Gator Capital’s Small Cap Portfolio Listed on kaChing.com Platform
Aug/100
FOR IMMEDIATE RELEASE
TAMPA, FL [8/27/10] — Gator Capital’s Small Cap Portfolio has been selected by kaChing to be a featured portfolio on the kaChing.com platform. kaChing.com is the nation’s leading online destination that connects independent investment managers with individual investors. The Gator Small Cap Portfolio earned an Investing IQ of 154 based on the risk-adjusted returns, quality of investment rationale and adherence to the stated management style.
Gator Capital Management, a private investment management firm, manages concentrated portfolios of stocks of high-quality businesses. High-quality businesses have durable competitive advantages, business models with attractive economics and management teams dedicated to creating shareholder value. Historically, Gator Capital’s portfolios have had low turnover, which has allowed management teams time to create shareholder value and has reduced taxes for our clients.
kaChing evaluates investment managers based on Investing IQ, a proprietary data-driven metric that separates the lucky from the good. Investing IQ is based on some of the same factors used by Ivy League endowments to select investment managers: risk-adjusted returns, quality of investment rationale, and how closely a manager sticks to their stated investment style. An Investing IQ of at least 140 is required to be listed on the kaChing platform, and Gator Capital is one of a select group of investment managers from across the country that has achieved this status.
“We are extremely pleased and excited to be included on kaChing’s platform of leading investment managers,” commented Gator Capital’s Portfolio Manager Derek Pilecki. “kaChing has made an important innovation in the financial advisory business to give investors the tools and transparency to hire independent investment managers directly. Their scalable technology creates efficiencies for both the investor and the investment manager.”
“Many investment managers have difficulty providing low-cost investment management services for smaller clients. At Gator Capital, we have received requests for investment management from many individuals with smaller amounts to invest,” explained Pilecki. “By working with kaChing, we are now in a position to offer our Small Cap Portfolio to people with as little as $10,000 and open a channel for investors to invest in our portfolios directly online.”
For more information or to open an account, please visit http://www.gatorcapital.com/ or http://www.kaching.com/gator-capital
About Gator Capital Management
Gator Capital Management is a boutique investment management firm dedicated to the professional management of focused, high‐quality growth investment portfolios for high‐net worth individuals and institutions. Gator’s Investment Philosophy is to build portfolios of stocks by viewing each stock purchase as an investment in the underlying business, by investing in high‐quality growth businesses, and by focusing its portfolios on its best ideas.
This press release does not constitute and is not intended to constitute an offer or solicitation for an investment in any Gator Capital’s investment portfolio, including the portfolios mentioned herein.
Contact:
Gator Capital Management
Derek Pilecki
Managing Member
+1 813 282 7870
derek.pilecki@gatorcapital.com
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Gator Small Cap Portfolio Starts the Year Off Strong
Mar/102
The Gator Small Cap Portfolio has had strong performance in the first 10 weeks of 2010. Through March 15th, the Gator Small Cap was up 9.3% after fees compared to 7.8% for the Russell 2000® Index. This continues the portfolio’s strong performance from 2009 when it was up 81.6% compared to 25.2% for the Russell 2000® Index.
We had several strong stocks in the portfolio to start the year. Tivo is up 63% year-to-date on the back of a favorable court ruling awarding the company monetary damages for continued infringement of its patents by a competitor. Brink’s Home Security is up 29% after a larger competitor agreed to acquire the company. Also, DineEquity, the franchisor for IHOP and Applebee’s, is up 46% so far in 2010 after reporting stronger earnings and a better than expected outlook for the rest of 2010.
The Gator Small Cap Portfolio holds a concentrated portfolio of 30 stocks of companies with market capitalizations under $3 billion at the time of purchase. We attempt to own smaller companies with strong franchises and business models with favorable economics. We want to hold onto the shares for multiple years to allow the management teams time to compound the strong economics of their businesses. During 2009, we had 30% turnover portfolio holdings.
We believe the Gator Small Cap Portfolio is a unique offering because it is a small cap portfolio offered in separately managed account form. In addition, the portfolio is concentrated which is unusual for a small cap portfolio. Lastly, our account minimum is $100,000, which makes the portfolio available to individuals with modest assets. Our clients may choose any broker or custodian to hold their account. If the client does not have an existing relationship, most of our clients take advantage of our relationship with Fidelity Investments.
Due to the Gator Small Cap Portfolio’s investments in small company stocks and the portfolio’s concentration of holdings, we expect the portfolio to have a much higher degree of volatility than the overall stock market. Please only invest money which you will not need for five or more years. Past performance is not indicative of future results.
You Don’t Want Berkshire to Pay Dividends
May/090
This year Carol Loomis asked the question whether Berkshire should start paying dividends since the stock price hasn’t risen in 5 years. This was in reference to Buffett longstanding quote that he will pay a dividend when he thinks he can’t create at least $1 of market value for each $1 of retained earnings. Jeff Matthews refers to this as a question that Buffett avoided answering in this thought provoking blog post.
My opinion is who cares whether Buffett answered the dividend question. If you are even asking the question, you should sell your Berkshire stock. The reason to own Berkshire is to get access to Buffett’s capital allocation decisions. Based on his well-documented track record and his well-know thought process, most Berkshire investors think Buffett can make better investment decisions and/or has access to better investment opportunities than they do. The last thing Berkshire investors should want is to have Buffett return the cash back to them in a taxable transaction. Then, the investors will have to decide how to allocate the returned cash.
Historically, investors have wanted management teams to pay dividends because they don’t trust management to spend the free cash flow from the business wisely. The business may be not need capital reinvestment, like Coca-Cola, or it may be a business in secular decline where the best thing to do is harvest the cash rather than reinvest. Shareholders of these businesses probably want managements to pay dividends to make sure they don’t destroy value.
Since the main reason to own Berkshire is to get access to Buffett’s capital allocation skills, if an investor wants Berkshire to pay dividends, then they should sell the stock instead because they obviously don’t believe in Buffett’s ability to create value by allocating capital.
There is a scenario where it makes sense for an investor to want Berkshire to pay a dividend. Maybe an investor thinks Buffett destroys value but think Berkshire is so undervalued that they can make a return by owning the stock and getting him to change his dividend policy. I don’t think Berkshire is anywhere close to a valuation level where this would make sense. At $91,500 per share, Berkshire trades at 1.4x tangible book. It would have to trade below tangible book value for this strategy to make sense.
The reason to invest in Berkshire is get access to Buffett’s skills as a capital allocator. If you want him to pay a dividend, you shouldn’t own the stock. You should ignore the 5-year rolling test about whether he adds more $1 of value for each $1 of retained earnings. He is never going to pay a dividend because he’ll never admit that he can’t add value. If he ever does decide to pay a dividend, you won’t want to own Berkshire.
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