FYI: In this piece, I'm going to introduce a new methodology for measuring the profitability and valuation of corporations. In applying the methodology, I'm going to encounter a massive discrepancy in corporate capital allocation. To explain the discrepancy, I'm going to attempt to show that reported company earnings are systematically overstated relative to reality. After identifying the likely causes of the overstatement, I'm going to explore their implications for individual stock selection and overall stock market valuation.
Regards,
Ted
https://osam.com/pdfs/research/The-Earnings-Mirage-Whitepaper-2019.pdf

FYI: Overlooking a strawberry field off the coast of California, Bernzott Capital Advisors doesn’t look much like a Wall Street firm. Portfolio managers dress in jeans, shorts, and flannel shirts. They sit in an open bullpen. Arranging meetings is simple: “We spin around in our chairs and talk to each other,” says Ryan Ross, an analyst and portfolio manager. “If you came in here you might think it’s a surf shop.”
Regards,
Ted
https://www.barrons.com/articles/the-best-mutual-funds-youve-never-heard-of-51562370354?mod=article_inline

@Alex: Thought you might enjoy reading the story behind Brown Advisory.
Regards,
Ted
https://www.forbes.com/sites/antoinegara/2019/05/28/the-oracle-of-apopka-meet-eddie-brown-one-of-wall-streets-greatest-untold-stories/?ss=etfs-mutualfunds#19278daf60c0

Confused --- what is the relationship b/w Brown Capital and Brown Advisory?

If you go to the MFO Search box at the top of the Discussions page and enter BIAWX, you'll find that several members offered takes on the Brown Advisory fund in April. To wit:
The write-up on Brown Advisory Sustainable Growth is very revealing. I was pleasantly surprised to find that the 33 stocks held by the fund are practically household names, ones that I feel very comfortable owning: Microsoft, Danahaer, American Tower, Amazon, Visa, Intuit, Alphabet, Thermo Fisher, Ecolab, Verizon Analytics. The top ten constitute 41% of assets, so the managers have conviction. My personal bogey for a LCG fund is AKREX; however, BIAWX edges out Akre over most time periods. AKREX is more tax-efficient, so shareholders in taxable accounts may be realizing some additional gains compared to the Brown fund.

https://www.sec.gov/Archives/edgar/data/319676/000094039419001007/cmssupp.htm
497 1 cmssupp.htm CMS CALVERT ULTRA-SHORT DURATION INCOME NEXTSHARES
CALVERT ULTRA-SHORT DURATION INCOME NEXTSHARES
(a series of Calvert Management Series)
Supplement to the Summary Prospectus, Prospectus and Statement of Additional Information each dated February 1, 2019
The Board of Trustees of Calvert Management Series (the “Trust”) on behalf of its series, Calvert Ultra-Short Duration Income NextShares (Nasdaq: CRUSC) (the “Fund”) has approved the liquidation of the Fund, which is expected to take place on or about August 1, 2019 (“Liquidation Date”). The Liquidation Date may be changed without notice at the discretion of the Trust’s officers. All capitalized terms used but not defined in this Supplement shall have the meanings ascribed to such terms in the prospectus and statement of additional information.
Suspension of Sales. Effective prior to the open of business on July 25, 2019, the Fund will no longer accept Creation Unit purchase orders. The last day of secondary market trading of shares for the Fund on The NASDAQ Stock Market LLC (“Nasdaq”) will be on or about July 25, 2019.
Beginning when the Fund commences liquidation of its portfolio, the Fund may not pursue its investment objective, comply with its investment limitations or engage in normal business activities, except for the purposes of winding up its business and affairs, paying its liabilities, and distributing its remaining assets to shareholders. During the time between market close on July 25, 2019 and the Liquidation Date, the Fund’s shares will not be traded on Nasdaq and there can be no assurance that there will be a market for the purchase or sale of the Fund’s shares.
Mechanics. In connection with the liquidation, any shares of the Fund outstanding on the Liquidation Date will be automatically redeemed as of the close of business on the Liquidation Date without the imposition of any customary redemption transaction fees. The proceeds of any such redemption will be equal to the net asset value of such shares after a Fund has paid or provided for all of its charges, taxes, expenses, and liabilities, including certain operational costs of liquidating the Fund. The distribution to shareholders of these liquidation proceeds will occur as soon as practicable, and will be made to all shareholders of a Fund of record at the time of the liquidation. Additionally, the Fund must declare and distribute to shareholders any realized capital gains and all net investment income no later than the final liquidation distribution. Calvert Research and Management (“CRM”), the Fund’s investment adviser, intends to distribute substantially all of the Fund’s net investment income at the time of, or prior to, the liquidation. CRM will bear all administrative expenses associated with the liquidation, if any.
Shareholders of the Fund may sell their shares of the Fund on Nasdaq until the market close on July 25, 2019 through a broker in the standard manner. Customary brokerage charges may apply to such transactions.
U.S. Federal Income Tax Matters. Although the liquidation is not expected to be a taxable event for the Fund, for taxable shareholders, the automatic redemption of shares of the Fund on the Liquidation Date will generally be treated as a sale that may result in a gain or loss for federal income tax purposes. Instead of waiting until the Liquidation Date, a shareholder may voluntarily sell his or her shares on Nasdaq until the market close on July 25, 2019, and Authorized Participants may voluntarily redeem Creation Units prior to the Liquidation Date, to the extent that a shareholder wishes to realize any such gains or losses prior thereto. Please consult your personal tax advisor about the potential tax consequences of the liquidation.
If you have any questions regarding the liquidation, please contact the Fund at 1-800-368-2745.
Please retain this Supplement for future reference.
July 3, 2019 32463 7.3.19

