Investing in the Future

Investing in the Future

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    Fenimore associates participated in several different career and investment education events for students recently as part of our ongoing commitment to investing in future generations. Highlights include:

    Middleburgh Central School District Career Day

    Fenimore was proud to be among the 40+ businesses and organizations participating in Middleburgh Central School District Career Day.

    Students in grades 7th through 12th had the opportunity to select areas of interest from different career groupings. Within each group, presenters spent time with the students discussing their organization, role within the organization, career background and required skills. During each of these sessions, Joe LeRoy, an Investor Relations professional at Fenimore, spoke to students about the tradeoffs between spending, borrowing, and investing, the importance of time in the market and the critical skills and background required to serve investors.

    Liberty Partnerships Program Career Fair at SUNY Cobleskill

    Liza Baran, Director of Shareholder Services & Operations, welcomed the opportunity to attend the Liberty Partnerships Program Career Fair at SUNY Cobleskill. The fair provided an opportunity for SUNY Cobleskill students to explore a wide variety of careers. Liza was able to meet with students as they stopped by the Fenimore table to ask questions and learn about the types of careers at Fenimore, educational requirements, and daily business activities.

  • Investing in the Future

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Junior Achievement Titan CEO Challenge

Junior Achievement (JA) brings business leadership skills and inspiration to nearly 150 Capital Region high schools. During the recent JA Titan CEO Challenge, Christian Snyder, J.D., CFA®, President of Fenimore, was pleased to be among the local CEO/President mentors.

The goal of the JA Titan CEO Challenge is “…a focus on financial analysis and insights into the workforce, JA Titan brings business economics to life with decision-making across all functions of the students’ simulated companies.” Each class was paired with a mentor that shared their personal experiences related to business management, tying together first-hand knowledge and the popular simulation challenge in which students compete as business CEOs.

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Firsthand Research: We Know Our Banks

Firsthand Research: We Know Our Banks

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    Due to recent news about the collapse of Silicon Valley Bank and Signature Bank, we want to give you comfort about Fenimore’s bank holdings. A hallmark of our investment process is to personally know what we own, and the banks in which we invest are no different.

    Our research analysts meet with and know our banks’ management teams, tour their facilities, and have extensive experience in the industry. This gives us long-term confidence during short-term challenges.

    While the circumstances that led to the demise of these two banks are somewhat complex, their foundations were built with “hot deposits” whereas Fenimore’s banks are standing on primarily “core deposits.”

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    Andrew Boord
    Portfolio Manager, FAM Small Cap Fund

Here is a basic summary and what it means to you:

  • Transactional Business Model: Silicon Valley Bank, for example, relied on a multitude of deposits from venture capital funded companies. These are typically very large deposits that far exceed the $250,000 FDIC insurance limit. These hot deposits can leave quickly — and they did. Then, apparently, many depositors panicked and withdrew their money causing a cascading effect.

    It also appears that the bank did not have a solid risk management process in place. When the hot deposits left, they had to sell their large amount of bonds at big losses to meet deposit outflows and this burned up some of their capital — it spiraled downward from there.

  • Relational Business Model: Fenimore’s regional banks are in the relationship business. They receive deposits from the community primarily for consumer checking accounts, business accounts, and savings accounts. These banks then loan most of that money back into the same community. They keep a modest amount of the deposits in bonds to earn some money, yet diversify their risk intelligently in our opinion.

    By design, our banks rely almost entirely on core deposits that tend to be a vast collection of depositors with modest balances, so they are not dependent on a few customers or one industry of customers. 

  • Five Bank Holdings: While the banking industry has been facing various headwinds, we do not foresee a run on any of our banks. Additionally, across all portfolios and among our many holdings, Fenimore only owns stock in five banks as of 12/31/2022 — our exposure is limited.

The federal government has stepped in and declared that all Silicon Valley Bank and Signature Bank depositors will have access to all of their money immediately. The Federal Reserve also created a new program that will lend money to banks for up to one year. It’s probable that the government could continue to intervene, as necessary, to calm any fears.

Finally, as we’ve stated in several recent communications, Fenimore believes that we have a collection of quality investments that are positioned well for the long term.

We hope these insights are helpful. Please do not hesitate to contact us at 800.721.5391 with any questions.

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Q4 Earnings Takeaway: Strategic Capital Allocation is Key

Q4 Earnings Takeaway: Strategic Capital Allocation is Key

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    In an environment where significant free cash flow generation, strong balance sheets, and superior management teams are crucial to company performance (and even survival), we believe our focus on high-quality enterprises with solid financials is more important than ever.

    Strategic capital allocation is one of the most important activities management teams do based on our experience of nearly 50 years. We strive to invest in companies that, after paying business expenses, generate more cash than they need and in turn seek to increase shareholder value.

    With excess free cash, leadership has five capital allocation choices.

  • Capital Allocation is Key

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1. Invest in the Business

  • This includes building new plants, adding more stores, increasing inventory, and research and development.

2. Impact the Balance Sheet

  • Put cash on the balance sheet.
  • Pay down debt.

3. Conduct Mergers and Acquisitions

  • Companies can acquire businesses to accelerate their growth.
  • When they acquire another firm, this tends to increase sales, profits, and their stock price.

4. Pay a Dividend

  • We seek companies that pay a dividend and consistently increase that dividend over time. We believe dividend growth is important because only businesses that are growing their cash flow are able to consistently grow their dividends. We favor investing in businesses that are growing their dividends quickly because it means the underlying operation is expanding.

5. Buy Back Stock

  • A stock buyback is when a corporation purchases its own shares in the stock market and it demonstrates the management team’s confidence in their business.
  • A buyback reduces the number of shares outstanding and this increases earnings per share and, frequently, the stock’s value. 
  • All buybacks are not alike. Just as we seek to purchase shares at a discount to a company’s value, we prefer businesses that repurchase their shares at reasonable valuations as well.

Across Fenimore’s three mutual funds (FAM Funds), 100% of our holdings are employing one or more of these strategic tools. This bolsters our confidence in their leaders and business.

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Adirondack Chamber Interviews Our CEO, John Fox

Adirondack Chamber Interviews Our CEO, John Fox

John Fox, CEO joins Amanda Blanton, Marketing Director at the Adirondack Regional Chamber of Commerce to discuss Fenimore, investing, and our community on the ‘I’m in with the ARCC’ radio show.

Interview Highlights Include:

  • How Fenimore Asset Management began and how we continue to serve individuals, families, businesses, and institutions

  • Fenimore’s commitment and support of our local community

  • Investing tips

  • Our long-term investing strategy and how we invest

  • What makes Fenimore different?

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

Past performance is not indicative of future results. All investing involves risk including the possible loss of principal. Before investing, carefully read the fund’s investment objectives, risks, charges and expenses. FAM Funds’ prospectus or summary prospectus contains this and other important information about FAM Funds and should be read carefully before you invest or send money. 

To obtain a prospectus or summary prospectus and performance data that is current to the most recent month-end for each fund as well as other information, please go to fenimoreasset.com or call (800) 932-3271.

The principal risks of investing in the fund are: stock market risk (stocks fluctuate in response to the activities of individual companies and to general stock market and economic conditions), stock selection risk (Fenimore utilizes a value approach to stock selection and there is risk that the stocks selected may not realize their intrinsic value, or their price may go down over time), and small-cap risk (prices of small-cap companies can fluctuate more than the stocks of larger companies and may not correspond to changes in the stock market in general).

