Salt Lake City, UT (PRWEB) March 12, 2012
Robert Gardiner’s annual letter shares not just his thoughts on 2011 but also his reflections on 30 years in the industry, and how his experiences shapped the founding of Grandeur Peak Global Advisors for the coming decade and beyond. Robert’s letter follows…
Dear Fellow Grandeur Peak Shareholders,
My first real lesson about the stock market came as a high school kid working at Wasatch Advisors. One of my duties was to calculate performance for our clients. Beginning in June of 1981, when I first started at Wasatch, the market seemed to go down almost every week for an entire year. It was quite educational for me as I watched our clients losing money and I wondered how Wasatch made a business out of this. Over the following couple of years the market enjoyed a strong rebound and I began to understand the roller coaster that is the market.
In 1986, after returning from two years living in France, I became a Wasatch research analyst working alongside Sam Stewart and Jeff Cardon as Wasatch launched its first mutual funds. I was a relatively green analyst when Black Monday hit in October of 1987, and as a young kid I was somewhat unfazed by its magnitude. One of my best stock picks ever was in November of that year. The company was Biomet, a maker of hip and knee implants. As I recall, the stock was up more than fifteen fold over the next four years. This was my first lesson about the great opportunities that can appear in times of market volatility for investors who stay disciplined with a long-term focus.
My experience on the market roller coaster now spans 30 years. Some were great years and some were really tough. The market has offered small caps a nice tailwind for years at a time, only to turn and become a challenging headwind. We never paid too much attention to which way the wind might blow, instead we set our sights on finding the best undiscovered growth companies and purchasing them at good values. Picking good stocks is hard work; fortunately, we were right more than we were wrong, but the tougher years of 1988, 1992, 1996, 2002, & 2008 are each burned into my memory, along with the lessons I learned from them.
Even on the Wasatch Microcap Fund, which I ran from its inception in 1995 until January of 2007, not every year was stellar. Microcaps lagged in 1997, the Asian crisis hit in 1998, and the recession of 2002 was particularly hard on small caps. We had the advantage of fishing in a well-stocked pond where most people weren?t fishing, but it took a lot of effort and discipline to sort through the thousands of unknown companies in search of the best investments, and of course I didn?t always get it right.
Tough years come with the territory. I have been so fortunate to be part of good teams over the past three decades, with people who kept each other focused and grounded despite all of the noise around us. I think Blake, Eric, and our new team at Grandeur Peak will look back on 2011 as one of those tough years, but it will also probably be remembered as one of the best years of our careers. It was difficult for us to leave our friends at Wasatch, and obviously not an easy mountain to climb to start our own firm and mutual funds.
The market was full of fits and starts in 2011, leaving many investors still on the sidelines a little too nervous to step back onto the ride. The performance of the new Grandeur Peak Funds was okay relative to benchmarks, but not something I?m writing home about as I was frankly disappointed in my 2011 performance. However, I?m extremely proud of our team?s 2011 accomplishments. It took courage for each member of the Grandeur Peak team to leave very comfortable situations to pursue a greater dream, and it has taken a tremendous team effort to accomplish as much as we have in so short a period of time.
We have much more to do, but what we did in 2011 is substantial. We put together a skilled team of nine professionals who are uniquely experienced and very passionate about global investing. We have a great office in downtown Salt Lake City (come visit us!) with all of the tools we need to be successful. Our two mutual funds were launched October 17, 2011, just three and half months after we left Wasatch, and as of February 29, 2012 we are pleased to already have over $ 115 million under management across a very broad base of clients. All the while, our research team screened roughly 15,000 companies and directly touched nearly 500 of them. In the last six months our global analysts have been on every continent except Antarctica, including trips to: China, Hong Kong, Korea, Brazil, South Africa, France, Germany, Australia, Japan, and numerous trips within the U.S. In the next month or so our team also has trips planned to visit companies in Canada, U.K., Malaysia, Indonesia, and Singapore.
