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SPOUSAL INDIVIDUAL RETIREMENT ACCOUNT (IRA)

spousal individual retirement account (IRA)

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    What is a spousal individual retirement account (IRA)?

    If you meet certain conditions, you can set up and contribute to an IRA (traditional or Roth) for your spouse, even if he or she receives little or no taxable compensation for the year of the contribution. Such an IRA is commonly referred to as a spousal IRA. A spousal IRA is not, however, a special type of IRA. It is merely a way of describing the fact that you are making a contribution to your spouse’s traditional or Roth IRA. To contribute to a spousal IRA, you must meet four conditions:

    • You must be married at the end of the tax year
    • You must file a joint federal income tax return for the tax year
    • You must have taxable compensation for the year
    • Your spouse’s taxable compensation for the year must be less than your taxable compensation
  • Andrew Boord, Portfolio Manager - Fenimore Small Cap Strategy

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Taxable compensation includes wages and salaries, commissions, self-employment income, and taxable alimony or separate maintenance. It does not include earnings and profits from property (such as rental income, interest income, and dividend income), pension or annuity income, deferred compensation received, or any items that are excluded from income.

Example(s): You have taxable compensation of $80,000 for 2024. Your spouse has no taxable compensation. Assuming you file a joint federal income tax return and are married at the end of the tax year, you may be able to contribute up to $7,000 to an IRA in your spouse’s name ($8,000 if your spouse is age 50 or older). If you do this and are also able to contribute $7,000 to your own IRA ($8,000 if you are age 50 or older), your total IRA contribution for 2024 to the two IRAs can be as much as $14,000 ($16,000 if you are both 50 or older).

Traditional spousal IRAs and Roth spousal IRAs

If you meet the above conditions for spousal IRAs, you can contribute to a traditional IRA in your spouse’s name. All or part of your contribution to your spouse’s traditional IRA may even be tax deductible under certain conditions.

You may also be able to contribute to a Roth IRA in your spouse’s name if you meet the above conditions and your combined modified adjusted gross income (MAGI) is within certain limits (see last paragraph). Roth IRA contributions are never tax deductible, but withdrawals may be tax free under certain conditions.

How much can you contribute to a spousal IRA?

Unless your spouse is age 50 or older, you can contribute no more than $7,000 to a spousal IRA for 2024 (up from $6,500 in 2023). To be more specific, the maximum amount that you can contribute to a spousal IRA for 2024 is the lesser of:

  • $7,000 ($8,000 if your spouse is age 50 or older)
  • The combined taxable compensation of you and your spouse, less any amounts contributed to your own traditional and Roth IRAs

Example(s): You have $7,000 in taxable compensation for 2024. Your spouse has $500 in taxable compensation for 2024. Both of you are younger than age 50. You contribute $5,500 to your own Roth IRA. The maximum amount that you can contribute to your spouse’s IRA (traditional or Roth) is $2,000.

If your and your spouse’s combined MAGI for the year is more than $230,000 in 2024 ($218,000 for 2023), your ability to contribute to a Roth IRA in your spouse’s name is limited, and phased out entirely if your combined MAGI in 2024 is $240,000 or more in 2024 ($228,000 or more for 2023). If either you or your spouse is covered by an employer-sponsored retirement plan and your combined MAGI exceeds certain levels, your ability to make deductible contributions to a traditional IRA in your spouse’s name may also be limited (or phased out entirely).

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Serving With Love

SERVING WITH LOVE

Ronald McDonald House Charities of the Capital Region stands by families in their toughest moments and, at Fenimore, we’re proud to stand by them.

For seven nights, Fenimore Associates came together to support The Albany Ronald McDonald House ‘Love is Served’ meal program. We cooked up love in the form of comforting meals like Mac-N-Cheese, Sliders, Tacos, Pasta, Meatloaf, and Chicken Parm.

Ronald McDonald House Charities of the Capital Region promotes the health, development and well-being of children and their families through the Ronald McDonald House, a home away from home for families of seriously ill children, and by creating and supporting programs that directly improve the lives of children and their families.

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Investing at Market Highs

Investing at Market Highs

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    Fenimore Portfolio Manager, Will Preston, CFA®, shares his thoughts on investing at market highs.

    The stock market has hit 14 “all-time” highs in the first two months of 2024. While this is great for portfolios, we understand it can also raise concerns about investing at market highs, particularly given the 9-month, -25% bear market that followed the last peak in early 2022. I’d like to reassure you that a long-term view is what matters most.

