Shareholders get a chance to question FAM analysts

PHOTOGRAPHER: Marc Schultz

With yard stick in hand, Fenimore Asset Management (FAM Funds) Chairman, Tom Putnam explains "The Rule of 3", Value Fund, Equity-Income Fund and Small Cap Fund at a shareholder informational meeting held at the Desmond in Colonie on Tuesday morn

The recent drought, a weak European economy and increasing oil and gas exploration were among topics on the minds of investors attending Cobleskill-based Fenimore Asset Management’s 26th annual meeting Tuesday.

About 120 people gathered at the Desmond Hotel and Conference Center for the first of two shareholder information meetings where founder Thomas O. Putnam described the uneasy feeling investors get when domestic and international situations and developments impact fi nancial markets.

Putnam launched the FAM Value Fund 25 years ago. That was right after the 1987 stock market crash, one of several economic fluctuations Putnam has seen over the years, which he said creates apprehension among some investors.

“It’s not unusual, after a fi nancial crisis, for people to be uncertain,” said Putnam, whose company launched its third mutual fund this year.

The FAM Value Fund, despite major dips in the market over a quarter-century, has yielded a 9.93 percent annual return since its inception.

The company’s FAM Equity-Income Fund, launched in 1996, has shown annual growth of 7.57 percent since inception.

The firm’s newest offering is the FAM Small Cap fund, which since its creation in March has yielded 5.9 percent growth.

Combined, about $875 million is invested through the three funds.

Investors had a variety of questions Wednesday for a panel of company analysts, on topics such as the potential impact of growth in the Capital Region nanotechnology sector.

Fenimore’s director of research, John Fox, said despite the excitement about the growth in this sector locally, his firm steers away from new companies — many fail, he explained.

Instead, Fenimore looks for investment opportunities in well-established, longstanding companies.

Erratic weather, such as the recent drought, is another factor that could impact investments, particularly in the consumer staples category.

A drought can cause a short-term rise in input costs for businesses, but other factors Fenimore considers before investing in a company help minimize that impact on investments, said analyst Kevin Gioia.

When selecting stock purchases in the consumer staples sector, Fenimore looks for companies with a strong brand, he said. These companies are able to raise prices gradually and maintain their customer base. They are also strong enough to bring new products into the market, Gioia said, and innovation growth helps offset fluctuations.

The assembled shareholders received the remarks cordially and gave the speakers a standing ovation when the meeting was done.