Investment adviser calls for patience

PHOTOGRAPHER: Bethany Bump

In a year of continued recession, dysfunctional government and low public confidence in both the White House and Capitol Hill, the managers of a Cobleskill-based investment advisory firm sought to reassure their investors Tuesday that the system still works.

Few things are as destructive to the national economy as a lack of confidence in the system, said Fenimore Assets Management founder and Chairman Tom Putnam at the company’s 25th annual shareholder meeting.

“The system still works, but we have a lack of confidence in it,” Putnam said. “And if we had some way to build confidence, if somebody would say something positive and we’d get a united front politically and move in the right direction, that would change things overnight.”

Putnam opened Tuesday’s meeting by reflecting on the hard times the community has faced since Hurricane Irene tore through the Schoharie Valley.

“People in the valley are pretty resilient, and even though it’s devastating, everybody’s taking one step at a time to bring things back and make this a better place to live,” he said.

Fenimore managers insisted that just as now is a shaky time locally, short-term volatility in the stock market doesn’t mean potential investors should run away. A late June decline in the market, and consequently the fund’s value, is only a snapshot of the larger picture, said John Fox, director of research and co-manager of the FAM Value Fund.

Total net assets for the FAM Value Fund were $630 million as of Sept. 30. Share prices are down 3.89 percent in the past year. Its value has dropped 0.12 percent in the last three years, but is up 9.35 percent since its 1987 inception.

“A team is never as bad as it looks when it’s losing and never as good as it looks when it’s winning,” said Fox. “And what I mean by that in terms of investment returns is we’ve just had an awful quarter in the market. So we’re looking at the snapshot at a bad time.”

The mutual funds company prides itself on looking at its mistakes and learning from them, he said.

The FAM Equity-Income Fund has $79 million in net assets and is down 0.11 percent in the past year. It is up 0.78 percent in the last three years, however, and has increased 6.49 percent since its 1996 inception.

Those who asked questions Tuesday expressed their trust and admiration for the managers seated on the auditorium stage of Cobleskill-Richmondville High School. And the large turnout appeared largely satisfied by the open format question-and-answer session that Fenimore holds on an annual basis.

“We live so close that we can go right down to the main office here and they invite you to come in,” Schoharie resident Laudlin Hoyenga said after the presentation. “They don’t hold anything back, it’s quite open.”

Four of the mutual funds’ investment holdings were on display in the school hallways: IDEX, Hurst Jaws of Life, CarMax and Zebra Technologies. The meeting took a loud turn when a Hurst representative and Fenimore presented Cobleskill Fire Chief Rich Cooper with the department’s first and only Jaws of Life.

“Thank you for such a great gift and great tool,” said Cooper. “It’ll get used quite a lot, I can tell you, since 50 percent of our calls involve the use of extrication tools like this.”

Investors were curious as to why Fenimore buys stock in small- to medium-sized businesses over larger companies like Alcoa or General Electric. Managers said they have the most success with smaller companies because they have the opportunity to grow faster, but can still be “global powerhouses” — or companies headquartered here that do business all over the world.

They also prefer them for a simpler reason: They’re easier to understand.

“Smaller- to medium-sized companies give us access to management which we don’t have with large companies,” Putnam said. “And that’s a big plus to us, to sit down with management and eyeball them and ask them tough questions like you are with us.”