Soundbites

Soundbites briefly explore what’s on Sionna managers’ minds.

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Classic Contrarian Value Opportunity, or a Disruption Trap?

November 2018

In the search for excess returns, investors chase disruptors that they believe will transform the way businesses operate. High-quality investment opportunities are being discarded in their wake, which is great news for contrarian investors like Sionna. We aren’t blind to disruption in the economy and industry. But, we also recognize when things go too far, too fast. Kim Shannon recently delved into this topic and revealed a current stock we believe the market has dramatically overlooked. This stock is inexpensive on a price-to-earnings basis and is trading almost 50 percent below its all-time high. Curious?

The Sionna Hype Cycle of Investment Products

February 2018

Over the years, we have watched the annual Gartner Hype Cycle forecasts with interest. For those that are not familiar with it, the Gartner Hype Cycle outlines extreme peaks and troughs that can occur with new technology trends. It demonstrates how hype can build and eventually collapse under the weight of over-inflated expectations, until finally the collective wisdom settles into a more balanced reality about the growth of a new product or concept. As the hype for the new and novel seemed to gather steam this fall, we developed our own “cheeky” version – the Sionna Hype Cycle of Investment Products – in tribute to Gartner’s innovation.

Artificial Intelligence and Stock Picking – the Future is NOT Here

December 2017

There is quite a bit of enthusiasm surrounding Artificial Intelligence (AI) and its potential to replace traditional stock picking. But, enthusiasm and hype of a new concept is common in market history. Humans love forecasting extremes – bland forecasts are boring and not worth talking about. Historically, market players fall prey to hype and assume adoption and acceptance of a new initiative will occur much more rapidly than it actually does.

Looking for Eldorado

June 2017

Throughout history, humans have sought the mythical city of gold, Eldorado. Explorer, Sir Walter Raleigh essentially spent his life searching for it, but never succeeded. Eldorado represents something much sought after, but something that may not even exist. For centuries, humans have also been searching for a perfect investment vehicle. There is a long history of fads and fashionable new strategies that, at the time, offered a seemingly simple, dependable solution. Often these fads have led to overuse (manias) and then disillusionment.

A Contrarian Value Opportunity Revealed

March 2017

As a value manager, we know that value picks don’t always perform right away; the best returns tend to be seen over the long term. The contrarian value opportunities are in stocks that are either overlooked, underfollowed or in some kind of trouble.

The Middle Way

March 2017

Buddhists have a term, middle way, which refers to the human tendency to explore extremes (for example, austerity versus indulgence) until centeredness is found by achieving a balance between the two. It suggests the path to wisdom is to aim for the middle way, and it is this path of moderation that leads to insight. It's a caution against indulging extremes. How have we seen this practice apply itself to financial markets?


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