Why did it take him SIX years to figure out , that he should return investor money ?
Derf

Hi, guys.
Well, yes. His strategy is fundamentally different than this peers. That would have been clear to anyone who read either the prospectus or his voluminous writings. He trailed his peers because he had up to 85% cash, which is consistent with his discipline and his long record. Relative value guys adjust, in the sense of buying the best of a bad lot if that's what's available. Absolute value guys are paid to stick to the discipline: buy if and only if there's a sufficient discount. Since every market goes through a period of overvaluation (the current one arguably since 2011), absolute value guys always have a period of radical outperformance and a period of radical underperformance. On the entire cycle, they typically come out ahead on total return and risk-adjusted return.
We're in the longest bull market in history, with the longest period of elevated valuations, and so the longest period of underperformance by value (generally) and absolute value. That's why there are only a handful of absolute value managers left in business.
As to investors losing money, he was in the black every year until 2014. In 2014, he posted a 2% loss while his peers posted a 3% gain. In 2015, he posted a 4% loss while his peers posted a 6.75% loss. In 2016 they liquidated mid-year with a small gain. The record from inception to liquidation was 4% or so.
When the market tanks, he'll do well. 2019? 2020? 2050? I don't know. Sadly, when the market tanks, average investors panic and run away. They don't invest in funds like Cinnamond's until a year too late when he's beaten the market by 2000 - 3000 bps which means they miss the major gains and are closer to the point that he'll begin moving back to cash.
As ever,
David

Hi, NumbersGal.
You might look at the Launch Alert for Palm Valley Capital in our July issue.
MikeM's recollection of ARIVX in 2009 is incorrect. Here's a snippet on his asset allocation from our profile of the fund.

He’s at 85% cash currently (late April 2016), but that does not mean he’s some sort of ultra-cautious perma-bear. He has moved decisively to pursue bargains when they arise. "I'm willing to be aggressive in undervalued markets," he says. For example, his fund went from 0% energy and 20% cash in 2008 to 20% energy and no cash at the market trough in March, 2009. Similarly, his small cap composite moved from 40% cash to 5% in the same period. That quick move let the fund follow an excellent 2008 (when defense was the key) with an excellent 2009 (where he was paid for taking risks). The fund's 40% return in 2009 beat his index by 20 percentage points for a second consecutive year. As the market began frothy in 2010 ("names you just can't value are leading the market," he noted), he began to let cash build. While he found a few pockets of value in 2015 (he surprised himself by buying gold miners, something he’d never done), prices rose so quickly that he needed to sell.

