Letter from Cobleskill – Autumn 2016

letter-from-coby-250By Tom Putnam, Founder & Chairman

Learn what Tom Putnam has to say about the current environment in response to investors who may be tempted to try to time the market:
Although we are opportunistic when mainstream investors are fearful and there is a downturn, I think it is helpful to reiterate to you our mantra of “stay the course.” We have heard concerns about matters such as the presidential election and possible rising interest rates, and some have asked if it is a good time to be invested. I would like to reinforce a study we highlighted recently on what panicky investors have cost themselves. Read more.

 

Please see Fenimore disclosure.

 

Focusing on High-Quality Stocks in the Small-Cap Value Space

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Andrew Boord, Co-Manager of the FAM Small Cap Fund, details how we identify high-quality, small-cap companies and invest in them at a discount to our estimate of their intrinsic value in an interview with The Wall Street Transcript.

“We’re value guys in the Buffett-Munger camp. We want to align ourselves with very high-quality companies and have spent a lot of time identifying these businesses. We then wait for an opportunity to buy shares in them at a discount to our estimate of intrinsic value. Whereas most value managers are really focused on finding cheap stocks, we’re extremely focused on finding quality stocks.”

Read the entire article here.

Please see Fenimore disclosure.

Dividend Growth For The Long Term

dividend-growth-wp-250Paul C. Hogan, CFA
Investment Research Analyst

Today’s environment has many investors looking for income. Some consider adding dividend-paying stocks to their portfolio and often choose dividend payers with high dividend yields; however, dividend growth is a key metric to examine as well. The statistics are compelling: companies that grow their dividend have been less risky, outpaced inflation, and performed better.

Learn more — read the concise paper.

Please see Fenimore disclosure.

 

 

 

Seeking Dividend-Paying Stocks in the Midcap Space

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Paul Hogan, Co-Manager of the FAM Equity-Income Fund, discusses topics such as the importance of dividend growth and mid-cap, dividend-paying companies in an interview with The Wall Street Transcript.

“A growing dividend means the business is growing as well. They grow because they have a competitive edge or a durable competitive advantage. This allows them to either increase prices, take market share from competitors or launch new products. A business that has proven that it can grow is likely to continue on the same path. As it grows, then it becomes a capital-allocation decision whether the company will take its excess cash flow and make acquisitions, buy back shares or pay dividends.”

For full access to the entire article please visit the link provided.

Please see Fenimore disclosure. 

Summer Fund Updates

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FAM Value Fund

  • John Fox, Chief Investment Officer and Co-Manager, and the Fund were featured in May’s MONEY magazine in an article “A New Take On Safe Stocks.”
  • John, the Fund, our investment philosophy, and stock stories were also showcased in the industry publication Value Investor Insight — the article was entitled “Down to Business.”

FAM Equity-Income Fund

  • The Fund celebrated its 20th Anniversary on April 1, 2016! Paul Hogan and Thomas Putnam have managed the Fund together since its inception providing consistent oversight. This continuity is very rare in the ever-changing investment industry.
  • Paul and the Fund were featured in the industry publication The Wall Street Transcript.

FAM Small Cap Fund

  • “Small Caps: Finding Great Companies” (Podcast) — Andrew Boord, Co-Manager, discusses where he’s currently finding value in the small-cap space, areas he avoids, and his outlook. Listen to the Podcast.
  • In a little more than four years, the Fund has grown considerably due to strong investor interest and its performance.

Analysts Across America

MapOur Investment Research Analysts have spent significant time on the road this year meeting with companies, speaking with management teams, touring facilities, and attending industry conferences. Our experience dictates that this is the best way to make informed, insightful investment decisions.

We want to know management very well, and it’s important to see how their operational view changes over time — especially during periods of adversity. Some topics we address are: business and industry trends, the competitive environment, financial goals, and capital allocation decisions.

Dividend Growth Pays

The universe of dividend-paying companies can be segmented by their growth profile, ranging from businesses that pay a static dividend to companies that pay a higher dividend every year. The data shows that since 1972 S&P 500 corporations that grow their dividend, or initiate a dividend, post higher returns than those that do not raise their dividend. Historically, dividend increases have signaled management’s confidence in the prospects of their business.

Ned Davis Research, Inc. provided this graph.

Dividend growing stocks have outperformed over time...

Please see Fenimore disclosure.