Headwinds, Fundamental Analysis, & Opportunities

We are studying the economic and political concerns of the day. So far, our conclusion is that while these issues are quite real – we see many companies reporting slower growth and thinner profit margins – it remains unclear if they are severe enough to trigger a recession as some may fear.

Meanwhile, there are reasons to be optimistic. Many of the problems facing us will likely be resolved. For instance:

  • No matter your political leanings, we can all probably agree that politicians around the world tend to focus on self-preservation – while posturing is sure to be involved, we expect resolutions to both the U.S./China trade conflict and government shutdown
  • The Federal Reserve may decide that current conditions no longer warrant further interest rate increases

At the company level, challenges are usually met and overcome through a combination of ingenuity, hard work, and adaptation. With our holdings, this includes:

  • Finding suppliers outside of China to avoid tariffs, cutting costs, and raising prices to offset higher costs to the extent possible
  • Continuing efforts such as growing through product additions, entering new geographies, and acquiring smaller competitors

The economic and political backdrop in which we invest is always shifting. As a result, Fenimore tries to take advantage of opportunities when people sell due to fear and invest in enterprises that we estimate can do well, and grow, in a wide variety of scenarios.

Please see Fenimore disclosure.