There are two things that are true about Mr. Cinnamond: (1) he's a spectacular stock picker and (2) he's incredibly picky. When you adjust his fund's performance for cash level, you find his stock picks - on whole - beating the market by 10:1; that is, a fund that goes up 5% when it's 5% stocks and 95% cash implies the stocks rose by 100% while the cash stayed at zero. In normal markets, Morningstar observed that Mr. Cinnamond's funds "trounced nearly all equity funds."
But markets have ceased being normal. The market's become addicted to the Fed put; that is, to the willingness of the Fed to move heaven and earth to keep things propped up. Here's a thought experiment: unemployment is low, the economy is growing, corporate taxes have been slashed, the market's at record highs, CEO comp is at record highs equity valuations are at their second-highest levels ever. What would happen if Powell announced that the Fed was taking the punch below away and normalized the fed funds rate? That would be rise of about a 1% rate to 3.5%, mid-range in their preferred 2-5% window. My guess is blind panic on Wall Street and Pennsylvania Avenue and a 50% adjustment in equity prices.
Absolute value investors, like gold investors, are horrified and find very few values in such markets. So, they hold cash and get derided as idiots. If you think that the current conditions are permanent, value will continue to lag and absolute value will lag dramatically.
David

Hi, guys.
It was a good trip. If you have the opportunity, it's well worth it. The only downside is the travel: hours in an uncomfortable seat then hours on completely crazy country roads. Everything else is, for us, bliss.
Odds and ends:
The Palm Valley fund might be a sign of the end of times. Mr. Cinnamond returned capital in 2016 but promised, like some Norse myth, to return for Ragnarok. When I talked with them, their view was "not yet but soon enough." If markets ever act normally again, it would be a useful holding. If the market is forever propped up by QEs 1 - 37, all bets are off.
The Harbor ISC fund is interesting, in part because Harbor wouldn't appoint a management team with such a short public record (that is, as Cedar Street) if they didn't have a lot of reason to be confident.
The Matthews Asia Value fund is something I should have written about in 2018, after I met Mr. Zhou for the first time and thought "Jay-sus, he's really sharp." Then I met him again in 2019 and thought, "Jay-sus, I was really stupid to put this off for a year."
I also spent time with Amit Wadhwaney of Moerus, about whom I haven't written. I will say this, he's the most thoughtful and erudite guy in just about any room. We had a lovely talk about a corporate culture that stresses the importance of reading good books, and his desire to hire a philosophy major or grad student for the sharpness they've been trained to and the distinctly different perspective they'd bring to each question.
Hmmm ... there's a scary bunch of funds that will launch in September. Not sure what I think of the new Grandeur Peak fund, since they were also so clear of their "this much and no more" approach to assets. I guess you've got to change with the times, but that really was bedrock for them. I was skeptical of the EM fund, then went back and looked at the manager's record at Eaton Vance. Shortly thereafter I decided to close my mouth and watch quietly.
And, of course, just a small celebration of The Shadow. I'm forever grateful for and slightly stunned by the work he does.
So, on whole, pretty decent stuff for a quiet summer day.
David

FYI: The S&P 500 rose more than 17% in the first half of 2019. That’s not just a good first-half return, it’s a great annual return. The average annual return for the S&P 500 for the last 87 years, excluding dividends, is about 8%.
Going into the second half of the year, investors have a lot to worry about: a slowing global economy, Federal Reserve decisions on interest rates, a still-simmering trade war, and a presidential election that is starting to heat up. With all that happening, and after such strong gains, maybe investors should take their profits and run.
That isn’t the best idea though, historically speaking. History says investors should actually get more greedy and expect positive returns in the second half of 2019.
Regards,
Ted
https://www.marketwatch.com/articles/the-stock-market-has-been-on-a-tear-history-says-its-time-to-get-greedy-51561971600?mod=barrons-on-marketwatch

He doesn't even have the guts to mention the disaster that was ARIVX in this little blurb on their new site! That fund was bad because of very poor decisions made by the manager, Eric Cinnamond. My memory is that the only value he seemed to find was PM miners who were in a nosedive and a complete value trap at the time. Also remember him being 20-50% cash when the market took off in 2009 until it closed in 2016. I think it was in the 99th percentile when he closed. I don't think there were many investors left to keep it open. No thanks...
From the People tab on this link:

