Invest With Us
We Spend 99% Of Our Time FOCUSED
On the 1% of Stocks Every Other Fund Ignores
Our History
Our Three Core Beliefs
High Quality Businesses
“Your goal as an investor should simply be to purchase, at a rational price, a part interest in an easily-understandable business whose earnings are virtually certain to be materially higher five, ten and twenty years from now.”
– Warren Buffett –
Overlooked
“If you spend your energies looking for and analysing situations not closely followed by other informed investors, your chance of finding bargains greatly increases.”
– Joel Greenblatt –
Concentration
“It’s not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it – who look and sift the world for a mispriced bet – that they can occasionally find one.”
– Charlie Munger –
Strategy
Focus: “Overlooked” stocks
Definition: Stocks where: 1) the percent of shares outstanding traded each year is abnormally low and 2) The beta is abnormally low
Style: Value / Quality
Size: Nano-cap, micro-cap, and small-cap stocks (smallest current stock: $30 million market cap; largest: $475 million market cap)
Concentration: 5 positions (often fairly equally weighted: 20% per position)
Volatility: Low beta (managed accounts have never bought a stock with a beta as high as 1; current lowest beta: 0.16 highest: 0.46)
Geography: Developed markets (currently: U.S., Netherlands, and Norway)
Why We Like Less Liquid Stocks
| Quartiles | Low Liquidity | Mid-Low | Mid-High | High Liquidity | |
|---|---|---|---|---|---|
| Micro-Cap | Geom. Mean Arithm. Mean Std. Dev. Avg. No. Stocks |
15.36% 17.92% 23.77% 323 |
16.21% 20.00% 29.41% 185 |
9.94% 15.40% 35.34% 132 |
1.32% 6.78% 34.20% 103 |
| Small-Cap | Geom. Mean Arithm. Mean Std. Dev. Avg. No. Stocks |
15.30% 17.07% 20.15% 196 |
14.09% 16.82% 24.63% 193 |
11.80% 15.38% 28.22% 175 |
5.48% 9.89% 31.21% 179 |
| Mid-Cap | Geom. Mean Arithm. Mean Std. Dev. Avg. No. Stocks |
13.61% 15.01% 17.91% 141 |
13.57% 15.34% 20.10% 171 |
12.24% 14.51% 22.41% 197 |
7.85% 11.66% 28.71% 233 |
| Large-Cap | Geom. Mean Arithm. Mean Std. Dev. Avg. No. Stocks |
11.53% 12.83% 16.68% 83 |
11.66% 12.86% 18.34 194 |
11.19% 12.81% 18.34% 238 |
8.37% 11.58% 25.75% 227 |
Data from page 25 of the Yale international Working Paper “Liquidity as an Investment Style” – by Roger Ibbotson et al. (2012)
5 Key Points from Roger Ibbotson’s Paper on Illiquid Stocks
- “Less liquid stocks outperform more liquid stocks.”
- “Less liquid stocks…have low…betas.”
- “Low liquid portfolios…(are) less risky than more liquid portfolios.”
- “Best return comes from combining high-value with low liquidity.”
- “The (low) liquidity style rewards the investor who has longer horizons and is willing to trade less frequently.”
Want to learn more? Just ask.
We’ll give you a copy of the Yale International Center for Finance Working Paper #12-13: “Liquidity as an Investment Style” – by Roger Ibbotson et al. (2012)
Fund Terms
Portfolio Manager: Geoff Gannon
Minimum Investment: $250,000
Management Fee: None
Incentive Fee: 25% of profits
High Water Mark: Yes
Redemption: Quarterly with 90-days written notice
We Are Not For Everyone
We seek to partner with individuals who…
1. Plan to invest and judge our performance over a multi-year time frame.
2. View stocks as fractional ownerships in real businesses, instead of papers that flash around on a screen.
3. Understand that volatility creates opportunity, and that periods of underperformance should be expected and viewed opportunistically for the long-term.
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Listen to Our Podcast
Want to Learn More About How We Think About Investing? Just Head Over to iTunes and Spotify to get access to over 250 podcasts!