Investing in Founder-Led Companies

"… there are certain structural advantages that founders may have … The social capital and moral authority that comes from being the founder and having built many of the company’s key products means that on balance people trust you more and give you the benefit of the doubt more when you make tough calls ... Everything is easier with social capital.”

- Mark Zuckerberg, Founder/CEO of Facebook

People matter. A lot.

Wouldn’t it be great to invest alongside leaders who ...

• have a track record of success?

• have significant “skin in the game”?

• have incentives that are closely aligned with shareholders?

The person who gave birth to the company is often best equipped to nurture, lead, and inspire the people who comprise the company. This can lead to better products, happier customers, and even better capital allocation decisions. Research suggests that this can result in better long-term stock returns. For instance, a recent study by Bain & Co. found that within the S&P 500, the companies whose founder was still deeply involved performed 3-times better than the other companies over a 25-year period (1990-2014).* Intrigued, we began to explore how we might invest in a passive (index) of founder-led companies. Ultimately, we found a solution that did this (an ETF). However, we did not like its cost structure or portfolio selection methodology. This led us to design our own. We are thus pleased to announce Fielder’s Founder-Led strategy. It is not a fund or ETF but rather a basket of ~50 individual stocks of founder-led firms.

Request Founder-Led Report

Passive (index) investing should not be mindless investing. We believe our Founder-Led strategy is a way to invest passively in a more “mindful” universe of companies. For more information, you can request a report on our Founder-Led strategy HERE.

Yours in the Fielder,

Frank Byrd, CFA

*Zook, Chris. “Founder-Led Companies Outperform the Rest — Here’s Why”. Harvard Business Review. March 24, 2016.

Disclaimer: The Founder-Led strategy may not be appropriate for all clients. It is a risker strategy, as it invests in far fewer stocks than a traditional index, such as the S&P 500 (often thought of as “the market”).  Further, such a portfolio may typically have a higher percentage allocation to certain industry sectors (such as technology) as well as to smaller and riskier stocks. Hence, Fielder’s Founder-Led stock strategy will likely experience substantially more price volatility than the market. HISTORICAL RESULTS ARE HYPOTHETICAL. Some of the research referenced above and in our Founder-Led strategy report alludes to the historical performance of founder-led companies, which is based upon back-tested hypothetical results. Such results do not reflect actual trading in real accounts. Future performance may be materially lower in actual client accounts. Since back-tested performance does not represent actual performance, it should not be interpreted as an indication of such performance or a reflection of our skill as an investment manager. Actual future performance of the strategies referenced in the text and links herein may be materially lower in actual client accounts. There are inherent limitations with such hypothetical back-tested results. For instance, such results do not reflect the impact of alternative market and economic scenarios. Nor do such hypothetical results reflect how an investment adviser's decision-making process managing actual client money might negatively impact actual results. Furthermore, back-tested performance has the advantage of the benefit of  hindsight, which actual portfolio performance does not. Investing involves the risk of loss that clients must be prepared to bear. There can be no assurance that the investments or strategies discussed in this document will prove profitable. This presentation, including any commentary, charts, tables and graphs therein, is for informational purposes only and does not constitute investment advice or any form of recommendation, and should not be construed as such. This presentation does not constitute a solicitation to buy or sell any instrument or to engage in any trading or investment activity or strategy. This presentation does not provide advice concerning the suitability or value of any investment or investment strategy for a particular investor, and certain investments referenced in this presentation may be unsuitable for certain investors.  For individualized investment advice, consult with your adviser. While the information presented herein is believed to be accurate, Fielder makes no express warranty as to its completeness or accuracy. Any projections, market outlooks or estimates in this document are forward-looking statements concerning our beliefs and opinions in respect of the future. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements.