The Fenimore team was excited to kickoff summer by planting flowers outside the Cobleskill Regional Hospital. We sincerely hope the beautiful flowers and bright colors serve as a welcome sight for patients, visitors, and our healthcare workers.
FAM Small Cap Fund Portfolio Managers Andrew Boord and Kevin Gioia chat with Senior Vice President Anne Putnam about Fenimore’s relentless quest for quality small-cap stocks. This pursuit began in 1974 and continues today.
Dear Fellow Shareholder,
Since the pandemics onset, we have taken two steps forward and one step back on several occasions. This is another one of those times. Corporate earnings for 2021’s first two quarters exceeded expectations and stock prices followed upward. During the third quarter, however, we saw the economy, earnings, and stock market slow down. It happened suddenly, but it is nothing to be alarmed about from our long-term investment perspective.
A visit to your local grocery store provides a telling picture of what is going on — some shelves are sparsely stocked and more customers are wearing masks.
Earlier this year, with COVID-19 cases on the decline and federal stimulus checks in hand, consumers rushed back into the marketplace — buying homes and cars, taking vacations, and attending all sorts of events. This was great for business. Sales were up, corporate profits jumped, and stock prices rose along with them. Until companies just could not keep up.
The reason is when the economy shut down, so did production lines. Then, when consumer demand exploded, manufacturers could not ramp up fast enough or find the employees they needed. Demand is simply outpacing supply. For example, automakers cannot obtain the semiconductors they need to build cars. Homeowners looking to upgrade appliances often cannot find what they need. As a result, people are suddenly spending less.
At the same time, businesses dealing with staffing shortages are reducing hours, further dampening sales. And now the upswing in COVID-19 cases is sending more people back into the safety of their homes and impacting restaurant seatings, air travel, and other elements of the mobile economy. Combined, these economic disruptions have forced some companies to downgrade their earnings estimates and this has slowed stock market growth.
What the fall has in store for us is impossible to predict — and certainly we are concerned about the resurging health impacts of the virus — but in our view the long-term outlook remains bright. Demand for consumer products is still high and the supply chain kinks should get straightened out. Quality businesses typically adapt, continue to grow, and should be bigger and more profitable five years from now than they are today.
We believe this bodes well for the FAM Funds. Our research team seeks quality companies with solid financial footings that we think are ideally positioned to weather any storm and deliver strong results over time. We focus not on the random, day-to-day, short-term turbulence in the economy or market, but on the businesses behind the stocks.
Have there been some unanticipated changes in recent weeks? Sure. But they do not alter our long-term vision. We believe we will take another two steps forward … And the shelves will once again be completely stocked.
Fenimore Founder and Executive Chairman Tom Putnam built the framework for a long-term succession plan many years ago to ensure continuity of experience and investment philosophy for years to come. I am pleased to announce the latest step in this plan.
Longtime Fenimore Investment Research Analyst Marc Roberts has been named as a Portfolio Manager of the FAM Value Fund. Marc served successfully in the same role for the FAM Small Cap fund from 2012 to 2016 before relocating to Chicago. He returned to us last year and quickly re-established himself as a key member of our research team. Marc joins me and Drew Wilson in managing the fund.
At the same time, Tom has announced that he will transition away from being a portfolio manager on our funds at the end of 2021 to concentrate fully on his Executive Chairman role. He will continue to be a mentor and an active participant in our research process and strategic direction. The rest of our fund management teams, including those of us who have led these teams for several years, will remain in place. Paul Hogan and Will Preston manage the FAM Dividend Focus Fund and Andrew Boord and Kevin Gioia the FAM Small Cap Fund.
We look forward to continuing Tom’s well-established tradition of collaborative, team management of the FAM Funds and to working diligently every day as we seek to grow your wealth over time.
We value the personal connections we have with our shareholders. You can reach us with any questions at 800-932-3271, through the contact us section of our website, or via info@fenimoreasset.com. Our team also welcomes you to meet with us in either our Albany or Cobleskill office or via Zoom.
We hope to hear from you soon. Thank you for your continued confidence in us.
Sincerely,
John D. Fox, CFA
CHIEF EXECUTIVE OFFICER
The Fenimore team delivered 38 packages to the residents at Springbrook NY, Inc. on a rainy spring morning. We filled the packages with birdfeeders, birdseed, umbrellas, and thoughts of warm weather to come.
Springbrook is an organization that provides support and services to people with developmental disabilities across central NY. Visiting and touring the campus was a delightful and meaningful way to spend a morning.
