The Contrarian's Journey
In the summer of 1974, as the Watergate scandal consumed American politics and global markets teetered on the edge of collapse, a 34-year-old Canadian with a philosophy degree from McGill University made a decision that would define the next three decades of his life. Peter Cundill, armed with little more than an unwavering belief in Benjamin Graham's principles of value investing and a meticulous approach to research, launched the Cundill Value Fund with $100,000 in assets under management.
What followed was one of the most remarkable investment track records in modern financial history. Over 33 years, from 1974 to 2007, Cundill generated compound annual returns of 15.2% net of fees—a performance that turned every $1,000 invested at inception into over $80,000 by the fund's end. More impressively, he achieved this while investing globally in an era when most fund managers barely ventured beyond their domestic borders.
By the Numbers
The Cundill Track Record
15.2%Compound annual returns (1974-2007)
33 yearsInvestment management career
$100,000Initial assets under management (1974)
$2.2 billionPeak assets under management
80xTotal return multiple over fund lifetime
Born in 1940 in Montreal to a middle-class family, Peter Cundill's path to investment greatness was far from predetermined. His father worked as an insurance executive, and young Peter initially showed more interest in literature and philosophy than finance. After completing his undergraduate degree in philosophy at McGill University, he pursued graduate studies at the London School of Economics, where he earned a master's degree in international relations.
The turning point came in the late 1960s when Cundill discovered Benjamin Graham's seminal work, "The Intelligent Investor." The book's rational, analytical approach to investing resonated deeply with his philosophical training. Graham's emphasis on intrinsic value, margin of safety, and emotional discipline provided a framework that appealed to Cundill's systematic mind.
The Montreal Years
Cundill's professional investment career began in Montreal in the early 1970s, working for a small investment firm. But it was his decision to strike out on his own that truly set his trajectory. In 1974, he established Cundill Investment Research Ltd. and launched the Cundill Value Fund through a partnership with the Yorkshire
Trust Company.
The timing could hardly have been worse—or better, depending on one's perspective. The 1973-74 bear market had devastated global equity markets. The Dow Jones Industrial Average fell 45% from its 1973 peak, while the Toronto Stock Exchange dropped even more precipitously. For most investors, it was a time of despair. For Cundill, it was Christmas morning.
The best time to buy is when blood is running in the streets.
— Peter Cundill
His first major success came with his investment in Versatile Manufacturing, a Canadian farm equipment company. In 1975, when the company's stock was trading at a significant discount to its book value, Cundill began accumulating shares. His research had revealed that Versatile owned valuable real estate and had a strong balance sheet despite temporary earnings difficulties. Over the next two years, as the company's fortunes improved and the market recognized its underlying value, Cundill's investment generated returns of over 300%.
But it was Cundill's global perspective that truly set him apart from his Canadian peers. While most Canadian fund managers focused exclusively on domestic opportunities, Cundill began looking internationally as early as 1976. His philosophy was simple: value could be found anywhere, and artificial geographic constraints only limited opportunity.
Going Global
In 1977, Cundill made his first major international investment, purchasing shares in a small Japanese textile company called Kanebo. The company was trading at less than half its book value, despite owning valuable real estate in Tokyo and Osaka. Cundill's painstaking research, conducted through Japanese brokers and translated annual reports, revealed a company with substantial hidden assets.
The investment proved prescient. As Japan's economy began its historic boom in the early 1980s, Kanebo's real estate holdings soared in value. Cundill held the position for nearly a decade, ultimately realizing gains of over 1,000%. More importantly, the success established his reputation as one of the few Western investors who truly understood Asian markets.
I will go anywhere in the world to find undervalued securities. Geography is not a constraint when seeking value.
— Peter Cundill
Throughout the late 1970s and early 1980s, Cundill's fund grew steadily as his reputation spread. Assets under management reached $10 million by 1980 and $50 million by 1985. His client base expanded beyond Canada to include wealthy individuals and institutions from the United States and Europe, all drawn by his consistent outperformance and unique global approach.
The 1980s brought new challenges and opportunities. The decade's bull market made traditional value investments harder to find, but Cundill adapted by expanding his geographic reach even further. He was among the first Western investors to seriously explore opportunities in emerging markets, making significant investments in South Korea, Thailand, and later, Eastern Europe following the fall of communism.
The Asian Adventure
One of Cundill's most legendary investments came in the late 1980s with his discovery of Swire Pacific, a Hong Kong-based conglomerate with interests in aviation, property, and trading. At the time, political uncertainty surrounding Hong Kong's 1997 handover to China had depressed valuations across the territory. Swire Pacific was trading at a substantial discount to the value of its underlying assets, which included prime real estate in Hong Kong and a significant stake in Cathay Pacific Airways.
