (35:08)
  • How Kim thinks about sizing positions and risk management (39:17)
  • The three main reasons to exit (41:13)
  • Why this down market is unique (45:03)
  • The Canadian market opportunity which has opened up (47:30)
  • Analyzing the current crisis from the perspectives of big tech and energy (49:04)
  • The problem with over-anticipating the next move in the market (50:09)
  • Why you need to understand financial history (51:18)
  • Getting curious about what happens when value underperforms growth (52:56)
  • Why Kim thinks this is one of the best times to buy value (56:47)
  • The tricky balance between the success of passive investing and the need for active managers (58:54)
  • And much more!


Mentioned in this Episode:


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