    Compared to the last peak in January 2022, today’s investing backdrop is very different. In January 2022, inflation was +7.6% and rising, along with growing expectations that the Federal Reserve would have to raise interest rates to combat the persistent inflation. This of course turned out to be true with interest rates increasing 11 times in 16 months.

    In February 2024, inflation, as measured by the Consumer Price Index, increased 3.2% year-over-year and has been trending down, supporting investor expectations that the Fed will not need to hike rates again this cycle. While some focus will remain on when the Fed will begin cutting interest rates, long-term company value creation continues to come from businesses growing earnings and cash flow.

  • Andrew Boord, Portfolio Manager - Fenimore Small Cap Strategy

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Another contrast to the previous market peak was the speculative investments that drove a lot of the returns. The IPO market set a record in 2021 and we saw wild returns in meme stocks, SPACs (special purpose acquisition companies), and crypto. We do not see this speculative behavior today. 

Comparing trailing multi-year returns for these market indices as of the end of February 2024 against the same trailing multi-year periods at the end of 2021 illustrates the exuberance that existed in 2021.

2/29/2024 3-YR TR
S&P 500 11.91%
Russell Mid Cap 5.51%
Russell 2000 -0.94%
NASDAQ Composite 7.69%
12/31/2021 3-YR TR
S&P 500 26.07%
Russell Mid Cap 23.29%
Russell 2000 20.02%
NASDAQ Composite 34.26%

Performance data quoted above is historical. Past performance is not indicative of future results, current performance may be higher or lower than the performance data quoted. Investment returns may fluctuate; the value of your investment upon redemption may be more or less than the initial amount invested.

As you can see, trailing returns are closer to long-term US equity return averages compared to 2021, which should bode well for future return prospects. 

In summary, the current market environment has notable distinctions from that of 2021 and early 2022. Despite potential reservations about investing at market peaks, it’s important to remember that the stock market regularly achieves all-time highs, and today’s “peak” will inevitably be surpassed by a new market high in the future.

  • S&P 500 New all-time highs by year

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    Ultimately, when your objective, like ours, is to preserve and compound capital over the long term, it necessitates investors to stay invested irrespective of market conditions. This has been our philosophy for the last 50 years and will continue for the next 50.

    Thank you for allowing us to be your trusted investment partner.

    Will Preston, CFA®
    Portfolio Manager, FAM Dividend Focus Fund


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

Important Disclosures
Performance data quoted above is historical. Past performance is not indicative of future results, current performance may be higher or lower than the performance data quoted. Investment returns may fluctuate; the value of your investment upon redemption may be more or less than the initial amount invested. All returns are net of expenses. To obtain performance data that is current to the most recent month-end for each fund as well as other information on the FAM Funds, please go to fenimoreasset.com or call (800) 932-3271.

Please consider a fund’s investment objectives, risks, charges, and expenses carefully before investing. The FAM Funds prospectus or summary prospectus contains this and other important information about each Fund and should be read carefully before you invest or send money. To obtain a prospectus or summary prospectus for each fund as well as other information on the FAM Funds, please go to fenimoreasset.com or call (800) 932-3271.

This presentation was prepared exclusively for the benefit and use of Fenimore Asset Management, Inc. (“Fenimore”) and FAM Funds clients to whom it is directly addressed and delivered and does not carry any right of publication or disclosure, in whole or in part, to any other party. Neither this presentation nor any of its contents may be distributed or used for any other purpose without the prior written consent of Fenimore.

In part, the purpose of this presentation is to provide investors with an update on financial market conditions. 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.

These materials contain the views and opinions of Fenimore. Additionally, the information herein is subject to change and is not intended to be complete or to constitute all of the information necessary to evaluate adequately the consequences of investing in any securities or other financial instruments or strategies described herein. These materials also include information obtained from other sources believed to be reliable, but Fenimore does not warrant its completeness or accuracy. In no event shall Fenimore be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction.

We undertake no duty or obligation to publicly update or revise the information contained in this presentation. In addition, information related to past performance, while helpful as an evaluative tool, is not necessarily indicative of future results, the achievement of which cannot be assured. You should not view the past performance of Fenimore funds, or information about the market, as indicative of future results.

All projections, forecasts and estimates of returns and other “forward-looking” information not purely historical in nature are based on assumptions, which are unlikely to be consistent with, and may differ materially from, actual events or conditions. Such forward-looking information only illustrates hypothetical results under certain assumptions and does not reflect actual investment results and is not a guarantee of future results. Actual results will vary with each use and over time, and the variations may be material. Nothing herein should be construed as an investment recommendation or as legal, tax, investment, or accounting advice.

There is no guarantee that any of the estimates, targets or projections illustrated in this summary will be achieved. 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. An investor could lose all or substantially all of his or her investment. 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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FAM Small Cap Portfolio Manager Talks Valuations

FAM Small Cap Portfolio Manager Talks Valuations

  • FAM Small Cap Fund Portfolio Manager, Andrew Boord, shares his thoughts on small-cap valuations.

    We definitely think small caps are on average trading at much lower valuations than large caps. We also regularly remind ourselves, and others, that historically small and large caps have taken turns leading the market, often for 10 to 15 years at a time, so eventually small caps will outperform large caps.  The big difference in valuations doesn’t mean relative performance will change tomorrow, but it does improve the odds of small caps outperforming large caps over the next 5 to 10 years. 

    That said, we at Fenimore focus 90% of our efforts on about 200 small businesses. We know very little about the other 1,800 lower quality small caps, and probably even less about macro topics, which is why we do not speak to the valuation of the Russell 2000, and instead focus on the valuation of our small cap investible universe. I would rather talk about the industries and businesses we intimately know—Russian fish, new floor offerings, risk of office loans, or the pricing of appliances because it impacts a new idea we’re evaluating—than employment trends. This is why it’s always a challenge to reconcile what we know or are hearing from our companies with the macro questions of the day.

  • Andrew Boord

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    Andrew Boord
    Portfolio Manager, FAM Small Cap Fund

Rather than comment about Russell 2000 valuations, we think about the valuations of the 27 companies we own stock in and the other 10 to 20 we might like to invest in eventually. When we think about our positions, valuations feel reasonable overall, maybe even low-ish, but it varies by company. Below is a quick summary of our 10 largest positions (as of 1/31/24), with particular focus on current valuations versus the prior 5 to 10 years.

  • CBIZ (CBZ) is trading at a higher-than-normal valuation. Our hope is that EPS growth stays high and they grow into it.
  • ExlSerivice Holdings (EXLS) valuation was on the high side of normal about a year ago but has declined considerably. Using FactSet data, the stock is about 19x forward P/E. Relative to the past 10 years, this is in the middle of the range.
  • Colliers International Group (CIGI) is very diverse by property type, service type, and geography. That said, soft U.S. office leasing and property sales brokerage is a headwind. So, the multiple is middle of the road versus history, while earnings are a little depressed (probably by 15 to 20%) by the lack of office transactions.
  • Pinnacle Financial Partners (PNFP) is trading around 1.7x tangible book. Clearly, investors fear bank stocks today. Outside of now and the COVID pandemic, the stock regularly traded around 2.5x tangible book.
  • Trisura Group (TRRSF) is only trading for about 11x earnings, which we view as cheap.
  • Chemed Corp. (CHE) is not particularly cheap, although it rarely is, at about 25x forward earnings. Over the past decade, the stock has regularly traded between 20x to30x. I would argue that EPS are a little depressed right now as the hospice business is still rebounding post-COVID, but even if true, the stock isn’t cheap.
  • Choice Hotels International (CHH): Investors are concerned that CHH may buy Wyndham, adding debt and integration risk. As a result, CHH is trading around 18x forward P/E, which is on the low side of normal versus history. 
  • Nomad Foods (NOMD) struggled with supply chain issues especially after Russia invaded Ukraine. Higher interest rates are a headwind too. They are starting to come out of this transition period, as you can see by the recent stock move. However, it still appears to be trading at 9x to 10x forward earnings.
  • Brookfield Infrastructure Corp. (BIPC) is a dividend stock, so I would argue the best way to value it is by dividend yield; our thesis is that long-term return will be the yield plus the growth rate of hopefully 5% to 9%. Yield-sensitive stocks sold off as interest rates rose. Today, BIPC yields about 4.4%. History is a bit limited, but in the past the stock usually yielded 3% to 3.7%. I would argue that the stock is cheap.
  • Landstar System (LSTR) is a truckload broker—a fabulous, yet volatile business. Demand goes through cycles tied to GDP growth, while supply goes through its own cycles tied to truck builds. In the past few quarters, they have been in a definite down cycle, which is the deceleration phase after the post-COVID boom. While the multiple may not look cheap, EPS are quite depressed. The stock should do quite well when the next upcycle inevitably occurs. 

