Hunter Frayne, Investment Research Analyst for Fenimore Asset Management, joined Julie Cooling, Founder and CEO of RIA Channel, to discuss the family-owned firm’s long-term investment philosophy.
Fenimore Asset Management started as a family office after the founder sold his textiles business in the 1960s. The founder used his business background to identify and invest in well-run businesses. After accepting capital from external investors, the firm performed well in the 1980s crash and high inflation environment.
Today, Fenimore manages three mutual funds and separately managed accounts (SMAs). The flagship FAM Value Fund was launched in 1987, while the FAM Dividend Focus Fund was launched in 1996. The newest fund is the 2012 FAM Small Cap Fund. The family-owned, employee run business has maintained its investment principles for nearly 40 years.
The low turnover, concentrated portfolios focus on quality small- and mid-cap stocks. Each fund typically invests in 25 to 30 companies that are run by strong management teams, exhibit competitive advantages, and produce strong and growing cash flows. Management teams that commit to annual dividend growth are confident that the company can generate cash flows to support the growing dividends. Dividend payouts also tend to focus management on investing in only the highest quality growth opportunities.
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