Eric Cinnamond and Jayme Wiggins met in 2002 when Eric returned to his alma mater, Stetson University, for an alumni event. Jayme learned under Eric as a small cap analyst for the next several years in Jacksonville Beach, Florida, where Eric had managed small cap portfolios since arriving from Evergreen Funds in 1998. Eric implemented an absolute return process while managing the Intrepid Small Cap Composite from 1998-2010 and the Intrepid Small Cap Fund from 2005-2010. Jayme managed high yield bond portfolios, including the Intrepid Income Fund, from 2005-2008, when he departed to earn his MBA at Columbia Business School.
In 2010, Eric started a new small cap fund. The bull market beginning in 2009 elevated small cap valuations to never-before-seen levels. Eric returned capital to investors in 2016 because he did not believe there were compelling investment opportunities. Jayme took over the Intrepid Small Cap Fund upon Eric’s departure in 2010. He managed the fund using the same absolute return investment strategy until September 2018, when his firm decided to pivot to a more fully-invested posture.

Or turn off cnbc ABC nyt CBS. Watch PBS very neutral but very boring..
Imho the most abused most hard workers are immigrants that came to usa from all corners of world
Everyone-s fav Grandpa Barry and best uncle Joe aunt Elizabeth would surely win 2020 by a mile!! ! Up 7-10pts in polls against spurs

https://www.foxbusiness.com/markets/us-stocks-wall-street-june-28-2019
US stocks end June with robust gains
By Ken MartinPublished June 28, 2019StocksFOXBusiness
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U.S. stocks Opens a New Window. on Friday closed out one of their strongest June performances in decades as Wall Street Opens a New Window. responded to signals that the Federal Reserve Opens a New Window. is moving towards a more accommodating interest rate policy.

Got tax the rich folks 70s%(not 30s%) and raise middle class tax from 25% to 40s-50s% to pay... Everyone who is working gotta pay more for more free stuff for one's not working
Have to give immigrants free Healthcare and free housing ssi since their lives and votes are much more valuable than our vets or our USA citizens. We also should open the borders since we are a living giving and kind supportive nation
Also everyone who wants their private part modified and birth controls are also free (for both men whom wanted be women and women who desire to be men)
Think I need register and vote for bary or uncle Joe 4 or 5 times in 2020. I am hoping to turn Texas blue
Think whoever give /promise most free stuff will get that heelspurs outta WH 2020!!...
Uncle Joe and bary was 5-10s pt ahead of spurs few days ago
Wonder whatever happened to whom ever worked the hardest would get the best grade / accepted to good colleges /gradschools and really have to pay for tuition and schools loan once finished... At least this us what i did and my family did and ended up in middle class 2nd Gen Americans

Interesting link, @davidmoran, to 2013 MFO commentary. The link to Sam Lee's M* article on CAPE is worthwhile, particularly where he says he'd prefer more history than just back to 2002. He was also very prescient in saying he'd feel more comfortable if CAPE were shown to work in overseas markets. As members have said here, DEULX has not really shown much until this year.
My re-reading also reminded me that the Oakseed Boys were announced with some fanfare in that issue of MFO and RPHYX appeared to be a world-beater. History was not kind to SEEDX (liquidated in 2017) and RPHYX tested shareholders' patience when Mr. Sherman seemed to stumble in trying to explain a period of severe under performance. I previously in this thread noted (obliquely) that Ryan Caldwell's Chiron Capital Allocation (CCAPX) fund benefited from a nice write up in MFO and then promptly showed it couldn't keep up with its M* bogey. The success of CAPE really stands out against a backdrop of a several failed efforts to invent a new mousetrap.

FYI: One of the signature achievements of the post-millennial capital markets is the driving down of investor costs to near zero, via Reg NMS which did away with the fraction spreads market makers once enjoyed and converted stock exchanges to a decimalized system.
While there have been winners and losers as a result of this and other improvements, no one would argue that the individual investor hasn’t become better off – more access, lower costs, increased liquidity. The concurrent shrinking of the average internal expense ratio at mutual funds and ETFs has been undeniably positive for the end investor trying to save for college, retirement, etc.
Democratic presidential candidate Bernie Sanders is now calling for a transactions tax on investors and traders that would represent a big step backwards for market participants, with the altruistic goal of wiping out the $1.6 trillion in student debt that many believe is holding back the economic potential of millions of young Americans.
Regards,
Ted

InvestmentNews Article:
https://www.investmentnews.com/article/20190624/FREE/190629961/wall-street-lashes-out-at-bernie-sanders-plan-to-pay-off-student

Don't disagree with the article, but my preference for China / Asia bonds is MAINX. I only have 2 bond funds and that is one of them. Not sure where you would go for a Brazilian bond focus.

