Active Management – A Different Perspective
Fenimore Asset Management, manager of the FAM Funds, is dedicated to protecting and growing capital over the long term. To accomplish this, we focus on independent, in-depth research; it’s this due diligence that we believe makes an effective active management strategy—one focused on active company research rather than trading activity.
An often cited statistic relevant to active management strategies is Active Share. Although our Funds do possess high Active Share, in this paper, we discuss Fenimore’s active investment management process, its key features (beyond Active Share), and how it compares to other styles of active management.
For the purpose of this paper, we benchmark against our peers with actively managed, long-only, no-load mid-cap funds. However, we apply this active management strategy to all our portfolio strategies.
FENIMORE’S STYLE OF ACTIVE MANAGEMENT
On the surface, our portfolios may not seem “active,” certainly when judged by trading activity. However, it’s quite the contrary. Our research team is very active when judged by the activities that we believe matter most– the diligence that helps us build conviction and grow wealth for our investors over the long term.
At the most basic level, active investment management can be defined as a strategy where portfolio managers actively make decisions to buy or sell securities. This is opposed to passive investment management, where investment decisions are made automatically or quantitatively with the aim of tracking an Index or Benchmark. When it comes to active management, there are many styles. We find that oftentimes investors equate active management with high portfolio activity– that is, trading activity and high turnover of portfolio holdings. At Fenimore, we take a different approach.
While our level of portfolio activity, as measured by trading and turnover, will ebb and flow, the activity that drives our investment research process and ultimately portfolio decisions, remains in constant motion. Our active management strategy is focused on a philosophy and process dedicated to conducting extensive due diligence on any business in which we may invest.
The goal of this independent, in-depth activity is to build concentrated, focused portfolios that create real wealth over the long term, without taking undue risk. Real wealth, in our view, is created by generating absolute returns that outpace the rate of inflation.
Discover how FAM's independent research-driven approach can protect and grow your capital over the long term. Dive into FAM Active Management Strategy now.
About Fenimore Asset Management
Fenimore was founded in 1974 with the mission of protecting and growing capital over the long term for our investors. To accomplish this, we conduct in-depth, independent investment research as we seek to maximize return and minimize risk. At the end of the day, our greatest priority is serving investors with excellence and integrity. We are proud to offer mutual funds, retirement planning, portfolio management, and more. Contact us today to learn more about us or to arrange a meeting with one of our associates.
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