Frank Martin of Martin Capital recently penned a shareholder letter to investors in His Hummingbird Value Fund and as always his thoughts are a worthwhile read. If you have ever read it his book A Decade of Delusions: From Speculative Contagion to the Great Recession it should be on your must read list. No less than Warren Buffett is a Martin fan saying “"For many years I've enjoyed reading Frank Martin's letters. This collection contains much investment wisdom and, just as important, sets a standard for the advisor-client relationship." Mr. Martin refers to his style of investing as winning by not losing and has pretty much achieved that lofty goal during his career. He side stepped the crash of 1987 after getting long near the early 1980s bottom and he was profitable in the internet bust.
In the last market debacle he started shorting investment banks like Bear Stearns, Merrill and Goldman in 2007. In an interview in the fall 2013 edition of Graham and Doddsville, the excellent publication from the Columbia Business School where Value investing was born , that “It was pretty easy to see that what I called “the easy money fool’s rally” of 2003 -2007 was going to end badly. You couldn’t describe it exactly. Ben Graham said, “You don’t have to know a man’s exact weight to know if he’s obese.”
Mr. Martin’s latest letter is once again waving a bit of a red flag. He writes that “Our policymakers are flying blind and if we, as risk-averse, absolute-return investors, fall into lockstep with our peers we are certain to join them as all-too-witting victims in a loser’s game. Harking back to career risk, the irony is that we can only win individually if in the long run our clients win collectively. Otherwise, when months ...