I should add that during the past 13 months, in the FAM Small Cap Fund, we trimmed CBIZ slightly while adding to Colliers, Pinnacle, Trisura, Choice, Nomad, and Brookfield Infrastructure Corp. 

Fenimore was founded on and remains true to a value-oriented investment approach focused on individual companies. This value investing philosophy has been applied by the firm in all environments, regardless of market cycle stages, for the last 50 years.

This gives us confidence that applying our traditional focus on valuation to the small-cap equity universe is a worthwhile endeavor. Of course, the concept of “value” does not exist in a vacuum: some stocks are “cheap for a reason.” The quality profile of a company is integral to our assessment of overall valuation.

STAY CONNECTED
If you have any questions, please reach out to us. Call 800-721-5391, email us at info@fenimoreasset.com, or stop by either our Albany or Cobleskill location.

Thank you for your ongoing trust.

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Gary Dake Joins Fenimore’s Board

Gary Dake Joins Fenimore’s Board

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    Fenimore Asset Management, an independent, Capital Region-based investment advisory firm and manager of the FAM Funds family of mutual funds, announces that business leader Gary Dake has joined its board of directors.

    Mr. Dake is President of Stewart’s Shops Corporation. Stewart’s is a large, privately owned, and vertically integrated chain of convenience stores and gas stations with more than 355 shops in New York and Vermont. Mr. Dake is an accomplished and acclaimed leader who heads a team of more than 5,000 partners (employees). These partners own more than 40% of the company through their Employee Stock Ownership Plan. Employed at Stewart’s since 1985, he holds a BA in Economics from St. Lawrence University.

    “Gary is a well-respected and admired leader both within his company and throughout the Capital Region community,” shared Tom Putnam, Founder and Executive Chairman of Fenimore Asset Management. “His integrity, expertise, success, and entrepreneurial spirit should benefit our investors over the long term.”

    In addition to his extensive business career, Mr. Dake is very active as a community leader and Stewart’s Shops is dedicated to community giving and support. Between the company, Dake family foundations, and Stewart’s “Holiday Match Program,” millions of dollars have been donated to thousands of local charities. Mr. Dake is also the founder of the Dake Foundation for Children. The nonprofit was established “to provide opportunities for children with disabilities to enjoy more independence, inclusion, and fun.”

    Founded in 1974, Fenimore Asset Management is an independent, nationally recognized investment manager with more than $4.12 billion in assets under management (as of September 30, 2023) through its Cobleskill and Albany offices. The firm’s team focuses on in-depth research, investing in the stocks of carefully selected quality businesses, and providing its investors with highly personalized investment services. Fenimore offers both individually managed portfolios and a family of mutual funds (FAM Funds) that can be used for retirement and other long-term investment planning.

  • Gary Dake Joins Fenimore’s Board

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Fenimore Names Anne Putnam CEO

Fenimore Names Anne Putnam CEO

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    Second-generation leader brings deep relationship management experience and lifelong commitment to firm’s core values to new role.

    Fenimore Asset Management, manager of the FAM Funds family of mutual funds, has promoted Anne Putnam to Chief Executive Officer, effective October 1, 2023. Anne’s promotion comes as the firm founded by her father, Tom Putnam, in 1974 nears its 50th year of service to investors in the Greater Capital Region and across the country.

    Ms. Putnam is an accomplished leader who has delivered results, built strong relationships, and carried out a vision of growth over her two-decade investment management career. Since joining Fenimore in 2006, she has contributed significantly to the firm’s success, most recently as Senior Vice President, a role she’s held since 2017. During her career, Ms. Putnam has served investors and financial institutions in a variety of capacities while immersing herself in all aspects of Fenimore’s operations, beginning as a client relationship manager for separately managed accounts.

  • Anne-Putnam

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  • Anne Putnam & Senior Leaders

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    John Fox, CFA®, Chief Investment Officer; Tom Putnam, Founder & Executive Chairman; Anne Putnam, Chief Executive Officer; Christian Snyder, J.D., CFA®, President

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    “As the founder and executive chairman of Fenimore, I am excited about everything Anne brings to her new role for our investors, associates, and community. She is a proven leader with a deep understanding and commitment to our investment philosophy, and the knowledge, experience, and drive to help guide our firm to new levels of investor satisfaction and growth,” Mr. Putnam said.

