FAM Small Cap Fund – Kevin Gioia, Portfolio Manager
2024 Performance & Portfolio Activity
This video is part of a comprehensive program — FAM Funds: 2024 Recap & Outlook.
The subject matter focuses on the Why, What, When, and How of estate planning.
Topics include: The Main Goals, Necessary Core Documents, A Simple Checklist, Life Events to Prioritize, Attorneys to Consider, and When to Review your Plan.
Watch the entire program above (Viewing Time = 34:35)
Alternatively, you can choose to watch any of these shorter videos below.
This video focuses on the importance of having an estate plan and the main goals. Having a thoughtful plan in place today provides peace of mind for the future.
(viewing time = 8:17)
This video is part of a comprehensive program — “Estate Planning: Plan Today. Enjoy Tomorrow.”
Learn the core documents that are necessary to develop a solid estate plan as well as a simple checklist to follow and the value of coordination with various professionals.
(viewing time = 12:53)
This video is part of a comprehensive program — “Estate Planning: Plan Today. Enjoy Tomorrow.”
It’s vital to be proactive and have a holistic view of your estate before it becomes an urgent matter. Topics discussed include life events that prompt the priority of planning and how often you should review your plan.
(viewing time = 8:55)
This video is part of a comprehensive program — “Estate Planning: Plan Today. Enjoy Tomorrow.”
This conversation highlights how to get started and find the right attorney, the types of attorneys to consider, and what to expect as you move forward with your estate plan.
(viewing time = 7:14)
This video is part of a comprehensive program — “Estate Planning: Plan Today. Enjoy Tomorrow.”
Dear Fellow Investor,
As I pen this letter, we are pleased with the overall performance of our mutual funds so far this year and, more importantly, over the long term. Despite our positive view, your FAM Funds team understands that you may be apprehensive with the November election looming. The interest rate environment, fears of a recession, and artificial intelligence (AI) may also be on your mind.
Even though there seems to be a constant drumbeat of negative and confusing news, Fenimore’s investment research analysts see order in the disorder and this keeps us grounded. What we are observing is that, in general, corporate earnings are still growing, and we believe we are invested in a collection of high-quality businesses that are positioned well for the long term.
PRESIDENTIAL ELECTION
Regardless of your politics, this year’s presidential election is creating some concern. However, when we look at past election years, the stock market has performed relatively well no matter which party controls the White House or Congress. It is also reassuring that the stock market rose in 20 of the last 24 election years.1 The Wall Street Journal published an article in early September about this topic with essentially the same takeaway. While our analysts are keenly aware of current issues, they continually look ahead seeking to own high-quality companies because, in our experience, this is the key to building wealth over time.
INTEREST RATES
Interest rates have slowly inched downward over the past two years in anticipation of Federal Reserve rate cuts. These rate cuts were confirmed at an August 2024 meeting where the Federal Reserve Chairman, Jerome Powell, stated, “The time has come for policy to adjust.” Lower rates should help increase home and automobile purchases, create an uptick in commercial construction projects, position businesses in certain sectors to thrive, and improve consumer confidence.
FEARS OF A RECESSION
Profits are still growing, overall, but results are mixed across sectors and industries. For instance, insurance, aggregates, and some high-tech pockets are performing well while industrials and banking are flat.
Our research team continues to visit our holdings’ headquarters and monitor them, attend conferences to discover new opportunities, and engage with customers and suppliers at industry trade shows. We still see encouraging signs at the company level, including dividend growth, stock buybacks, and mergers and acquisitions. Because of this shareholder value creation, coupled with increasing profits, we remain bullish on stocks since stock prices tend to follow earnings over time.
AI
Increasing enthusiasm surrounding AI and considerable capital investments in its infrastructure have helped propel the positive stock market returns this year. At the same time, we are still in the very early stages of this technology and no one knows what the future holds. In fact, there are many similarities to the excitement of the dot-com era.
As businesses strive to constantly improve, AI should help them to mine, process, and analyze data faster than ever before. While it remains to be seen how AI will take shape, we expect that many of our holdings should benefit from increased AI investment due to the services and technologies they provide.
LOOKING AHEAD
To reiterate, rising corporate profits typically lead to rising stock prices. These earnings are the result of hard work, ingenuity, and the compounding of knowledge and capital—not politics. Throughout Fenimore’s half-century in business, it has paid to believe in corporate America.
We will continue to follow our market-tested investment approach, identifying what we deem to be high-quality companies, purchasing shares in them if they are available at appealing prices, and, ideally, holding them for many years as they grow profits. When we execute our plan effectively, we expect healthy returns over time, regardless of the temporary challenges experienced along the way.
