A View from Research: Tariffs and Trade

Tariffs and Trade – Raised tariffs are leading to increased tensions with some of our largest trading partners while creating uncertainty and volatility in equity markets. Nobody knows what will ultimately come from these maneuvers or the eventual impact on business values. At the same time, management teams of the companies we hold are implementing plans to help lessen the negative impacts under various possible scenarios.*

* FactSet & Bloomberg financial data systems. Data as of 8/31/18.

Please see Fenimore disclosure.

A View from Research: Interest Rates

Interest Rates – While interest rates have risen, they remain low. We believe that our long-held aversion to enterprises with a lot of debt, as well as our more recent strategic avoidance of corporations that suffer with higher interest rates, has our portfolios well-positioned should rates continue to rise.*

* FactSet & Bloomberg financial data systems. Data as of 8/31/18.

Please see Fenimore disclosure.

A View from Research: Inflation

Inflation – In addition to wages, costs for commodities, energy, and transportation have been on the rise. These costs are forcing some firms to raise prices to maintain profits. One of Fenimore’s key indicators of a quality business is the ability to raise prices without much customer pushback. In aggregate, we estimate that our portfolio companies are in good shape, but it is something we continue to watch.*

* FactSet & Bloomberg financial data systems. Data as of 8/31/18.

Please see Fenimore disclosure.

Volatility Can Provide Opportunities

“If volatility continues, it can provide opportunities to invest in quality enterprises – that meet our criteria – at a discount. This is key as we seek to continually enhance the Fund’s holdings while preserving and growing your wealth over the long term.” — John D. Fox, CFA, CIO

Read FAM Funds’ Semi-Annual Letters:
Chairman’s Letter, FAM Value Fund, FAM Equity-Income Fund, FAM Small Cap Fund

Volatility Can Provide Opportunity: Understanding Price vs. Value

“Having a strong foundation gives us the confidence to stick to our time-tested process during volatile times. When the stock market dips and investors may sell out of fear, Fenimore’s team gets excited about the possibility of buying stock in quality businesses at bargain prices. I realize we state this fact often, so, with volatility in the headlines again, it is a good time to look more closely at the heart of the matter. As value investors, the key as to why market drops can provide opportunity is understanding price versus value.” Read More.


Please see Fenimore disclosure.

 

Quest for Quality

The stock market peaked in January and is going through a correction as we write this in early February. We have had a long period of stock prices increasing — this correction is a natural part of the process. To reiterate, the fundamentals of the economy and Corporate America are still very strong. In fact, this type of environment can provide opportunities to invest in quality companies, both existing and prospective holdings, that have declined in price. Read More

 

Please see Fenimore disclosure.

 

CHANGING times, UNCHANGING principles

FAM Funds’ Annual Shareholder Informational Meeting
John Fox began, “We chose the theme after celebrating the 30th Anniversary of the FAM Value Fund earlier this year. We thought about the last three decades and how much has changed. I’d like to make a few observations.” Read More

 

Please see Fenimore disclosure.