    Fenimore Asset Management is an independent, nationally recognized investment manager with more than $4.27 billion in assets under management as of June 30, 2023, through its Albany and Cobleskill offices. As a research-based and service-centric manager, Fenimore offers investment solutions to individuals, families, and organizations to help nurture and grow their capital over the long term. The firm’s team focuses on in-house research, investing in carefully selected quality businesses (stocks), and providing its investors with highly personalized investment solutions.

As a second-generation leader, Ms. Putnam has played a key role in maintaining and enhancing the strategic vision and value investment philosophy established by her father when he founded the firm as a means to manage family money after the Putnams sold the successful textile business started by Ms. Putnam’s grandfather. She has also been integral to continuing Fenimore’s half-century commitment to philanthropy in the community. 

“Fenimore is an investment factory, like my grandfather built with his business, based on relationships with our investors, financial institutions, and portfolio-owned companies. Due to our values, we remain committed to investing in our community and giving back; it is humbling to walk in the footsteps of my forefathers,” said Ms. Putnam. “My goal as CEO is to maintain our presence regionally as a partnership owned by family and associates, expand our presence in the Capital Region, and continue to offer our investment strategies nationally through various channels. The same culture — in values-based management plus investment philosophy and process of these last fifty years — will guide us forward.”

Ms. Putnam succeeds John Fox in the CEO role. Mr. Fox will continue in his role as Chief Investment Officer (CIO) and dedicate his full attention to guiding the firm’s investment management strategies. Ms. Putnam’s promotion is the latest step in Fenimore’s carefully planned leadership succession strategy, which included the appointment of Christian Snyder as president in 2022.

Ms. Putnam is active in the community — both in Schoharie County where she was born and raised and throughout the Capital Region — through volunteerism and giving back. She currently sits on the boards of Double H Ranch in Lake Luzerne and Lakeside Chapel in Lake George.

“Anne is a highly-respected professional who is dedicated to serving our investors, our associates, and our community,” shared Michael Saccocio, a member of the Fenimore Asset Management Board of Directors and Executive Director, City Mission of Schenectady. “She exemplifies Fenimore’s commitment to excellence and is a great choice to serve as our next CEO.”

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FAM Funds’ 37th Annual Investor Meeting

FAM Funds’ 37th Annual Investor Meeting

Fenimore Asset Management, manager of the FAM Funds, welcomes you to join us & hear:

  • How our new generation of leadership continues to focus on in-depth, firsthand research and service excellence.
  • The latest insights from our investment research analysts’ company visits.
  • An evaluation on long-term investing through various market cycles — despite the news headlines at any given time.
Tuesday, October 10, 2023
4:00–5:00 p.m.

Cobleskill-Richmondville High School Auditorium
1353 State Route 7, Richmondville, NY
Refreshments & Complimentary Gift

BRING A GUESTIt’s a great opportunity to meet our team.

MEETING Q&A — Questions can be submitted when you RSVP or asked during the meeting.

RSVP

or call 800-932-3271
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37th Annual Investor Meeting

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Making a difference over the long-term

Making a difference over the long-term

Fenimore joined forces with Siena College Men’s and Women’s Basketball teams and CAPTAIN Community Human Services to host a Court Rehab Dedication and Ice Cream Social at the newly renovated basketball court at Cheryl’s Lodge in Clifton Park, New York.

Cheryl’s Lodge was the winning recipient of this renovation as voted on by attendees at the Men’s and Women’s Siena basketball games last season.

The teams, CAPTAIN, and local fans all came together to celebrate making our community better and the lasting impact it will have on kids and their families.

“For our fans to come here to Cheryl’s Lodge, obviously CAPTAIN and Fenimore Asset Management being able to put this on to refurbish a court that the youth of the community will be able to really enjoy, it means a lot,” said Carmen Maciariello. “I’m thankful to be in this position to be able to help.”

SIENA COURT REHAB AND ICE CREAM SOCIAL

The kids at Cheryl’s Lodge named the court, The Star Court, as a reminder that every person that steps on the court is special. The Star Court was dedicated in honor of Dr. Bill Long for all he has done to help CAPTAIN.

The mission and vision of CAPTAIN Community Human Services supports and empowers people of all ages to reach their goals of personal growth and self-sufficiency, while also strengthening communities. Cheryl’s Lodge is a program of CAPTAIN, which is a Community Outreach Center offering programming for children, families, and seniors.

See highlights of the evening here:
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