Here’s the first group of slides from the spoke fund workshop I held here in Islamorada a few weekends ago. I’ll split the original presentation up over several posts to keep things in bite-sized chunks.
I think I speak for everyone in reporting that it was an enjoyable day. Steve, Kevin, Chris, Kai and Dustin came in from all over – DC, Phoenix, Indianapolis, Chicago and Gainesville – to basically sit all day in the old dynamite warehouse that is my office and learn more about spoke funds. Everyone there was a value investor, and I don’t think I was the only one that noticed we all seemed to share a certain ethic about the right way to treat our investors. I’ve found it’s pretty rare in this wacky industry o’ mine to find yourself in a room full of peers that you intrinsically trust, but this was one of those times. I began the day feeling flattered that they would show up, and ended feeling honored that they had.
I also found it a little bit surreal to hear other portfolio managers throwing around the “spoke fund” term like it was part of the vernacular. Kinda cool. Guess our little idea is growing up.
Unfortunately, the slides below don’t capture any of the many discussions, questions, comments or off-slide conversations we had. If you have any of your own as you view these, let ‘em fly in the comments section.
Since the workshop, I’ve also been doing some more digging on some of the topics I discussed that day – like finding out more about some new technology providers – and I’ll post those notes at some point, too.
So, here’s part one. If you’re already familiar with spoke funds and my firm, some of the early slides may look familiar, but hopefully there are more nuggets for you in the later ones.
And more slides will be posted soon.
@PlanMaestro Roger that. Thx. Will add to the list. More ideas than cash lately. in reply to PlanMaestro 1 week ago
Is advertising for RIA’s regulated like advertising for mutual funds?
Hi Dan,
Yes, there are rules and regulations that govern advertising done by RIAs. Many of these are similar to those of mutual funds when it comes to advertising portfolio performance, specifically. Probably another good post to do soon…
Thx.
Cale
Do you see any issues or limitations with the window trading as your AUM grow? Also, with the market these days even a Mega cap like Apple can move 5% between when you submit a trade and the window opens up.
Don’t think it will be too big an issue given the liquidity of the shares of the kinds of companies we own. That said, I suppose it could be more of a potential issue if you were trying to do a lot of special situations/nanocap investing – but the way to avoid the issue then is to just use a limit order. Not locked into using the trading windows by any means. I just like using them to save that money on commissions. Orders in the window seem to be filled from anywhere from 5 to 20 minutes, I’d say. I typically wait to submit a window order until a few minutes before the window opens to try an minimize any surprises about what the likely price will be. I’m also buying or exiting a position in several transactions over several days, so even big intra-window moves like in that Apple example aren’t as big a deal as they might otherwise be if taking a full position at all once. And those kind of moves are fairly rare – although I agree they seem much more frequent lately.
In my mind, issue also relates to having a big margin of safety in the shares. If the average cost of full positions bought in windows after all that ends up being 50 bips higher than it might otherwise be, it’s less than ideal, but I’m okay with that if something is undervalued by 50%. I don’t think that average cost is higher, mind you, but the possibility exists that it could be. With a big margin of safety plus all else above, that’s why it’s not such a huge concern to me.
Now when we hit $10 billion under management…
Cale,
Are you using a Macintosh for your daily work? No reliance on any Windows software?
Hi Marc,
I basically run the biz from a MacBook Pro on which I use the traditional Microsoft Office suite (Word, Excel, Powerpoint, etc) every day. Also have a Mac server at home I store some files and back-ups on…and on which my girls like to use to watch “Sid the Science Kid.” Use the Mac OS on the laptop for most everything, then, but I also have Windows XP installed on it via VMWare Fusion. Have a couple of apps on Windows that I still use once in a while – mostly for web stuff, plus a database tool – and Fusion makes it a snap to toggle over from OS X.
Have looked at Google Docs, Zoho, and a handful of cloud-type solutions for most common desktop apps, but switching over has not been a huge priority for me. The Microsoft apps I have work great on the Mac.
Cale
Cale,
Thanks for the slides, too bad I missed the meeting. I’m looking around for CRM software, but I’m leaning toward just using a simple spreadsheet at first. What do you think?
thx
David
Hi David,
Yep, I cover CRM tools later in the slides. Well, one, anyways. To fast forward, I use (and recommended) Highrise by 37 signals. Huge fan. Cheap, brilliantly intuitive, hooks into your website, can tag things, check it on the iPhone, create internal checklists, bleh bleh bleh. Alas, CRM was one of the things I learned about the hard way. Got some great advice from a PM at a big value fund about getting a good CRM system early on, so I went out and spent a not insignificant amount of money on Salesforce.com…but it was a mistake. Way too much for what I needed. Highrise is perfect.
More ideas on tech tools coming up soon…
Thx.
Cale
Cale -
Thanks again for your generosity in sharing this information, and your hospitality in hosting us in the Keys. Great time, great information.
Kevin