Classic Value Account

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A Classic Value Account offers investors access to the Intrinsic Value asset management of Portfolio Manager Scott Leckie.

Intrinsic Value asset management is a common sense investment methodology that has been successfully applied starting in the 1920s by investors focused on rational business values rather than market prices.

Beginning in 1986, Mr. Leckie has developed and successfully implemented his own adaptation of it, described below under “Investment Objectives”.

Investment activities involve the opportunistic purchase and sale of common shares, corporate debt and other securities such as options principally in the Canadian and to a lesser extent US public markets. Private securities may exceptionally be considered.

Classic Value Accounts are eligible for Registered Accounts.


Portfolio Manager: W. Scott Leckie, CFA
Mr. Leckie has been managing client assets on a discretionary basis since 1993 and advising investors since 1986.

As Portfolio Manager, Mr. Leckie focuses exclusively on Intrinsic Value discretionary asset management. In addition to managing all Classic Value Accounts, he also manages a number of segregated accounts for which a variant of his methodology, Premium Value, is offered (Premium Value Accounts and the Aquilon Premium Value Partnership extend the investment strategy by including the possibility of shorts and leverage; Premium Value portfolios are not RRSP eligible).

All Classic Value portfolios share the same strategy and investment opportunities, leading to similar portfolios and results.

General Partner and Investment Advisor: Takota Asset Management
Takota Asset Management was founded by Mr. Leckie in April 2012. Takota manages investment portfolios and aims at creating value for its investors by seeking and realizing upon intrinsic value investments, which currently includes taking advantage of the dislocations and opportunities created by the financial crisis.


Preserve capital and generate significant returns
The first objective of the Portfolio Manager is to avoid the permanent impairment of the invested capital. To do so, the Portfolio Manager evaluates and compares the intrinsic value of each potential investment to its current market price. The intrinsic value of any investment is equal to the value of its share in the underlying business, when that business is appraised with common and rational business sense. For an investment to be considered further the intrinsic value of the investment needs to be significantly higher than its asking price.

The significant difference we seek between intrinsic value (business value) and asking price (market value) represents a margin of safety that will offer us protection against adverse corporate developments. It is also the source of our future profits.

The second objective of the Portfolio Manager is to generate significant long-term returns, well above traditional market returns. To achieve this objective, the Portfolio Manager builds on the intrinsic value methodology described above. Once he has found securities offered at a significant discount to their intrinsic value, the Manager evaluates the possible catalysts, existing or that he could introduce, that could provoke the market or other business interests to re-evaluate those securities to a value closer to their intrinsic value. When that value is reached, the investment is sold and the process started anew. Investments are made only when the Portfolio Manager is reasonably confident that a minimum annualized rate of return of 20% can be obtained.

When looking at the entire capital structure of a target company, the Manager will consider only those securities that have the highest margin of safety (for capital protection) and the potential of returning at least 20% annualized. Investment decisions are strictly based on this bottom-up analysis and are solely driven by the Portfolio Manager’s intrinsic value assessment of each individual investment.


The Portfolio Manager prefers to concentrate the invested capital on the best investment opportunities he can find, those with the highest margin of safety and the highest likelihood of success. While such concentration can accentuate short-term market-induced volatility, it is essential to lay the foundation for significant long-term returns. Even so, it is only the rarest of opportunities that results in an allocation at the maximum level permitted (20% of the invested capital).

Risk is assessed separately for each investment. Each position is weighted according to its own risk and potential impact on the portfolio. The portfolio exposure to the market is the aggregate of all individual investments and varies according to the availability of suitable opportunities.

The Manager does not seek to be invested at all times. When no acceptable opportunities are to be found, cash will be preserved for future use rather than tied up in second-rate investments. The Manager does not use any top-down analysis and does not set targets for cash level or total market exposure.


Classic Value Accounts are dedicated to investors who have a long-term perspective of their need for capital accumulation and who:

  • Share in the Manager’s objective of long-term returns significantly higher than those usually delivered by traditional asset management or index investing, irrespective of short-term returns;
  • Understand and are comfortable with the uniqueness of intrinsic value investing (such as seeking value amongst out-of-favor companies or portfolio concentration) and the resulting un-conventional behavior of such portfolios;
  • Understand that portfolio risk is controlled by assessing and tracking the margin of safety of each investment, and not by traditional methods such as portfolio diversification or value-at-risk or any other quantitative method also relying on past historical data;
  • Understand that market-induced volatility is of little long-term relevance and that accordingly short-term performance will not be targeted by the manager;
  • Are willing to commit in principle to an initial investment horizon of three year at a minimum. Such a horizon is occasionally required for a new pool of intrinsic value investments to start accumulating significant results.


Name Classic Value Account
Structure Managed Account (segregated account managed on a fully discretionary basis)
Portfolio Manager Scott Leckie, CFA
Custodian Canaccord Genuity
Investment Management Style Intrinsic Value Investing
Investment Objective Significant long-term growth while avoiding permanent impairment of capital
Investment Universe Mostly Canadian securities
Eligible Securities Publicly traded equities, options and debt securities; may at times include some private investments
Minimum Initial Portfolio At discretion of Portfolio Manager
RRSP Eligibility Eligible
Subsequent Investments No stated minimum
Recommended Holding Period Minimum of 3 to 5 years to reflect the long-term nature of intrinsic value investing
Target Return While the Manager does not target a specific annualized return, each investment at inception must have the potential to yield a 20% annualized return
Maximum position allocation 20%
Maximum market exposure 100% of capital
Management Fee 2.00% on the first $1,000,000
1.75% on the next $1,500,000
1.50% on the next $2,500,000
1.25% on amount above $5,000,000
Performance Fee 20% of net performance above hurdle rate, subject to high water mark
Hurdle Rate 5%

This document is offered for informational purposes only and does not constitute an offer to sell or buy any securities. Past performance is not indicative of future results of any particular investment. There can be no assurance that a consistent return will be achieved, and an investor may in fact incur losses. The third party information used in this document has been obtained from various published and unpublished sources considered to be reliable. However Takota Asset Management Inc. cannot guarantee its accuracy or completeness and thus do not accept liability for any direct or consequential losses arising from its use.

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