Japanese insurers at 40% of NAV vs. 150% in the U.S.
   McElvaine: Peter mentioned our activities in Japan. We have a number of holdings in Japan that make up a large part of the portfolio. A couple names you would know are MEI [Matsushita Electric Industrial Company] and Hitachi. Both are industrial concerns that are trading well below net asset value. Koa Fire and Marine is a property and casualty company that trades for about 40% of net asset value -- and it's making money -- compared to U.S. insurers which generally trade at 150% of NAV.

We remain cautiously optimistic about Semi-Tech Global.
   McElvaine: And then there's Semi-Tech Global -- which is related to Semi-Tech Corp., but is not the same thing. It's really a quasi-Japanese holding company. Semi-Tech Corp. owns companies such as Sansui, Akai and Pfaff and is related to the Singer Sewing Machine Group. Once again, it's cash and securities at a discount. And we remain cautiously optimistic about its future....

We'll buy anything at a price -- even retailers.
   McElvaine: One of the things Cundill Security Fund's done is retailers. Retailing's a tough, tough, tough business. Warren Buffett said, "In some businesses, you have to be smart once. In retailing, you have to be smart every day -- every second." And that means it's a tough business to invest in.
   However, the sentiment was so, so negative in the Canadian retailers that we found that the prices outweighed that to some extent. And we bought a number of retailers. Our largest position in Cundill Security Fund, in fact, is in a retailer -- Dylex. And in spite of everything you might have seen in the newspaper, we actually own it at a profit. So we'll see how that goes from here.

An oil & gas business at a discount & a retailer for free....
   McElvaine: Peter asked me to mention Gendis -- which is another holding in Cundill Value Fund. Canadian retailers aren't the most popular things today in the investment world. And Gendis kind of fell into the category of not really being a retailer, but being a big retailer.
   It has a number of holdings. It has a holding in Chauvco Resources that's worth roughly C$12 a share. It has about a C$800 million retail business -- admittedly not the best business in the world, but 800 million bucks worth of sales is 800 million bucks. And the stock trades at C$10 a share. So we figure we're getting the oil and gas company at a discount and we're picking up the retail business for free.

Believe it or not, we even own some good businesses....
   McElvaine: Another group we have some holdings in is the newspaper group. That seems a little bit odd for a value investor. But we believe that our cost is below what their properties would sell for in an orderly sale. We own shares in Southam and Hollinger.

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