Value, Momentum, Plus a Little Seasoning
IMS Capital Value Fund
Carl W. Marker
Author: Dave Jennings
Last Update: , :
|Style shifts don't concern Carl Marker, who started his own investment firm 15 years ago at age 25. Learning from mistakes and the willingness to grow and evolve has kept his IMS Capital Value Fund ranked in the top quartile of mid-cap blend funds for the past seven years. He believes he can get better.
||IMS Capital Value Fund|
Remember, we're students of momentum. Once we see it change, we sell. Most value managers don't believe in momentum and they sell because it exceeded their arbitrary target price. The stock doesn't know your target price. The stock is going to do what it's going to do independent of your target price. If there are good things happening in the company, it's not going to stop because that is where your price target is. We're in this to make money. We want to make as much money on the research that we do because, as you know, we don't research that many companies. When we finally do invest in something, we want to get the most out of it that we can.
Q: How many people do you have on the research staff?
There are four of us that participate in the process. I drive it. A couple of analysts do the work. I review that work and then we discuss it in our investment committee meetings. I make the final decisions. I started the firm 15 years ago when I was 25 years old. I had five or six clients that were family, friends and co-workers and had been managing their money for a little while, but they weren't paying me. I decided that since I was doing pretty well and I enjoyed this business, that I wanted to make a go of it. My wife had a good career. We didn't have any kids. I saIdent, 'I want to go out and start a business,' so I did.
Q: What kind of acumen have you acquired that has kept you successful?
I think we've learned from our mistakes and evolved our process over the last 15 years. Five to seven years ago we were a lot more traditional in our value approach. We have evolved as money managers. We used to be considered contrarians; deep value managers. Now, I would say we're considered relative value managers. Occasionally, like I saIdent, we drift into blend, because we're holding some of our companies a little bit longer. We're letting our winners run a little longer. The reason why most value managers don't do that is they're afraid of style drift and moving from one style box to another. You aren't paid by how long you stay in your style box. And it doesn't reward your clients to stay in your style box. Your shareholders are paying you to make them as much money as possible. We try to stick to that objective first. Seasoning is the biggest part of not being early. The biggest part is just being patient and waiting 18 to 24 months to enter a stock, no matter how cheap it looks. It's a hard thing to do. You see something that looks cheap. You think you're right and everybody else is wrong and eventually everybody else will figure it out. It's hard to wait. It's not human nature. But, we wait.
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