- Early in the pandemic, I spoke with the leader of one of our long-term industrial holdings. He said he expected the U.S. to soon be in the midst of an economic shutdown, that it would be at least a year before we returned to any sense of normalcy, and that they were ready. He said their revenue could decrease by as much as 50% and they could still break even due to their financial profile. This was a solid business, in our opinion, and these insights gave us confidence to maintain our stake even as the stock price dropped significantly. Today, we are very pleased with the stock price.
- Our research analysts conducted an in-depth review of a longtime automobile industry holding in the spring of 2020. We know their leaders and wanted to assess if they could survive with their showrooms closed due to the virus. With $600 million in cash, access to ample credit, and manageable debt we believed they could. Our thesis was correct and we estimate that they have a long runway for growth.
- Simultaneously, there were several holdings where we lost confidence, so we sold them and redirected dollars into what the portfolio managers viewed as higher quality businesses with staying power. Our personal knowledge of these operations helped us make educated decisions.
We can never know the future, but our researchers know our holdings and their management. This gives us the confidence we need to execute our long-term strategy: buying stock in what we deem to be quality businesses that meet our exacting standards and are ideally positioned to do well in good times and persevere through adversity.
As fundamental value investors with a long-term mindset, the firsthand knowledge we have of our companies, their industries, and their competitors, delivers high-conviction portfolios.
Fenimore Asset Management: Fenimore, manager of the FAM Funds, has been providing differentiated investment management solutions for nearly five decades. Learn more about our unique history and how we partner. Call 800-721-5391.