CUNDILL VALUE & CUNDILL SECURITY FUND'S
PETER CUNDILL & TIM MCELVAINE
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OID: Can you tell us anything about earnings or returns historically?
   McElvaine: Like Paribas, this is a company in transition. They're taking a cash asset and redeploying it into an operating business. So you have to be careful with drawing too many conclusions from their past results. However, historically, they've earned as much as FF44 as recently as 1992.

OID: They've earned that much?!
   McElvaine: They did. But that was a different time. We don't think of that as necessarily being representative.

OID: Could you even ballpark normalized earnings -- if there is such a thing here?
   McElvaine: There's not, really -- because they now have cash and industrial assets. So what will they be able to earn going forward? Well, the stock's at FF130 and the cash is earning 5% today. So they may have earning power of around FF15 today. But once their cash is redeployed, we just think that they'll be able to do a lot better, although how much better we can't really say.

OID: It's awfully tough for us to do background work or fact checking on these companies. We don't have remotely the data available for these that we do for domestic firms -- even for most very small ones.
   McElvaine: Actually, the Street's in the dark, too. But again, in the case of Nord Est, the current price of the stock is more than covered by the current assets. You get the industrial operation for free. They have a shareholder who doesn't want to be there. They're focusing their energies and other assets on their core business. And no one knows anything about it or really cares.
   Frankly, what else do you need to know. We've found that to be a combination that tends to lead to good things.

OID: It's certainly hard to argue with you there.
   McElvaine: Our downside is protected by the cash -- although, of course, it can be subject to piracy or stupidity. And the discount to NAV is substantial. So our upside will come as they evolve into a focused operating business.
   In effect, the arithmetic is on your side.

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