On December 31, 2020, Oelschlager Investments launched the Towpath Technology Fund. The fund will be managed by Mark Oelschlager. The manager anticipates owning 25-40 tech stocks. The plan is to focus on firms with long-term, durable business advantages such as “barriers to entry, pricing power, network effects, limited competition, [or] lock-in effects.” His discipline is much more valuation-sensitive than tech managers generally pursue, and he focuses strongly on the durability of free cash flow metrics. This strategy is the same one the manager used at Red Oak Technology Select.
Mr. Oelschlager was the sole manager of Red Oak Technology Select Fund (ROGSX) for 13 years, from April 2006-January 2019; he also managed Pin Oak Equity Fund (POGSX), initially as co-manager then as sole manager from June 2006-January 2019. In sum, he was responsible for several hundred million dollars in assets.
There is fair evidence that Mr. Oelschlager is an exceptionally talented, albeit low-key, manager.
While running Red Oak, he received Lipper’s Best Fund Over 10 Years Science & Technology Funds award … three times in a row.
Over Mr. Oelschlager’s 13 years at Red Oak, an initial $10,000 investment grew to $43,500. In comparison, the Morningstar tech group average was $32,800. That performance helped earn his fund a spot on the Schwab Select list.
Over his first ten years as sole manager of Pin Oak, the fund outperformed its Morningstar peer group by 460 basis points (bps) annually and its Lipper peer group by just over 500 bps.
Measured as a large-cap value fund, his Towpath Focus Fund (TOWFX) posted the second-best returns among the 102 funds in the Lipper LCV group. Its 11.2% gain from January through November 2020 topped the average LCV fund by 11%. (2020 is the first full year of operation of TOWFX, which has a large-cap value portfolio, although Morningstar classifies it as a large-cap core fund, and Lipper places it in the multi-cap core group. It is outperforming its average peer in both of those groups, as well.)
The fund’s minimum initial investment is $2,000, which is reduced to $1,000 for accounts established with an automatic investing plan. So far, the Towpath funds are only available through direct investment with the firm, though they’re in conversation with Schwab, Fidelity, E-trade, and company to expand their distribution reach. The fund’s website is Oelschlager Investments.