@dj: I can confirm that Rob suggested looking into CYB for my own account. I wrote a post on it after asking him if it’s okay to do so. I thought it is an interesting story even if it’s not the kind of investing many readers do here.

DJ – I just saw your comment from back in late April. That was before the weekend and I have tried to leave this alone. I hate myself that I can’t just leave things like ill-informed comments alone, but I can’t so let me address them:

First, “advisers love to make it on both ends”? Not sure what that means, other than CYB owners indirectly own 21% of EdgePoint mutual fund company. My original responses to all of these are now gone, which is a shame… but the main point is this would be one of the stupidest investments an advisor could use if their goal was to screw their clients. If that is there goal, there are a million products designed to do just that. CYB isn’t one of them. Also, not sure how this is bad for EdgePoint owners, or CYB owners – unless you think advisors are going to encourage their clients to buy EdgePoint so their CYB shares are worth more. Again, the only response to this is there are a million products designed to do just that and would accomplish this far more effectively than CYB. Doesn’t make sense.
THE HIT?
CYB is illiquid, so your comment about it being “hit” applied to a very few number of shares. CYB has typically traded above NAV, but there has been painfully little volume below NAV (more on why this is painful in a minute). The “hit” you describe is simply the effect one or two larger shareholders getting out for what could be a plethora of reasons. This will happen repeatedly and I hope there are more (more on that later).
Anyone owing CYB should only own it understanding the pros and cons of illiquidity. CYB owners are compensated by getting to own a piece of the EdgePoint mutual fund company.

PERFORMANCE
So let’s talk about the investment results based on the Class A share NAV (the J class of shares will be even better as they had no underwriting fees). Let us also use December 31st of each year, and then again on June 30th of each half year, because those reports are nicely prepared for us in CYB’s annual report. Figures here are audited by KPMG and the report is publicly available on their website.
From http://www.edgepointwealth.com/documents/Cymbria%202010%20Annual%20Report.pdf – Page 2
In the short period since inception on Nov 4th, 2008, CYB has had a cumulative growth (after fees) in NAV of 34.98% compared to its benchmark (MSCI World on C$) of 18.71%. Note that this is cumulative, and not annualized outperformance. In other words, it has certainly beaten its benchmark. But they and I will be the first to say that this as WAY too short a time period to gauge long-term success. All this early success does is give them a good start on their goal to perform in the top quartile over 10 years.
We can look again soon after the June 30th semi-annual report comes out and keep track of this on the CC site if you (and of course RAM) likes. I don’t think they will beat their index in every period – but I believe this will beat it over the long term period and we can watch along the way to see how CYB is doing.
The Global Portfolio mutual fund is doing equivalently well to CYB based on NAV… the only difference being the effect of cash flows in on the open-ended fund, and the slightly higher fees in the mutual funds.

SORT OF A PUMP?
As for your comment “sort of a pump”. I have no interest in you and nothing to gain by you or any of CC’s readers liking this investment. I originally sent this CYB idea to Ram, not for a post, but just as an idea if he wanted any active management in his portfolio. He confirmed this in later comments which have also been deleted. He turned CYB into a post (which is 100% his right to do if he wants). But to think this is a grand master sinister plan of mine to promote the investment and trick people is a little weak. A site where people hate active management is not really an effective forum to do that.

On the contrary, I actually want people to have zero interest and hope it continues to trade at prices below NAV. When it does this, CYB can buy back their own shares and get all their stock ideas in the fund on sale so-to-speak and concentrate the EdgePoint ownership back for the benefit of remaining CYB holders.
SHARE BUY BACKS
CYB has been frustratingly trading slightly above NAV for the vast majority of trading days. This has made it very difficult for CYB to buy back and cancel shares. Recently, they were able to buy a few hundred back, and I hope there are doing it as we speak since it has finally traded at worthwhile discounts in the last month or so.
By the way, buying back and cancelling shares reduces management’s fee income, but helps investors. Please help me understand why this is bad because I am sure you can come up with a reason

SUMMARY

DJ – you are likely similar to me in your cynicism of the industry. I can assure you that I am extremely cynical after working in it for 21 years and seeing first hand all of the crap that goes on. Similarly, the founders of EDGEPOINT (Tye Bousada, Geoff MacDonald and Patrick Farmer) are ethical guys who find the industry just as frustrating. They could have made a lot of quick money for themselves playing in that game, but they have chosen instead to take a longer-term approach and make an investor-focused firm in response.
If I seem passionate about this product, please accept that it may be because I have a hell of a time finding investments I think are good for my clients.

If you want to continue to monitor and evaluate this investment, lets do it semi-annually on the site, using facts and not just pre-conceived biases. Fair?

I do occasionally edit comments to clean up unacceptable language but when I do, I add a note that the comment has been edited.

If the manager’s former trading records at Trimark are any indication of what Cymbria will see, investors will take comfort to see their turnover will likely be very low. At Trimark, trading costs were a super-low 0.05% typically (many high turnover funds can add 2.0 – 3.0% in costs).

Furthermore, this is a closed-end fund so no trading needs to be done when cash comes in with new purchases or leaves due to redemptions. This will also keep it low.

What elese could an active investor ask for?”

The only comment I’ll add for active investors is to also look for low turnover. All too often, active funds turnover their investments at a rapid pace, incurring not only trading commissions but also taxes. It may not be realistic to expect turnover to be as low as index funds but lower turnover indicates that the manager is truly buying stocks with a long-term view in mind.