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Seafarer Capital Partners, whose Seafarer Overseas Growth & Income is in my own portfolio.Highlights: C.T. Fitzpatrick - one of the few managers whose funds I've profiled but with whom I've never spoken - distinguishes Vulcan's approach from the Longleaf (his former employer) approach because "we place as much emphasis on business quality as we do on the discount." He also thinks that his location in Birmingham is a plus since it's easier to stand back from the Wall Street consensus if you're 960 (point eight!) miles away from it. He also thinks that it makes recruiting staff easier since, delightful as New York City is, a livable, affordable smaller city with good schools is a remarkable draw.
Grandeur Peak Global Advisors, whose Grandeur Peak Global Opportunities was profiled in February 2012 and whose new Global Research fund is the subject of an upcoming profile.Highlight: Andrew Foster spends about a third of this time running the business. Rather than a distraction, he thinks it's making him a better investor by giving him a perspective he never before had. He frets about investors headlong rush into the more volatile pieces of an intrinsically volatile sector. He argues in this piece for slow-and-steady growers and notes that "People often forget that when you invest in emerging markets, you're investing in something that is flawed but that you believe can eventually improve."
RiverPark Advisors, five of whose funds we've profiled, two more of which we've pointed to and one of which is in my personal portfolio (and chip's).Highlight: Robert Gardiner and Eric Heufner both began working for Wasatch as teenagers? (Nuts. I worked at a public library for $1.60/hour and doing landscaping for less.) They reject the domestic/international split when it comes to doing security analysis and - I've really got to follow up on this - Gardiner is "intent on keeping Grandeur Peak, which is now on the small side, just shy of $1 billion under management." Uhhh ... International and Global already have $825M and if you allow for asset growth there, this implies a tiny capacity for Global Reach. Time to call Eric.
Okay, mostly right. They got the name of the fund wrong, the photo caption wrong and the quote wrong. Apparently Mr. Heufner said Grandeur Peak currently had a bit under a billion, that their strategies' collective capacity was $3 billion but they're apt to close once they hit $2 billion to give them room for growth.
The article's most curious claims surround the economics of starting a firm. One claim is that it takes about a million in start-up capital. The other comes from Frank Strauss, of Beacon Consulting Group: "Depending on the type of fund and cost structure, you need $100 million to $200 million in assets before a fund can start making a profit." That's an awfully big "depending on," since most managers place breakeven at or below $50 million.Highlight: Mitch Rubin's reflection on the failure of their first venture, a hedge fund "Our mistake, we realized, was tryig to create strategies we thought investors wanted to buy rather than structuring the portfolios around how we wanted to invest" and Mitch Rubin's vitally important note, "Managers often think of themselves as the talent. But the ability to run these business well takes real talent." Ding, ding, ding, ding! Exactly. There are only a handful of firms, including Artisan, RiverPark and Seafarer, where I think the qualit y of the business operation is consistently outstanding. Lots of small firms handicap themselves by making the operations part of the business an afterthought. Half of the failure of Marx's thought was his inability to grasp the vital and difficult role of organizing and managing your resources.
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Comments
Man, I've been hearing that one since grammar school...
Thanks for the laugh...you're one funny dude. See you after detention.
I've moved monies from ARIVX to VVPSX after determining that ARIVX was not a good match for me. So far, I am very satisfied with VVPSX.
I am writing this because you are a valued poster here and contribue towards it.
At this time in my investing life (about 20 years to retirement) I would like managed funds to have downside consciousness but that should not be at the expense of giving up too much upside. I need growth and I want my manager not to shun risk completely but take some risks that are asymmetrical in his expert opinion.
ARIVX manager is extremely concerned in downside that causes it to miss long periods of up-trending market. If a fund is going to keep 50% of the invested monies in cash and still charge 1.40% on that, I can do the same much more cheaper by investing half the amount in a fund that is predominantly in the market and put the rest of the money in a place where I see fit at the time or even if I keep it cash, I am not paying an ER ratio that big on that. That is why ARIVX and I have parted ways.