The Power of Patience: Peter Cundill’s path to profitable investing

Canadian value investor Peter Cundill has consistently emphasised that patience is the cornerstone of successful value investing.

In his view, patience meant maintaining confidence in a company’s future based on thorough research. However, he distinguished this from stubbornness, which he defined as holding on to an investment despite negative analysis or disappointing results.

Let's take a look at some of the learnings he shared and left behind for fellow investors.

Cundill often advised that in the pursuit of value, investors should not be swayed solely by low prices. Instead, he urged them to dig deeper into a company's profit-and-loss statements and balance sheets to uncover hidden assets, seeking opportunities to buy companies at prices below their liquidation values.

He emphasised the importance of applying the 'margin of safety' rule when picking stocks, as it offers a strong theoretical foundation for selecting investments based on their realizable underlying value.

Cundill believed that only a small number of investors made decisions grounded in thorough research and analysis.

He stressed that when an investor conducts proper research, they gain an edge over others. This advantage gives them the confidence to seize opportunities early, without waiting for others to act first.

Cundill believed that investors should establish a clear set of criteria to guide their investment decisions.

Cundill believed if investors have to do well, they must show full passion and dedication towards their work. This conviction and passion can lead them to the path of success.

Cundill believed if investors operated from a value-oriented framework, they were sure to make money.

Cundill encouraged investors to search for value stocks on a global scale, as this increases the likelihood of discovering worthwhile opportunities. He embraced this approach himself, becoming a global investor and exploring various international markets in search of deep value investments.

Cundill believed it was crucial for investors to stay informed about the latest developments in the financial world, as information is the foundation of sound investment decisions. He advised investors to read widely, build strong networks, and stay focused on their objectives.

He also emphasized that before committing valuable capital, investors should ensure they fully understand the situation at hand.

Cundill believed that patience was the most essential quality for a successful investor, as it could often take months, or even years, for an investment to yield results.

Cundill advised investors to maintain a detailed investing journal throughout their careers, documenting both their successes and failures. He believed this practice could help them reflect on past decisions and avoid repeating earlier mistakes.

Cundill recommended that investors perform a critical analysis of their decisions and performance at the end of each year. He emphasised the importance of doing this with honesty and humility, as it would help them continually improve and elevate their investing skills.

The investing veteran believed that seeking insider information about stocks was not advisable, as it would only result in temporary gains. While such information might cause short-term price movements, ultimately, it is the underlying value and economic conditions that truly influence stock prices and drive long-term investment success.

Cundill advised investors to maintain flexible investment plans and not rely solely on a single strategy to navigate market fluctuations. Flexibility allows for adapting to changing conditions and better managing the ups and downs of the market.

Cundill acknowledged that identifying great investments is challenging and that investors might experience temporary setbacks while searching for the right opportunity. “When you invest in value, you often need to average down. None of the great investments come easily—there’s almost always a significant setback for some reason. We’ve learned to expect this and not to panic. There’s always something to be done. You just need to look harder, be creative, and remain flexible,” he advised.

(Disclaimer: This slideshow is based on the book "There’s always something to do: The Peter Cundill Investment Approach" by Christopher Risso Gill.)