Dear friends,
Charles and I will have dinner Monday with Andrew Foster, "the seasoned and skilled skipper" (saith Morningstar) of Seafarer Overseas Growth and Income. Paul Espinosa, who will lead Seafarer Overseas Value (SFVLX), won't be at the conference. I'll have a separate phone interview with Mr. Espinosa in the weeks ahead. As such, I thought I'd ask Mr. Foster about the new fund's strategic perspective and hold off the tactical ("how do you assess the valuations of banking stocks") questions until I have a chance to speak with Mr. E. I'm likely to ask Andrew about the evolution of SFGIX and his current estimate of strategy capacity, as well as the evolution of his investable universe.
Are there other topics you'd like us to approach with Mr. Foster?
As ever,
David
Comments
A dinner date is too friendly an environment to question and challenge aggressively. Beside, that approach has the likelihood of spoiling a superior dining experience.
Also, the short exposure time only is a snapshot to the thinking of any fund manager. Fortunately, there is an easy answer, cumulative statistical scorecards. Investing offers as many statistical measures to assess management performance as does baseball.
I would go into the dinner armed with the year by year performance record of the manager in question. Of particular significance would be the performance deviation numbers, the excess returns, the standard deviation of those excess returns, and the resultant Information Ratio.
I would focus not only on the magnitude of these values, but also their stability over time. That would include reviewing the manager's record with earlier investment organizations. I would ask for reasons for any significant departures from average performance. It's the exceptions that ultimately generate superior performance.
The answers, both positive and negative, just might give some insights into the talents, or the luck, of that manager's skill set and build some confidence in him. Confidence is essential to staying the course.
I'm sure I have not added anything to your expectations or understanding of the dinner task that is fast approaching. In any case, good luck and hopefully a good meal.
Best Wishes.