September 1, 2017

By David Snowball

Dear friends,

Our thoughts and prayers go out to the people in Houston and the surrounding Gulf Coast. The receding flood waters end one phase of the disaster and exposes the next.

Several mutual fund families have headquarters, or significant presence, in the Houston area. Those include Ascendant, Bridgeway, Crossmark Global (formerly Capstone), Invesco, Kerns Capital, Salient, Sarofim and Continue reading →

Ruminations at Summer’s End

By Edward A. Studzinski

Silence is the most perfect expression of scorn.

                                 George Bernard Shaw

Book Review

David Snowball recently asked if I would have any interest in reading Joel Tillinghast’s (Fidelity Low-Priced Stock Fund) new book entitled Big Money Thinks Small. While I am usually reluctant to read what often end up being collections of anecdotes about how smart someone was, the fact that it had been published by Columbia Business School Publishing overcame my initial reluctance. Much to my surprise, I enjoyed the book immensely, and found it to be a very thoughtful work. Let me first say that I do not know Mr. Tillinghast, other than by reputation. However, I have served on committees with people who do know Mr. Tillinghast and have worked with him. They are uniform in their praise of him both as an investor and as an individual. He is a true polymath with almost total recall. And unlike many who content themselves with a formulaic approach to investing, e.g. mean reversion, he seeks to understand the quality of a business, the numbers supporting the business, and the character, intelligence, and integrity of management. Two chapters in particular I would recommend to all are “Gamblers, Speculators, and Investors” and the last chapter entitled Continue reading →

Historically Low Volatility

By Charles Boccadoro

“Experts often possess more data than judgment.”

Colin Powell

The S&P 500 closed August yesterday with an annualized standard deviation below 6%. Typically, since about 1940, which marked the end of The Great Depression, annualized standard deviation runs between 13 and 14%. It was the second consecutive month to break the 6% threshold; in fact, only five times has volatility remained this low for consecutive months: 1964, 1993, 1995, 2006 and 2017.

Continue reading →

The Land of the Investment Dervishes

By David Snowball

America’s best-selling poet is a Muslim theologian who died 750 years ago. Jalal ad-Din Muhammad Rumi (alternately, Mevlana Jalaluddin Rumi) is not only namesake to Beyonce’s new child, but also founder of Sufism, a branch of Islam. Sufism is both mystical and ecstatic. Rumi was given to a whirling dance that reflects the boundless joy and energy that overwhelms a believer; it helped believers express and achieve ecstasy, was codified by his son and practiced by dervishes, literally “poor monks.” They became famous as whirling dervishes, who spun with an almost unhuman grace, energy and tenacity.

I thought of them as Continue reading →

great horned owl

Centerstone Investors (CETAX/CENTX), September 2017

By David Snowball

Objective and strategy

Investors Fund seeks long-term growth by investing, primarily, in an all-cap global equity value portfolio though there’s no formal limit on its ability to hold fixed-income securities, including private placements. The manager’s value discipline leads him to higher-quality firms whose stocks are selling at a discount to his assessment of their intrinsic value. As the stresses on the firm rise, so does the size of the discount he demands. The goal is to also invest with a margin of safety, which might also lead the fund to hold substantial amounts of cash when attractive and attractively-priced opportunities are not available. As of June 30, 2017, cash and cash surrogates comprise 26% of the portfolio. The manager expects to keep at least Continue reading →

Launch Alert: Driehaus Small Cap Growth (DVSMX)

By David Snowball

On August 21, 2017, Driehaus Capital launched Driehaus Small Cap Growth (DVSMX/DNSMX). There’s reason to pay attention.

The fund will target U.S. small cap (sub $6 billion market cap) growth stocks. The “name rule” obliges them to keep at least 80% in small caps; they allow that the other 20% might be in international stocks that trade on U.S. exchanges or larger cap equities. As is common with Driehaus, it’s a growth-centered fund likely with a fairly high portfolio turnover rate.

They’re attempting to find “fundamentally strong companies,” which obliges them to evaluate the company’s competitive position, industry dynamics, potential growth catalysts and its financial strength. They also account for comparative stock valuations and external factors (behavioral and macro-economic) likely to impact the Continue reading →

old license plates on a wall

Funds in Registration

By David Snowball

Wow. Finally, a lot of intriguing new investment opportunities. David Sherman, whose RiverPark Short-Term High Yield (RPHYX) fund has both a one-star rating and the universe’s best Sharpe ratio (by a lot) over the past five years, is launching a CrossingBridge Low Duration. Polen Capital, which runs three splendid funds – large growth, global and international – is adding a small cap offering. Thrivent, which has very solid, low-profile funds, offers up a no-load, no-minimum international fund with 0.09% expenses. And Mark Wynegar, whose Tributary Small Company Fund (FOSCX) has a great record for low risk, low turnover, low drama performance, adds a small-to-midcap fund to his portfolio.

And, oh yeah, you can also track Continue reading →

old alarm clock

Manager changes, August 2017

By Chip

This month saw partial or complete manager changes at 57 funds. The most consequential occurred at American Beacon Holland Large Cap Growth Fund, following the decision by Holland Capital Management to close after a long and honorable run. That team’s departure occasions a change in the fund’s strategy as well as in its management.

As to the other 56 funds … meh. In the case of Cornerstone Advisors Global Public Equity, which saw the departure of one of 47 managers from one of 14 sub-advisers, the change doesn’t even rise to the level of “meh.” (Nice fund, though.) Continue reading →

fountain pen writing a note

Briefly Noted

By David Snowball


PIMCO fee roulette. PIMCO is changing the advisory fees on a bunch of their funds, some up, some down, and some both. Here’s the snapshot:

PIMCO All Asset Fund (PASAX), management fees go up 0.05% for D shares.

PIMCO All Asset All Authority Fund (PAUAX) up 0.05% for D shares

PIMCO Total Return Fund (PTTAX) up 0.05% for D shares, down 0.05% for A shares.

PIMCO Unconstrained Bond Fund (PUBAX), down 0.11% for all asset Continue reading →