Cundill's analysis revealed that investors were pricing in an almost apocalyptic scenario for Hong Kong's future. His contrarian bet was that the territory would not only survive the transition but thrive as China opened its economy. He began accumulating Swire Pacific shares in 1988 at around HK$40 per share.
The investment required patience and conviction. Through 1989 and 1990, as the Tiananmen Square protests heightened fears about China's political stability, Swire Pacific's stock price remained depressed. Many investors fled Hong Kong entirely. Cundill not only held his position but increased it, purchasing additional shares at even lower prices.
His patience was rewarded spectacularly. As Hong Kong's economy boomed in the 1990s and China's growth accelerated, Swire Pacific's assets—particularly its real estate holdings—soared in value. By 1997, the stock had reached HK$200 per share, representing a five-fold return over nearly a decade. Including dividends, Cundill's total return exceeded 600%.
The European Expansion
The fall of the Berlin Wall in 1989 opened an entirely new frontier for Cundill's value-hunting approach. While most Western investors viewed Eastern Europe with skepticism, Cundill saw opportunity in the chaos of economic transition. He was among the first to recognize that many state-owned enterprises being privatized were trading at fractions of their intrinsic value.
His most successful European investment was in Skoda, the Czech automotive manufacturer. In 1991, as the company was being privatized, Cundill purchased shares at what amounted to less than the value of the company's cash and inventory, effectively getting its manufacturing facilities and brand for free. His research had revealed that despite Skoda's reputation for poor quality, the company had solid engineering capabilities and valuable real estate holdings.
The investment thesis proved correct when Volkswagen acquired Skoda in 1994, paying a price that represented a 400% return for Cundill's early investment. More importantly, the success established his credibility in European markets and attracted additional capital from institutional investors impressed by his ability to identify value in unfamiliar territories.
The Technology Bubble and Beyond
The late 1990s technology bubble presented Cundill with perhaps his greatest test. As internet and technology stocks soared to astronomical valuations, his value-oriented approach seemed increasingly obsolete. The Cundill Value Fund lagged the broader market significantly in 1998 and 1999, leading some investors to question whether his methods were still relevant in the "new economy."
Cundill remained steadfast in his principles. While others chased momentum stocks, he continued to search for undervalued companies with strong balance sheets and reasonable valuations. His 1999 annual letter to investors was characteristically blunt: "We will not abandon our discipline to chase speculative bubbles. History suggests that such bubbles always end badly."
The four most dangerous words in investing are 'this time it's different.'
— Peter Cundill
His vindication came swiftly. When the technology bubble burst in 2000, the Nasdaq fell 78% from its peak while the Cundill Value Fund declined only 12%. Over the subsequent three years, as growth stocks continued to struggle, Cundill's value-oriented holdings outperformed dramatically. By 2003, the fund had not only recovered its losses but reached new highs.
The early 2000s also saw Cundill expand into new markets, including Russia and other former Soviet republics. His investment in Gazprom, Russia's natural gas monopoly, exemplified his contrarian approach. Purchasing shares in 2002 when Western investors shunned Russian assets due to political instability, Cundill recognized that Gazprom's vast energy reserves were worth far more than its market capitalization suggested. The investment generated returns of over 500% as energy prices rose and Russian markets stabilized.
The Final Chapter
By the mid-2000s, Cundill's reputation had reached its zenith. The Cundill Value Fund managed over $2.2 billion in assets, and he was widely regarded as one of the world's premier value investors. His annual letters to investors were studied by finance students and professional investors alike, and he was frequently invited to speak at investment conferences around the world.
However, the physical and mental demands of managing a global investment portfolio were taking their toll. Cundill had always been a hands-on investor, personally visiting companies and conducting extensive research. The constant travel and stress began affecting his health in his mid-60s.
In 2007, at age 67, Cundill made the difficult decision to step back from active management. He transitioned day-to-day operations to his longtime associates while remaining as chairman. The timing proved fortuitous, as the 2008 financial crisis devastated many investment funds. Under new management, the Cundill Value Fund struggled to maintain its founder's exceptional track record.
Peter Cundill passed away in 2011 at age 71, leaving behind a legacy that extended far beyond his investment returns. His meticulous approach to research, global perspective, and unwavering adherence to value investing principles influenced a generation of investors and demonstrated that disciplined, patient investing could generate extraordinary long-term returns.
