When Eric Cinnamond left ICMAX with what appeared to be a sterling record I decided to invest the minimum when ARIVX announced it was closing so that I could add to my position at a later date. I have read posts here in the past where his cash position has been highlighted and even now remains in excess of 60%. I have not increased my investment and am more likely to sell even though Cinnamond is likely to be right at some stage in the future but at what lost opportunity cost ? Vanguard's VISVX has in excess of 30% gain ytd while ARIVX has managed just over 6% and sitting in the 99th percentile. From the quarterly report "Above-average cash levels along with below-average equity performance continued to weigh on results" seems to sum it up. So were the other managers at Intrepid the real deal and not Cinnamond - while running greater than 58% cash and also residing in the 99th percentile it may suggest they follow a similar investment style. I just thought it was interesting that a manager who has a portfolio nearly two thirds in cash with a performance ranking of 99th percentile in M*Star and 100% ranking in Lipper is still being promoted by Kinnel in M*Star. I wonder whether I am missing something here as I am not nearly as astute as the "experts" as I continue my end of year review to identify problems in my portfolio. Any thoughts before I do something stupid ?
Comments
OK, so I've started viewing ARIVX as an actively managed conservative allocation fund, specializing in small caps. That may help temper expectations, 'cause like you say (and I know Ted and others will remind us), pure comparison in the SV equity category will have you questioning your sanity, especially when ASTON charges a too high 1.42% on $700M AUM.
Cash has been a better place to be than bonds this year, so a 35/65 equity/cash balanced fund may look pretty good...for the conservative investor, or at least the conservative part of a portfolio.
Let's take a look...M* performance plot below is from ARIVX inception against a conservative allocation benchmark:
Looks pretty good!
OK, now, how about since time it closed, which is essentially YTD performance:
Viewed from that perspective, maybe not a bad place to be...
Edit: Charles, cash has not been a better place to be than junk and bank loan bonds, but I think you know that.
Break, break.
Hey, hope all is well. Been a awkward month for my trades. Some up 10% over 2 weeks on heavy volume at market close, only to reverse direction and tank the following week. Valuations providing me some fortitude, but when the market speaks, I listen. Ha. It's the interpreting part that is hard!
I did receive that book we talked about. Thank you!
Hope Thanksgiving was great and best wishes for holidays.
Charles
His returns since inception trail his peers by 18%, a deficit entirely generated since February 01 of this year - a period when the average small cap popped 22.5% and ARIVX rose only 4.5%.
And his previous charge, ICMAX, against its small cap value peers for the length of his tenure:
The Leuthold Group argues that small cap stocks are currently at their highest relative valuation (that is, relative to large caps) ever. I suppose the market might continue to run. If you believe that, and if you have exquisite timing ability and the nerve to rush back into what will appear to be a hail of falling knives, there are some very fine microcap value and ultra-small cap value funds that have booked 40-50% this year. Admittedly they did have 60-70% drawdowns a few years ago, but that's all past.
Invest well!
David
I continue to see nothing attractive about this fund:
1. Poor Fund Stewardship: The fund was reopened on 9/2012 to new investors only to add to its huge cash position and dilute the meager equity exposure of the original investors. Despite the attempted spin by the fund manager, this was blatant asset gathering.
2. Why Own This Fund ? With such high cash positions, an investor's portfolio cannot expect to benefit from the long-term diversification and performance of SCV equities. And exactly what catastrophic event would it take for Mr. Cinnamond to become more fully invested ? Obviously the 20% loss in SCV equities in Q3 2011 was not enough.
3. Poor Upside/Downside Capture Ratios: During the period of Q1 2011 - Q3 2013, ARIVX had U/D ratios of 38/28 relative to VBR. Essentially, ARIVX is not making much and not losing much. Clearly, this is not the path to wealth creation.
4. Unimpressive Stock Selection: Assuming 35% SCV equity exposure in ARIVX, so far in 2013 it should have returned 0.35 X 31.70% (VBR YTD) or 11.1%, but instead ARIVX has a YTD return of 5.99%. Now if you want to consider that ARIVX is actually composed of 27% domestic and 8% foreign SC equities (VSS as proxy), the fund should have returned 9.6% YTD. The same conclusion can be reached if you look at the data in 2012.
Kevin
I think it is less risky to keep half in cash, half in either a SV index or high beta SV fund, and rebalance quarterly or yearly.
Cinnamond will have his day.
(Charles, I think yours is a very interesting perspective.)
I had a minimum position in Aston based on EC's earlier record at Intrepid, but bailed in January when I noticed that what little he was putting into new investments was going into value traps, e.g. PM-related stocks.
I didn't have a problem with the strategy; I thought he just wasn't executing it very well. I haven't followed him since, until this thread prompted a look at the portfolio and the record. Said look hasn't changed my mind about it in the least.