Despite the rain, we hope we brightened the residents’ day, and we enjoy being part of such a giving community.
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.
John Fox and his insights on investing were highlighted in the Albany Business Review’s article, “Fenimore CEO’s 3 biggest lessons from the year since the pandemic stock market crash.”
March 23 marks one year since the stock market crashed and bottomed. Compared to 2020, John says 2021 looks favorable, “The stock market is capitalized on corporate profits. If businesses are doing well, prices go up and stock prices tend to follow earnings over time.”
John shared what he believes are the key lessons from the past year:
The article ended with John reinforcing that, of course, there are risks. It will be some time before we know the true cost consequences of the federal stimulus spending including whether it leads to a period of inflation and higher interest rates. Fenimore’s Investment Research team will be monitoring these risks while staying focused on the positive signs ahead.
Fenimore Asset Management, an independent, Capital Region-based investment advisory firm and manager of the FAM Funds family of mutual funds, is celebrating the 25th Anniversary of the establishment of its FAM Dividend Focus Fund (FAMEX).
When Fenimore Founder Tom Putnam and Portfolio Manager Paul Hogan mapped out the investment strategy for the firm’s second mutual fund a quarter century ago, they focused on mid-cap companies with a history of paying growing dividends. Their goal was laser-focused — an investment vehicle that could provide downside protection in turbulent times and upside potential for long-term capital appreciation.
FAMEX has done just that. Since its launch on April 1, 1996, FAMEX has weathered the dot-com bubble, the Global Financial Crisis, and the COVID-related market plunge and volatility. Over its life, FAMEX has achieved solid long-term performance with a positive return on investment in 20 of its 25 years.
Additionally, as of February 28, 2021, FAMEX held the top 5-Star Overall Morningstar RatingTM based on performance returns and risk-adjusted returns. (Morningstar, an independent investment research firm, currently follows 407 mutual funds in its Mid-Cap Blend Category. The Morningstar RatingTM is a quantitative assessment of a fund’s past performance — both return and risk — as measured from 1 to 5 stars. It uses focused comparison groups to better measure fund manager skill. As always, the Morningstar RatingTM is intended for use as the first step in the fund evaluation process. A high rating alone is not a sufficient basis for investment decisions.)
April 1 also marks the silver anniversary of Mr. Hogan’s and Mr. Putnam’s joint management of the fund — a rarity in an industry where the average manager tenure is approximately five years. In May 2020, the two were joined in managing FAMEX by Portfolio Manager William Preston.
“The FAM Dividend Focus Fund exemplifies Fenimore’s nearly half-century commitment to investing in quality businesses that have strong leadership and the proven ability to navigate all types of economic and market cycles,” Mr. Hogan said. “We are proud of the Fund’s performance over its first 25 years and look forward to what we are able to accomplish for our shareholders in the years ahead.”
“Fenimore’s team is truly grateful for the strong local support and ownership of the Dividend Focus Fund as well as our national recognition and investors across the country,” Mr. Hogan added. “We are invested alongside our shareholders and truly care about their financial and life goals.”
“The investment philosophy remains strong: Invest in mid-cap companies with the potential to not only grow their earnings but grow the dividends they return to their shareholders,” said Mr. Preston. “As we like to say, a growing dividend can be a good indicator of the health of a company and its potential for future success.”
Founded in Cobleskill in 1974, Fenimore Asset Management is an independent, nationally recognized investment advisor with more than $3.7 billion in assets under management (as of 12/31/2020) through its Cobleskill and Albany offices. Fenimore offers both separately managed accounts and a family of mutual funds that can be used for retirement and other long-term investment planning. The firm’s team of professionals prides itself on investing in carefully selected quality businesses and providing its investors with highly personalized investment services.
Fenimore’s headquarters is located near the National Baseball Hall of Fame in Cooperstown, NY. But who knew we’d have our own Hall of Famer right here?
Fenimore President Debra Pollard has been inducted into the Albany Business Review’s “40 Under 40 Hall of Fame.” This is the third year the Business Review has inducted select past recipients of its annual 40 Under 40 awards. The Hall of Fame honors “the professionals who’ve made the biggest impact since earning the award.”
Deb joined our team 29 years ago as a marketing associate — our 10th employee — and moved steadily up our leadership ranks, becoming president in 2016. A visionary thinker, she drives our long-term strategic planning and focuses every day on delivering the greatest possible service and value to our investors.
Congratulations Deb!