Neither this presentation nor any of its contents may be distributed or used for any other purpose without the prior written consent of Fenimore. The description of certain aspects of the market herein is a condensed summary only. This summary does not purport to be complete and no obligation to update or otherwise revise such information is being assumed. These materials are provided for informational purposes only and are not otherwise intended as an offer to sell, or the solicitation of an offer to purchase, any security or other financial instrument. This summary is not advice, a recommendation or an offer to enter into any transaction with Fenimore or any of their affiliated funds. This presentation may contain statements based on the current beliefs and expectations of Fenimore’s management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Any references herein to any of Fenimore’s past or present investments, portfolio characteristics, or performance, have been provided for illustrative purposes only. It should not be assumed that these investments were or will be profitable or that any future investments will be profitable or will equal the performance of these investments. There can be no guarantee that the investment objectives of Fenimore will be achieved. Any investment entails a risk of loss. Unless otherwise noted, information included herein is presented as of the date indicated on the cover page and may change at any time without notice.

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Unsung Heroes

Unsung Heroes

The Richmondville Volunteer Emergency Squad (RVES) provides emergency medical services to more than 2,600 residents in a rural Upstate New York county as well as to surrounding communities. While this rescue team is accustomed to saving others in danger, they recently had their own urgent situation.

RVES’s 2005 ambulance was in constant disrepair — a nerve-racking circumstance for first responders whose equipment can make the difference between life and death. As an all-volunteer squad that does not receive regular municipal funding, it was their turn to ask the community for help.

Fenimore’s associates were honored to support RVES’s capital campaign and thrilled when they stopped by to celebrate their new, state-of-the-art ambulance and give us a tour!

Thank you RVES for your selfless acts of service for those in need!

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Fenimore’s 2022 Year-End Newsletter

Fenimore’s 2022 Year-End Newsletter

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Fenimore’s 2022 newsletter features:

  • Investment Insights from CEO John Fox: “The good news is these turbulent times will come to an end and our ship is built for the long haul with what we believe are quality companies that can survive and navigate difficult surroundings.”
  • President Christian Snyder’s Message: “With Fenimore’s heritage and differentiated approach to serving our investors resting on such sound footing, my plan is to ensure, elevate, and expand.”
  • IRA News: Details are provided on the 2022 contribution deadline and 2023 limits.
  • Team Highlights: Fenimore welcomes new team members and a board member while recognizing four retirees for their decades of faithful service.
  • Supporting Our Community: The FAM 5K — Off and Running!
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Fenimore’s 2022 Year-End Newsletter


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Christian Snyder & The Albany Business Review Leader Board

Christian Snyder & The Albany Business Review Leader Board

Christian Snyder, J.D., CFA®, President, was named in the Albany Business Review’s Leader Board series as one of the ‘54 Capital Region senior executives you should know’ on December 11th. This series features ‘well-known executives making career moves and those new to the region.’*

Christian Snyder, J.D., CFA®, joined Fenimore as President in October 2022. He succeeds Debra Pollard who is retiring from Fenimore at the end of 2022 after a tenure of more than 30 years, the last six as President. He previously held the position of Chief Operating Officer of the Wealth Strategies Group at Goldman Sachs Ayco Personal Financial Management.
Congratulations Christian!

*The Albany Business Review Leader Board is a quarterly series that introduces readers to the newest top executives.

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Quality Investing: Its Impact During Down Markets

Quality Investing: Its Impact During Down Markets

Investment Insights: Fenimore’s Latest White Paper

William Preston, Portfolio Manager of the FAM Dividend Focus Fund, discusses how Fenimore’s mutual funds have performed in down markets over the decades and analyzes their quality characteristics.

Highlights Include:

  • Achieving long-term investment goals usually depends on staying invested during down markets and having an established risk management process.
  • The downside capture ratio of Fenimore’s three equity mutual funds helps quantify the benefits of our risk management approach.
  • Fenimore Asset Management conducts firsthand research and seeks to invest in select, quality businesses. We believe it is our holdings’ collective quality characteristics that have helped our mutual funds typically outperform during down markets.

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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.