What is a Roth Conversion?
Investor Education Series

What is a Roth Conversion?
Investor Education Series

In this short educational video Shaun Fagant, Shareholder Relations, clearly defines a Roth IRA Conversion.

If you would like more information about a Roth IRA Conversion, please watch our other video, “Roth Conversions” or contact us at 800.932.3271.

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Roth Conversions
Investor Education Series

Roth Conversions

Investor Education Series

In this educational video on Roth IRA Conversions, Shaun Fagant, Shareholder Relations, breaks down this strategy that distributes pre-tax dollars (e.g., Traditional IRA, 401(k), 403(b)) into a Roth IRA for the potential for tax-free growth.

Here are some of the topics covered:

  • Basics of a Roth IRA
  • Introduction to a Roth Conversion
  • Advantages and Drawbacks to a Conversion
  • Frequently Asked Questions
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A Quarter Century of Finding Value in Dividend-Paying Mid-Cap Companies

A Quarter Century of Finding Value
in Dividend-Paying Mid-Cap Companies

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    Before the internet boom went bust in the early 2000s and prior to FAANGs1 dominating passive investors’ portfolios, one mutual fund strategy found that the most straight forward approach led to creating long-term wealth via investing in great companies.

    This year marks the 25th anniversary of Fenimore’s FAM Dividend Focus Fund, which has outperformed2 with a concentrated portfolio of mid-cap names with long-term growth potential. According to the fund’s Co-Manager Paul Hogan, who has managed the fund since its inception, the fund’s strong emphasis on quality rather than riding fashionable market trends is what makes the difference. The fund’s mantra is that of Fenimore Founder Thomas O. Putnam in seeking out investments to make “the train go faster not longer.”

  • Andrew Boord, Portfolio Manager - Fenimore Small Cap Strategy

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In searching for the right stocks, mid-caps are a fertile space because they typically grow at a faster clip than large-cap companies. For the most part, the faster a company grows, the faster it can grow its dividend to shareholders as well. The dividend provides additional yield that in turn boosts long-term portfolio gains. While there are numerous mutual funds focused on large-cap dividend paying strategies, FAM’s focus on the mid-cap sector essentially doubles the number of companies to consider.

When evaluating these companies, Mr. Hogan and Co-Manager William Preston travel extensively to meet management teams in-person to not only get a sense of the company ethos but gain insights on whether a company is best in class and has room to grow.

Trade shows too offer a unique vantage point to see a company’s potential in action. A key question Mr. Hogan and Mr. Preston seek to answer is why clients want to do business with a particular company. Such events offer confirmation. Mr. Hogan recalled that about a decade ago one of the fund’s original holdings IDEX Corporation unveiled a new battery-operated ‘jaws of life’ tool demonstrating how with little training anyone could save a life.

When we look at our investment strategy, the first thing we are always concerned about is preservation of capital,” said Mr. Hogan. “So for us it’s first preserve capital, second generate an attractive return, and third, let the compounders compound.”

1 Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX), and Alphabet (GOOG).
2 Morningstar 3, 5, 10 year periods vs. the Russell Midcap Index.

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Meeting with Management: Getting Informed and Building Relationships

Meeting with Management: Getting Informed and Building Relationships

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    By: William Preston, CFA®
    Portfolio Manager – FAM Dividend Focus Fund

    Ever since Tom Putnam established Fenimore in 1974, he has maintained the practice of getting out from behind the desk and meeting in-person with management teams, a key tenet of Fenimore’s research process.

    Why do we do it? There are a few factors that support Fenimore’s longstanding belief that face-to-face meetings are a best practice including learning the business better, getting a bigger picture view and building relationships.

    Today, our entire research team is responsible for conducting in-person meetings annually with our portfolio companies with the purpose of achieving the following:

  • Andrew Boord, Portfolio Manager - Fenimore Small Cap Strategy

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  1. Understanding the business better. Many companies communicate their investment thesis through scripted conferences and regulatory filings. However, our in-person meetings give us a much better feel for how the business is managed, how employees are treated and other intangibles, like a great culture, that truly make the business exceptional. These meetings also help increase our conviction to hold onto an investment when the markets become volatile or the stock begins to look expensive, a practice that has served us well throughout our history.
  2. Learning out of the office. While truer in the early days when there was no internet, getting out of the office often grants broader insights about the economy and market environment. Our research team interacts with businesses and management teams in a variety of settings, including at company HQs, store locations, warehouses, distribution centers, manufacturing facilities, industry trade shows and investment conferences, which help provide diverse perspectives.
  3. Building relationships over the long-term. In a world where it is becoming harder for active managers to differentiate themselves, by connecting in-person every year management teams often get an appreciation for Fenimore’s shared long-term investment horizon. This distinguishes us from many short-term investors and traders that are worried about quarterly earnings numbers as opposed to long-term value creation.

