Our client relationships are based on values similar to those discussed in our Investment Philosophy. We firmly believe that if your goal is Wealth Creation and Capital Preservation, that is best achieved through the following:

Focus on margin of safety in all investment decisions
Align our compensation as closely as possible with your results
Low costs and concentrated portfolios are critical components to earning excess returns
Patience and a long investment horizon are requirements for success

We focus on 4 primary investment strategies:

1.Concentrated Value Investment Portfolio
2.High Dividend Paying Stocks
3.Low Cost Index Portfolio
4.Low Cost Mutual Fund Portfolio

Concentrated Value Investment Portfolio
Since inception, value investing is what we have specialized in. Depending on one’s desires and qualifications, an investor may open an individual account or may wish to become a partner in the Steamboat Investment LP. Either scenario will result in an investor owning a portfolio of solid operating companies at undervalued prices. We seek to find investment opportunities which result in buying companies at significant discounts to their true value and selling those companies once they realize their true value. This type of account will receive heavy and consistent management scrutiny from our firm.

High Dividend Paying Stocks
Over the past decade, we have found ourselves consistently purchasing stocks which have higher than average dividend yields. When one can combine the ability to purchase a solid company at a discount to its intrinsic value with a company that has historically grown its dividend, it can result in a favorable long term return to the investor. We seek to continue to build portfolios of high dividend paying stocks for investors in the years to come. This type of account will receive heavy and consistent management scrutiny from our firm.

Low Cost Index Portfolio
A diversified portfolio is the choice of many within the investment world. We offer an opportunity to build a diversified portfolio made up of various indexes for a low cost to the investor. The focus is on the long term and will result in annual rebalancing of the portfolio. For the investor that feels more comfortable having an investment professional compile an index portfolio, we are happy to assist. This investment alternative carries a relatively low amount of management scrutiny after it has been initially set up.

Low Cost Mutual Fund Portfolio
We have been fortunate to follow a number of great value investors over our career. Many of these investors have mutual funds that they operate. We can provide the opportunity to build a portfolio of mutual funds run by exceptional managers for our investors. This is a long term investment strategy that results in a moderate amount of management from our firm.

Investment Management Fee Discussion
Our fees vary depending on the type of investment account an investor wishes to have as well as other factors as discussed below. Our fees are a function of our investor’s opportunity to make significant returns. A portfolio built for average returns will have low fees. A portfolio built for significant returns will have higher fees. The net result is a benefit to the investor.

We are noticeably different compared to other advisors – we feel it is appropriate that an advisor share the risk of accomplishing goals together with you. What kind of relationship is based on situation where one party “wins” regardless of whether the coin comes up “heads or tails”?

We attempt to provide investment management services for the primary benefit of the investor, not the investment manager. Due to SEC and state securities rules different fee structures are required for different classes of investors. We COMPLETELY DISAGREE with this – however, rules are rules. Let us explain.

The typical investment manager charges investment management fees based upon the amount of assets that an investor places with that manager. It is quite typical for an investment manager to charge an annual fee based upon the assets that an investor invests with that manager, regardless of the performance of the manager. It is safe to say that this is the industry standard and a fee based upon assets managed is found in over 98%+ of investment accounts. We feel this makes most investment firms more analogous to marketing firms whereby their primary purpose is based upon the gathering of assets, not the return on those assets for the benefit of the investor. We have a very different view of how the “industry” should work.

We firmly believe an investment manager should earn fees, not be entitled to them. It is our view that the way an investment manager earns their primary fees is when the manager shares in the performance of the investment returns. We feel our duty to you is to increase value in your account and have your account profit substantially over time. When a profit is generated in the investor’s account, we earn a percentage of that profit. We have set up a compensation structure based on how we perform. When we generate a profit for your account, our fee is equal to a percentage of the profits. The performance fee is only paid on incremental profits made by you. This concept is known as “high water mark” accounting. As your investment increases in value, our performance fee is assessed on the incremental gain each month. Should your investment decline in value we do not receive a performance fee until we have first recouped your loss. Stated simply – we share in profits only when you make money. Your goal of generating investment returns is directly aligned with our goal of creating wealth

Although we feel very strongly in this regard, the federal and state securities regulations do not share this same philosophy. The policy of the state and federal securities regulations clearly state that performance fees may only be charged to those individuals with a high net worth. At this point, we can only charge performance fees to investors with a minimum net worth of $1.5 Million. Again, we do not feel this is appropriate; however, these are the rules we are bound by. It is solely because of these state and federal regulations that our clientele is made up of high net worth individuals. We would like to structure our investment firm to earn performance fees from all investors, but we are prohibited from doing so.