-Oliver Wendell Holmes
-Oliver Wendell Holmes
At Fortunato, we work hard to grow our clients assets by conducting fundamental equity research, following a disciplined strategy toward allocation, and concentrating our investments in our best ideas. By managing separate accounts for our customers, we have low operational costs and thus are able to charge low fees through either our performance based fee structure for Qualified Clients, or our fixed fee structure. Our investment strategies are long term focused and value driven.
Unique Low Cost Fee Structure
Our unique fee structure is a competitive advantage for Fortunato and keeps frictional costs to a minimum while aligning our interests with those of our clients. For Qualified Clients we charge no management fee, only performance-based fees on amounts exceeding an annual 6% return. We charge some of the lowest fixed rates in the industry; .5% for our Fortunato 3 Dividend and Income strategy. Our low-cost operational structure allows Fortunato to pay all its own operation costs including audit, legal, accounting, administration, tax and regulatory filing fees. None are passed on to investors.
Side by Side Investment
A substantial percentage of our personal assets are invested in our 3 fund strategies alongside client funds. Research repeatedly shows this to be a difference maker in fund performance.
Our research process begins with screening, through various methods the companies we want to research. We perform bottom up, fundamental research before investing in companies. We read annual reports, expert articles, and 10Q filings. We listen to conference calls and frequently ask questions directly to the company. We also sometimes attend public company annual meetings.
Focus on Long Term Performance and Appreciation
We invest primarily for the long term, and focus on investments that we believe we will be able to hold through a variety of macro-economic and business cycle environments.
Undervalued Industries and Growth Companies
We focus much of our investment research on companies that we feel are undervalued within their industry and potentially in an industry that is also depressed. For our Fortunato 1 Growth and Value strategy we also hold investments in growth stocks that we believe are at least fairly priced based on their long term growth prospects.
All Cap Anywhere Strategies
Our fund strategies invest in companies of all sizes (Micro, Small, Mid, Large Capitalization), and in any market worldwide. This flexibility allows us to pursue investments in areas of the world that may represent better value than the domestic market. It also allows us to focus on “Where the blood is in the streets,” rather than just, “When the blood is in the streets.” Smaller companies often have less analyst coverage than larger companies, allowing us to find more inefficiencies related to price and future outcome.
While the perception is that a stock portfolio must hold numerous stocks to be properly diversified, research shows that a portfolio of just 5 stocks can eliminate 81% of systematic risk. Excess diversification is sure to lead to average to poor results, while a concentrated portfolio allows us to focus on our best investment ideas. As one noted investor put it, “Why would I want to spend an inordinate amount of time focused on my 32nd best investment idea?”
One approach we use to minimize risk is an allocation to cash and cash equivalents based on our proprietary market valuation formula and other criteria. By keeping these percentages of cash available, we are able to take advantage of market downturns and forced selling in order to buy at attractive pricing when others are selling.
One component of minimizing risk, we develop sell criteria for our investments. These criteria take into account a variety of factors other than solely valuation metrics and help us to stay true to our original investment thesis.