Fenimore’s trips to AHR Expo, an annual HVAC (heating, ventilation, an air conditioning) industry trade show, provide a great example of the in-person value we seek to create. Over the years, we have made a number of investments in the HVAC industry and this conference provides an efficient way for us to talk with all of our portfolio companies in this industry, as well as their competitors, suppliers, and customers.

At the last expo, we gained a better understanding of how powerful the tailwind of sustainability through reduced energy consumption will be for the industry.  We also learned that several companies believed consolidation will continue, particularly as foreign companies try to buy their way into the US market to bypass the tremendous barriers to entry.

While the pandemic has temporarily changed the way we interact with management teams, the industry has done a great job adapting to a virtual world, which has enabled us to continue to have valuable face-to-face engagements with existing and potential investments. Most important, you can be assured that the Fenimore team is eager and planning to get back out on the road and resume in-person meetings as soon as possible.

It is this direct connection, and industry understanding that Fenimore has embraced for nearly 5 decades – a tradition we expect to remain for generations to come.

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FAM DIVIDEND FOCUS FUND: 6 KEY LESSONS LEARNED

FAM DIVIDEND FOCUS FUND:
6 KEY LESSONS LEARNED

FAM DIVIDEND FOCUS FUND
25 YEARS OF INVESTING IN DIVIDENDS

As we celebrate 25 years of service to our shareholders, we’re pleased to provide an insight into 6 Key Lessons Learned along the way that have helped contribute to the Fund’s long-term success.

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25 Years of Distinctive Dividend Investing

25 Years of Distinctive
Dividend Investing

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    Dividend investing has been around for over 100 years, but for the last 25 years Fenimore Asset Management has been implementing its own style of dividend investing through the FAM Dividend Focus Fund by investing in the growth potential of the dividend over the long term versus its current yield.

    Much has changed since 1996, when the 10-year Treasury was at 7%1 and money market funds would pay investors 5%.

    Finding Growth in Dividends

    And even the Fund’s name has changed in that time, but what has not changed is the return potential from investing in dividend-paying mid-cap companies that are on a growth trajectory.  The FAM Dividend Focus Fund Co-Managers evaluate every business in order to determine if it is best in class and can grow for years to come. Together they analyze whether the management team is strong and ethical, and why clients want to do business with the company to build the case for growth.

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“We kiss a lot of frogs to find the right businesses,” noted William Preston, Co-Manager. “We are looking for that company to be the best holding over the next five to 10-plus years. It’s truly an unrelenting focus on quality and it is one of the things we don’t compromise on.”

The Intrinsic Value of Dividends

But what value do dividends really add? Going back all the way to 1926, dividend income has constituted more than 30% of the monthly total return of the S&P 5002, according to analysts. At Fenimore, the dividend growth focus allows the team to determine not only whether a company is growing, but also creates guard rails around managements’ capital allocation. This trusted Fenimore strategy is dividend focused with a growth filter.

Since inception the FAM Dividend Focus Fund has produced 9.62% annualized. To see the full track record, click here. To learn more about how the FAM Dividend Focus Fund could add value to your portfolios contact us.

1Factset. 10 year was as high as 7%.
2S&P Dow Jones Indices, “DIVIDEND INVESTING AND A LOOK INSIDE THE S&P DOW JONES DIVIDEND INDICES” September 2013

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Thomas O. Putnam founded Fenimore in 1974 with two passions: conduct in-depth, firsthand, independent investment research and serve investors with excellence and integrity. Today Fenimore Asset Management, manager of the FAM Funds, is nationally recognized, yet locally rooted and independently owned. Decades have passed, but our approach endures.

Securities offered through Fenimore Securities, Inc. Member FINRA/SIPC,
and advisory services offered through Fenimore Asset Management, Inc.

© Fenimore Asset Management. All Rights Reserved.