MAINX is my pick too for Asia. It's part local, part U.S. currency (~ 50% USD now), so does well when the dollar's doing a dip but doesn't get completely killed when it rallies.
To Crash's point, I like the combo of MAINX and PRSNX for overall exposure that's partly local currency, mostly dollar-hedged, half or more EM, and fairly heavy Asia.
Per Brazil: Pimco's EM holdings in their various multisectors have usually been fairly heavy in Brazil. Maybe one of the Pimco EMs would be heavy Brazil, but I can't tell by the web site entries, which are weighted by duration and currency exposure only, not market weight. The monthly fund data spread sheets prob'ly show market weight, but I'm too lazy to dig further.
Cheers, AJ
P.S. Just reading the clip Ted provided about the article: holding some negative yielding issues is not wacky if you're positioning for an equity/credit downturn or just a risk offset for that exposure. Yield is not the only potential upside in bonds - capital appreciation is another, at times much more important, consideration. The negative yielders are "safe" ex-U.S. developed nation sovereigns that are being bought for that purpose exactly - thus the negative yield. Lots of knock-on effects there, including on U.S. rates and the dollar ...
Bloomberg TV's weekly program "Real Yield" (airs Fridays, also available online afterwards) is a good source for up-to-date news and trends in fixed income - highly recommended.

I’ve been wondering the same thing. Something doesn’t seem right with a great many investors “giddy” at having achieved double-digit gains in most risk assets (junk bonds, EM bonds, equities, gold, REITS) half-way through the year (and continuing to push those markets higher) while, at the same time, many others are piling headlong into a vehicle that promises 2% annually.
Please don’t give me the old “Song & Dance” about how Treasuries offer capital appreciation. That’s only true if interest rates move even lower and, in any case, doesn’t address the fundamental question of why Treasury bonds and most other risk assets are moving at flank speed in diametrically opposed directions.

Hi @hank.,
The "Sell in May" axiom has many spins to it. Below is mine.
Generally, Old_Skeet does a portfolio review and a calendar rebalance in May and October and at other times if felt warranted. My asset allocation threshold is 20% cash, 40% income and 40% equity. I allow for a 2% + (or -) movement from the threshold for my income and equity areas while I generally let my cash area float. In addition, I can, if felt warranted, tactually let equity bubble up to +5% from it's threshold. With this, the cash area can float from a low of 13% up to a high of 24% depending on where my income and equity allocations bubble.
As we entered May I was equity heavy; and, I reduced my allocation to equities raising my allocation to cash. As equities pulled back in May I did a little buying but staying well within my asset allocation ranges, of course. So, thus far, this has worked well for me playing the swing so-to-speak. My market barometer is a tool that I developed and I use to assist me with market calls along with using it to help me throttle my equity allocation. As of market close June 20th, it scored the S&P 500 Index as extremely overbought. Perhaps, now might be a time, for me, to take a little off the table and book some profit since the S&P 500 Index reached a new all time hight.
The Sell in May and Come Back After St. Legers Day axiom is one that my family has followed for a good number of years. For us this has worked well through the years; but, like most everything else it does not work every year.
It will be interesting to see how stock valuations bubble as we approach fall. For me, the Sell in May theme simply reflects calendar times to review and, at times, to rebalance my portfolio, if warranted. After all, most of the gains in the stock market have historically taken place during the fall and winter months. It is during these times that Old_Skeet chooses to be equity heavy and then light to normal during the other periods.
So, with this, I am, in general, a subscriber to the Axiom.

Cintas (CTAS, $191.55) is perhaps best-known for providing corporate uniforms, but the company also offers maintenance supplies, tile, and carpet cleaning services and even compliance training. As such, it’s seen by some investors as a bet on jobs growth.
There may be something to that. Shares have more than tripled over the past five years vs. a gain of just 51% for the S&P 500. In January, the economy notched its 100th consecutive month of employment gains. Meanwhile, weekly jobless claims stand at levels last seen in 1969.
Regardless of how the labor market is doing, Cintas is a stalwart as a dividend payer. The company has raised its payout every year since going public in 1983. Most recently, in October, Cintas raised its annual dividend by 26.5% to $2.05 a share.