STAY CONNECTED
Please do not hesitate to connect with us about your investments and financial goals at our Cobleskill or Albany office. You can also contact us from the comfort of your home by calling 800.932.3271 or emailing us at info@fenimoreasset.com.
Thank you for your confidence in us.
Sincerely,
John D. Fox, CFA®
CHIEF INVESTMENT OFFICER
1 FactSet as of 8/31/2024
In an ever-changing world, consistency matters.
At Fenimore Asset Management, we’ve stayed true to our investment philosophy and guided investors through the many ups and downs since 1974.
For 50 years, investors have relied on our in-depth investment research, focus on quality stocks, and personalized service — from people who truly care.
CHANGING TIMES. UNCHANGING PRINCIPLES: Looking back as we celebrate Fenimore’s 50th Anniversary.
Join us in revisiting a pivotal moment: our Founder, Tom Putnam, sharing insights on Wall Street Week with Louis Rukeyser on January 29, 1993. Just like our steadfast stock selection process over the last 50 years, our mantra remains unchanged – focus on the long term.
At Fenimore, we meticulously assess companies through personal meetings, tours, and extensive research. Our criteria are rigorous: from understanding business models to ensuring strong balance sheets and ethical management.
Discover more in this interview excerpt
Dear Fellow Investor,
A sense of stability has returned to the investment world as it appears that inflation is abating and the economy is growing slowly. Our team views stability with optimism and the stock market, which is forward-looking, has responded accordingly. The S&P 500 Index hit a new high in January after more than two years since its previous high.1
How did we get to where we are today? Late in 2021, inflation began to accelerate. When it became clear that high inflation was not temporary, the Federal Reserve (“Fed”) intervened. The Fed increased short-term interest rates significantly — at a record pace of just 18 months. Interest rates are a key factor in valuing assets, so this sudden change caused the prices of stocks, bonds, and real estate to decline.
Given this backdrop, why are stocks currently performing well overall? It seems that the market is now expecting the Fed to cut short-term interest rates due to inflation stabilizing. No one knows what the Fed will do, but we believe that steady interest rates (no more increases) are a positive for asset prices across the spectrum. Additionally, corporate earnings are projected to achieve mid- to high-single-digit growth this year. This adds to the optimism because stock prices tend to follow earnings growth over time.
Even with the volatility and uncertainty over the past two years, you may be pleasantly surprised to know that the stock market has generated good returns over one, three, five, and 10 years as of year-end 2023.2 Likewise, we hope you are pleased when you review your FAM Funds quarterly statement.
50 YEARS OF UNCHANGING INVESTMENT PRINCIPLES
Just as Fenimore Asset Management’s stock selection process has been steadfast over the last half-century despite an ever-changing investment landscape, so has our mantra — focus on the long term. As we celebrate our golden anniversary, our research analysts remain dedicated to identifying select, quality businesses that we believe can grow and produce attractive returns over time.
We evaluate these companies carefully through personal meetings with leadership, facility tours, and extensive research. Our approval criteria are unyielding: small to midsize firms with business models we understand and clear competitive advantages; strong balance sheets, free cash flow generation, and increasing cash profits; experienced and ethical management; and the potential to deliver long-term, sustainable growth for our investors.
Developing an in-depth understanding of companies, including their economic worth, allows us to welcome market volatility rather than fear it. Sometimes, that means moving on to what we think are better opportunities. Other times, it means buying more shares in the face of market panic. Fenimore prepares for markets and does not predict them. We believe that having a long-term perspective, knowing what you own, and investing in quality, well-run businesses is the best way to outpace inflation and grow wealth over the long haul.
LOOKING AHEAD
While matters seem to have stabilized and our team is positive about the future, many outcomes are still possible. As a result, we will continue to stick to our market-tested approach and identify what we deem to be the best companies, buy shares in them if they are available at reasonable prices, and hold them for many years as they increase earnings. If we execute our process well, then we expect healthy returns over time — regardless of the temporary macro conditions experienced along the way.
NEW ALBANY OFFICE NOW OPEN
On March 6, Fenimore moved into our new Albany branch office with the goal of ensuring that the investor experience and work environment are the same as our Cobleskill headquarters. Located at 142 Wolf Road, the new location is more than double the size of our previous Albany office. This larger space accommodates multiple operating groups to better serve you. We welcome you to visit us or schedule an appointment.
LET’S TALK
Please do not hesitate to connect with us about your investments and financial goals in our Cobleskill or Albany office, or from the comfort of your own home. Call 800.932.3271 or email us at info@fenimoreasset.com.
Thank you for your confidence in us.
Sincerely,
John D. Fox, CFA®
CHIEF INVESTMENT OFFICER
1 FactSet as of 1/19/2024
2 FactSet as of 12/31/2023