We?re a young company. We have more work to build our team, to tie down our process and to execute on getting performance. But after an intense and somewhat distracting 2011 I feel like we are now really hitting our stride in our research efforts. There is a vast global universe of interesting small and microcap growth companies. They are relatively undiscovered and we?re finding plenty of good growth opportunities across the globe despite the broader economic challenges.
As we begin 2012 there remain plenty of economic concerns throughout the world. We do not aim to predict the global macro environment or market gyrations. I?ve ridden the market roller coaster for thirty years and I know that trying to predict the market is not a game worth playing. Instead, you can count on Grandeur Peak to diligently screen the universe, travel extensively, and visit and touch companies. We will peel the onion on their competitive advantage, management ability and growth opportunity, and then try to buy the most interesting companies at attractive prices. We believe that if we do this well that we can deliver solid long-term performance for our clients regardless of the short-term ebbs and flows in the macro environment and the stock market.
We think of investing like running a marathon. It?s a long-term effort. We are in a hurry to do well for our clients, but not too big of a hurry. It?s important that we do things carefully and methodically, that we pace ourselves and keep an eye on the long run. With three decades under my belt, I?ve seen many asset managers out in front of the pack riding high only to completely collapse. I can think of firms that were viewed as world class, that don?t exist today because they didn?t build something enduring underneath.
The most important step we took in 2011 was to found an enduring investment firm with a strong foundation, skilled team, and repeatable process focused on bringing a truly global view to investing. Our returns were average in 2011. We can?t promise we?ll do better in 2012, and obviously we could do worse, but I give you our commitment to be disciplined in our investments and to work diligently to put ourselves in a position to be among the winners of the marathon over the coming decade. We will all be invested right alongside you in the Grandeur Peak Funds. Our ultimate goal in founding Grandeur Peak Global Advisors is to enhance the lives of our clients and our employees, and to have the opportunity to enrich the local and global community in which we live.
Sincerely,
Robert
Robert Gardiner, CEO
Grandeur Peak Global Advisors
About Grandeur Peak Global Advisors:
Grandeur Peak Global Advisors is comprised of a highly seasoned and collaborative research team taking a bottom-up approach to investing using disciplined global screening, rigorous company due diligence, and close attention to valuation to find what we believe to be the best investment opportunities around the world. Our bias is towards small and micro cap companies because we believe we can find faster growth among these firms, and often at better valuations due to the lack of analyst coverage. Grandeur Peak Global Advisors, LLC is an employee-owned investment adviser headquartered in Salt Lake City, Utah and registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940.
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The objective of both the Grandeur Peak Global Opportunities Fund and the Grandeur Peak International Opportunities Fund is long-term growth of capital.
These funds are new and have limited operating history.
Mutual fund investing involves risks and loss of principal is possible. Investing in small and micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds. Investing in foreign securities entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus. Investments in emerging markets are subject to the same risks as other foreign securities and may be subject to greater risks than investments in foreign countries with more established economies and securities markets.
An investor should consider investment objectives, risks, charges, and expenses carefully before investing. To obtain a Grandeur Peak Funds prospectus, containing this and other information, visit http://www.grandeurpeakglobal.com or call 1-855-377-PEAK (7325). Please read it carefully before investing.
An investor should consider investment objectives, risks, charges, and expenses carefully before investing. To obtain a Wasatch Funds prospectus, containing this and other information, visit http://www.wasatchfunds.com or call 1-800-551-1700. Please read it carefully before investing.
Wasatch Advisors is not affiliated with Grandeur Peak Global Advisors or with ALPS Distributors, Inc.
Biomet was not a holding in either Grandeur Peak Fund as of 12/31/11.
Grandeur Peak Funds are distributed by ALPS Distributors, Inc (?ADI?). Wasatch Funds are distributed by ADI.
GPG000145 3/31/2013
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