In any entirely-admirable move, several fund advisers are trying to answer the question "how can we do better?" In particular, they're asking about how they can do a better job of talking with their shareholders. A couple have asked me to recommend companies whose communication might serve as exemplars.
I think of investor communications as following one of three models:
Granular detail on the portfolio - these folks report what the SEC require,s then tend to tell us more than I could ever want to know about their analysis of one or two holdings.
Talks about the investing environment - these folks spend more time walking through the "what do we see going on out there and how are we trying to deal with it" story.
Lifeless drivel (a/k/a the Fidelity model) - these are the template-driven reports where every fund reports the exact same topics, in the exact same order, using the exact same language. Somewhere in there the manager gets his very own two-sentence paragraph. Huzzah.
When it comes to shareholder letters and reports, my own biases favor reports with a human voice and those that help me think about the bigger questions surrounding my portfolio planning. One favorite is John Montgomery at Bridgeway (one of the few guys, perhaps the only guy, to invite his trustees to contribute content). I think Seafarer does a consistently good job of speaking to their investors and treating them as if they're partners with brains rather than just marketing targets. Vulcan Value is sort of a hidden gem; you've got to love any manager letter that begins "we've done great recently but that's entirely irrelevant." Grandeur Peak (whose letter starts with a casual "It was a rough quarter for stocks, no doubt about it") is an interesting case of folks striving for balance between big picture and granular detail.
So, here are two questions: if I were to be approached by an earnest fund manager looking to connect with his investors, is there a company whose work he should really pay attention to? Or should he take the shareholder letter as a historical curiosity and focus on some new technology? Fund companies are, God help us all, flocking to YouTube and they tweet like sparrows swarming a warm loaf of bread.
Curious, as ever,
David
Comments
They do very detailed market commentary, a general portfolio review with the pluses and minuses, and detailed analysis of a couple of holdings including how the holdings fit their criteria, specifically, with real data. (I have to laugh sometimes at how curmudgeonly they sound, but hey, curmudgeons can be great value investors!)
Parnassus, and as you said, David, Grandeur Peak and Seafarer also come to mind. I'll have to read some Vulcan Value; I have it on a watchlist but haven't ever read the manager commentary.
The champion by a wide margin is the famous Berkshire- Hathaway series.
Here is a Link that provides access to many of them:
http://www.berkshirehathaway.com/letters/letters.html
You have to go a long way to beat the Buffett-Munger team just like you need to go a long way to beat a Carl's Jr. hamberger (a less famous Richard Nixon quote from his library).
Best Wishes for a Happy and prosperous Holiday season.
Wasatch Funds, which provides granular detial were the first that came to mind, I have their WAGTX fund, here is a quote from their latest quarterly summary:
"We’re glad that despite a rough final quarter of the fiscal year, we were able to do a little better than preserve the exceptional returns that the Fund achieved over the prior several years. Today, while it could be argued that we’re winning based on the entirety of our performance, it clearly feels like we’re losing—mostly because we just finished a quarter and fiscal year in which the Fund underperformed the benchmark."
It certainly is no surprise Grandeur Park also provides detail, as they came from Wasatch.
For the rest of It:
https://secure.wasatchfunds.com/Our-Funds/Commentary.aspx?fund=WAGTX
SeaFarer.
Not just letters but conference calls.
Come immediately to mind.
Although David Iben has been feeling the pain since launching KGGIX, I really liked his letters when he was at Nuveen Tradewinds, and he continues to write compelling, easy-to-read letters at Koppernik:
http://kopernikglobal.com/content/news-and-views-iben-insights
Kevin
One "rotten-tomatoes" award: I get absolutely nothing from the reports from Permanant Portfilio Funds (PRPFX). It may be that since he considers the fund's allocation fairly static, he deems these reports an unnecessary encumbrance.
What I look for most of all is some insight into the manager's thought process. If he's wrong I understand. But, I want to know what went into his/her decision to buy/sell a stock or to over-weight/under-weight an area. If they're really sharp, I'll take away some new insights into the investing process I hadn't considered before.
John Deysher (Pinnacle)
As far as alternative media, I'm not a Facebook or Twitter guy or any of those things. I like what Matthews does with frequent communication about their markets, and I have occasionally watched and enjoyed a video presentation (Tekla was a recent example). I think its important to do these things in a way that adds value, and for me that's again having the chance to understand their thinking and approach better.
It sounds like there are some other good ones out there and I may review them and consider adding them to my list of reading, but the reality is there's enough to read that the bar is moving higher and higher.
They're brief and it's not a US fund, but it's interesting to hear from Jacob Rothschild a couple of times per year via RIT Capital Partners letters (ritcap.com)