Episode Summary
Executive Summary: Kim Shannon discusses her path into value investing, the importance of mentorship and team-based research, and Siona’s disciplined process combining simple quant screens with deep fundamental analysis. The conversation also explores women in asset management, relative value and risk control, portfolio construction, and Shannon’s view that value is historically cheap and may rebound when rates stop falling and inflation returns.
Main Topics: Kim Shannon’s career path into value investing: Shannon describes moving from volunteer organizing and a science background into finance, then learning value investing from a deep-value mentor in the 1980s and building a long career in Canadian asset management. Women in asset management and unconscious bias: She details the obstacles women face in the industry, the decline in women PM representation, and her efforts through mentoring and Variant Perspectives to improve visibility and access. Siona’s team-based investing philosophy: Shannon explains how Siona was built as a collaborative, open, independently run firm focused on developing internal talent, sharing a common value philosophy, and avoiding overreliance on any one person. Quant screens as a fast value-ranking tool: Siona begins with a simple quantitative model based on normalized valuation, earnings, book value, dividend yield, and financial risk to rapidly rank the universe and identify cheap stocks. Fundamental analysis and relative value: After screening, the team uses a structured questionnaire to assess competitive advantage, management quality, earnings quality, accounting integrity, and relative attractiveness within sectors to manage risk and diversify. Portfolio construction, sizing, and selling discipline: Shannon outlines how benchmark awareness, position limits, and three sell reasons—mistake, switch to a better opportunity, or reaching intrinsic value—shape active risk control and turnover. The outlook for value investing and market structure: She argues that value’s long underperformance is tied to falling rates and deflation, that today’s valuation gap is extreme, and that passive investing still relies on active managers for price discovery.
Key Arguments: Business is not just about profits; it is about organizing people and resources to make things happen, which aligns naturally with collaborative investing. Mentorship was decisive in Shannon’s career; without senior advocates and role models, women struggle to retain and advance in asset management. Asset management should be a meritocracy, but unconscious bias still reduces the share of women in portfolio management and ownership. Siona’s process is deliberately simple at the screening stage to stay efficient and responsive, especially during market dislocations. Fundamental analysis remains essential because screens can identify cheap stocks, but only deep work can assess truthfulness of earnings, balance-sheet risk, and competitive durability. Relative value reduces benchmark and style risk by selecting the cheapest names within sectors rather than concentrating in the cheapest sector overall. Selling should be driven by errors, superior replacements, or valuation realization, with discipline to avoid giving back gains after intrinsic value is reached. Value’s recent underperformance is explained largely by the long decline in interest rates, which boosted long-duration growth stocks through a discount-rate effect. Passive investing can only function because active managers still do the work of research, valuation, and price discovery; if active becomes too thin, market efficiency may weaken.
Data Points: Industry experience: 35+ years - Kim Shannon’s total experience in the asset management industry. Siona founded: 2002 - Year Shannon founded Siona Investment Managers. Women in entry class: upper teens - Shannon’s estimate of women’s representation early in her career. Women portfolio managers (historical peak): 16% - Share of women PMs when mutual funds were strong. Women portfolio managers (recent): 10% - Current approximate share of women portfolio managers cited from CIO article. Women in leadership at asset management firms: 10% - Approximate share of women in leadership roles in asset management. Assets under management managed by women: 3% - Share of AUM managed by women cited in the discussion. Assets under management managed by women owners: 1.2% - Share of AUM managed by women who are owners in some capacity. Major institutional investors represented by CCGG: over 50 - Canadian Coalition for Good Governance membership base. Assets represented by CCGG: more than $4 trillion - Combined assets managed by institutions represented by CCGG. Siona growth in Canada: from $0 to $3.5 billion in 3.5 years - Growth after Shannon joined Merrill Lynch to help build Canadian asset management. Original Canadian mutual fund size: $40 million - The Canadian Equity Fund size when Shannon took over and turned it around. Model horizon: 2 years - Siona uses two-year-ahead earnings, book value, and dividend assumptions in its screening model. Target expected return on purchase: minimum 30% - Shannon says new purchases ideally enter with at least 30% expected return. Portfolio risk cap: 10% - Cap 10 benchmark: no stock more than 10% of portfolio on a book-value basis. Historical value outperformance frequency: 84% - Shannon cites Fama-French/Morningstar-era data showing value outperforms growth most of the time. Worst wartime interest rate level cited: 1.95% - U.S. all-time low rate in 1941 referenced in the historical comparison. Recent low North American rate cited: 0.34 basis points - Shannon cites a record low in North America as part of the deflationary backdrop for growth outperformance.
Pivotal Quotes: "Up until now, I've been competing with half the population, and I welcome competing with the entire population." — Warren Buffett: Buffett’s remark at the Omaha conference on increasing women’s participation in investing. "Business was about making things happen with other people." — Kim Shannon: Her description of the realization that led her into business and later collaborative investing. "if you buy value today and you're a patient investor... this is one of the best times to buy value given how cheap it is relative to growth in over 80 years." — Kim Shannon: Her view that current valuation spreads create an unusually attractive entry point for value investors.
Implications: Listeners should expect value investing to remain highly relevant, but only when paired with disciplined research, risk control, and patience. For the industry, the episode underscores the need for better diversity, active price discovery, and adaptable value frameworks in a passive-heavy market.
About Value Investing with Legends
Value investing is more than an investment strategy — it's a fundamental way of thinking about finance. Value investing was developed in the 1920s at Columbia Business School by professors Benjamin Graham and David Dodd, MS '21. The authors of the classic text, Security Analysis, Graham and Dodd were the very pioneers of their field and their security analysis principles provided the first rational basis for investment decisions. Despite the vast and volatile changes in the economy and securities markets during the last several decades, value investing has proven to be the most successful money management strategy ever developed. Value investors' success over the second half of the twentieth century proved not only the validity of the value approach, but its preeminence over even the most widely taught and practiced modern investment theory, which was developed in the 1950s and '60s and remains dominant even today. Our mission today is to promote the study and practice of Graham & Dodd's original investing principles and to improve investing with world-class education, research, and practitioner-academic dialogue. In this podcast you will hear from some of the world's greatest investors, their views on the investment management industry, how they developed their investment process and how they see the field changing over time.