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Category : The Business of Money Management

This Just Smells Really Wrong

From a recent interview with Bill Gross, manager of the Janus Global Unconstrained Bond fund: Years of easing by central banks mean that interest rates in most of the developed world will fluctuate narrowly. That offers an opportunity to sell […]

Someone Else Thinking Like Us

We ran across Hodak Value as we were reading a proxy that detailed managers not getting paid a bonus because they didn’t hit a target that looked to us as very cleverly designed. You rarely see either—bonuses not being earned […]

Pretty Shareholders

As we clean out files and thoughts at year-end, this was a doozy that I think is an interesting view of “shareholder relations” and how badly it can be handled. We simply want to be treated as actual or prospective […]

The Most Important Thing

This remains one of my favorite pieces of self-analysis on not only “how to invest” but how to practically invest and conduct one’s self in the business of managing other people’s money. I read it every year around this time.

The Right Way to Think About It

Warren Buffett: Annual Letter Comments Regarding the Selection of Corporate Directors Berkshire Hathaway 2003 Annual Report: Pages 9-10 (bold added): True independence – meaning the willingness to challenge a forceful CEO when something is wrong or foolish – is an […]

Yes, We Have Written a Letter to the SEC

CLICK HERE to download our recent letter to the SEC.

Grinnell College

There is a lot of money in the world and there are often fascinating stories behind it. This is a great story and what also makes it great is what a pertinent lesson it is for “some people” to understand […]

A New Beginning

Forestar Announces CEO Transition, Management Promotions and Board Retirements  ************************  September 28, 2015 06:45 AM Eastern Daylight Time AUSTIN, Texas–(BUSINESS WIRE)–Forestar Group Inc. (NYSE: FOR) today announced that James M. DeCosmo, President and Chief Executive Officer, stepped down September 25, […]

Mini Book Review and Thoughts | “Minding the Markets: An Emotional Finance View of Financial Stability” — David Tuckett

I will ignore the somewhat silly premise of the book which was to analyze the emotional nature of “money managers” and thus glean some clues as to how to prevent future financial crashes. But I would note the following: If […]

Investment Management is Not a Drinking Game

Aside from a mayonnaise issue, one of the largest pet peeves here is the following: focusing one’s time on finding interesting businesses and values first and then considering some macro considerations next is known as “Bottom-up” investing. It is NOT […]

The Investment World Under Hillary Clinton: Part I

This is certainly our favorite exchange this quarter in the ongoing dialogue between management and shareholders at Richardson Electronics (RELL). The pertinent facts you need to know here are that there is an “A-B” structure that keeps voting control with […]

Capital Allocation 101

Sadly, most CEOs don’t read this. They should.

The Fire is Burning – OM Group Continued

Related: Plus ça Change, Plus C’est La Même Chose. ************************ The following is a letter by Wynnefield Capital Management to fellow shareholders of OM Group (OMG), released June 11, 2015: ************************ Wynnefield Capital Management, LLC 450 7th Avenue, Suite 509 […]

The Good News is We Are on the “Public” Side

Managing $163 billion is not easy. What this piece points out is: It’s generally right. “Private” or “Alternatives” are a good idea only when practiced in small size and in small distribution. What is clear is that “alternative” investing as […]

Pondering Things Way Out of Our Control

by Eugene Robin | Research Analyst The magnitude of the recent price decline caught many of “us” off guard and caused many (including Cove Street) to re-think our notion of what constitutes a sustainable oil price. Here, we analyze the […]

50 Shades of Grey, the G-rated Version

From time to time I have embarrassing moments, like admitting I have read L.J. Rittenhouse’s book, “Investing Between the Lines: How to Make Smarter Decisions by Decoding CEO Communications.” This was a fairly simplistic read on a 2 hour flight […]

The Reluctant Warriors

A friend of ours who works for a well-known activist firm summed it up perfectly when he said, “We are living in the era of the activist halo.” From 300-page PowerPoint presentations to incredible revelations about the amount of salt […]

All That is Necessary for the Triumph of Incompetence is That Good Men Do Nothing

This is a very nicely done and thoughtful piece about a topic that every serious long term shareholder eventually faces despite best intentions. CLICK HERE to download PDF

More Corporate Governance Weirdness

The “Entertainment Business” is well known for having a callous disregard for other people’s money. The origins of Live Nation (LYV) and some of the Board principals involved—current and former—include some of the more egregious examples we’ve seen in our […]

Buffett vs. Icahn on Coca Cola? Slam dunk for Icahn.

by Jeff Bronchick and Ben Claremon We have been thinking about this issue for a few weeks, tempering our urge to dash out some heated thoughts of the moment. We have gotten over it. Ignoring for a moment the details […]

A Word From Our Trader

by Matt Weber |  Director of Trading + Operations There is more to life than increasing its speed. -Mahatma Gandhi Even though we are “investors,” we are very aware of the High Frequency Trading (HFT) issues that emerge on our […]

Proxy Season and the Unusually Juicy Soap Opera at Tessera

We own Tessera at a cost of approximately $16 per share. Our thought process was simple: a conservative analysis of their IP portfolio’s current cash stream plus cash on the balance sheet suggested a valuation of $15 per share, leaving […]

The Nonsense Math Effect

Please insert the phrases “money manager,” “hedge fund,” “large pension plan,” and “underperformance” at will throughout this piece.  The Nonsense Math Effect  Mathematics is a fundamental tool of research. Although potentially applicable in every discipline, the amount of training in […]

Summer Reading Continued

The fault, dear Brutus, is not in our stars, but in ourselves… The latest in a long line of thought provoking pieces by investment consultant guru Charles Ellis about what ails the “business” of investment management and the propensity for all actors—clients, consultants […]

What We See Versus What We Infer

CLICK HERE to download a superbly interesting thought process that is eminently applicable to investment management, and it can be argued that i have seen balance sheets that look worse than some of the included slides. – Jeffrey Bronchick, CFA | […]

More Things That Don’t Change Over Time

THIS (Keynes the Stock Market Inventor) is a pretty interesting piece that was partially excerpted in the Wall Street Journal several weeks ago, but being gluttons for punishment, we had to read the original tract. We would note the following and […]

So We Get Questions

Q. Should we be concerned that you have a small investment team? How can you cover hundreds of stocks? Won’t you miss things? A. No, we don’t need to and of course. We run a concentrated portfolio that strives for […]

The Ongoing Tyranny of the Growth vs. Value Argument

Co-written by Jeffrey Bronchick & Ben Claremon A recent article in the Wall Street Journal—from which we lifted the chart below—once again highlights the never-ending debate about the merits of growth versus value, a discussion that inevitably forces an investment […]

Interpreting Performance Attribution

Old Ideas that Require Repeating in Regard to Hiring a Money Manager