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Mutual Fund News

ME AND MY MONEY

Special to The Globe and Mail

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 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 best way to ensure investment success is to only buy when a large margin of safety is present."

Want to share your strategies?

E-mail mccolumn@yahoo.com

© 2007 The Globe and Mail. All rights reserved.

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