Sunday, June 9, 2013

"Ye Olde Artisanal Stock Pickery & Son" (or "Equity investing as a luxury good")

The world is going Artisinal.
For some time we've believed that with returns from portfolio investments uncertain at best that entrepreneurs have much lower opportunity costs when investing in what, at first glance, are ridiculous affectations:
Oncle Sam, for example, is a mechanism that pops single kernels of popcorn one at a time using an elaborate steel lattice of moving parts and a single tea light. Animal Growth is a set of tools that makes simple foam animal toys, while Marbelous makes a marbled mirror. Swing is particularly awesome: the user inserts a piece of fabric between a sharp mold and an off-kilter top, then balances above it as their weight cuts through the fabric in a pattern that turns it into an expandable mesh bag....MORE
But which are apparently real businesses.

From DealBreaker:
How Much Is Adorable Worth To You? Is It 116bps A Year? 
...Wally Weitz may be only the second-best-known investor in Omaha. But like Warren Buffett, he has long churned out gains by sticking to a basic formula: Buy strong companies whose shares are down and wait patiently for a rebound. …
Just 31% of Weitz Value’s investments turned over in the past year, versus a 78% average for actively managed stock funds. … When he really likes a company, he holds on. Mr. Weitz has held shares of Mr. Buffett’s Berkshire Hathaway Inc. for three decades. … “Stock picking will always have value,” he says. “Whether people will pay us to be stock pickers—that’s a separate question.” …
“I’m not a thrill seeker,” Mr. Weitz says. “No heli-skiing for me.” Investing is both his work and his hobby. … In high school, he joined a stock-picking club and haunted a branch of Merrill Lynch & Co., reading its research reports. … After a stint at a brokerage house in Omaha, where his wife is from, Mr. Weitz launched his own firm in 1983 backed by a few local investors. …
Mr. Weitz’s son, Drew, recalls how his father would discuss world events at the family dinner table, informed partly by his studies of businesses he followed. The conversations inspired Drew, now 33, to join the family business, where he is a research analyst and portfolio manager.
I sort of bolded randomly there, but … I mean. This business is family run, multi-generational, community owned, and handmade by local artisans from local ingredients. It’s slow-food, minimally processed, humanely sourced. Probably seasonal, too. He really ought to move this thing to Brooklyn, or at least Portland.1 Maybe change the font on his web page though, no, actually, this is pretty good.
Like all locavore artisanal businesses, this one isn’t cheap:
Weitz Value charges investors 1.2% of their money, and another Weitz fund charges 1.85%. The cost at stock index funds and ETFs can go as low as 0.04%.
But the premium pricing is easier to take when there are little old-fashioned grace notes like this...MORE
 HT: nekkid capitalist

Some of our posts on the Artisinal movement:
"The Economics of Artisanal Chocolate" (Here at Zero-bound Chocolates, We Believe...)
Questions America Wants Answered: “Should I dilute the laudanum before rubbing it on the gums of my caterwauling baby?”
Is the Future of Food Artisanal?
The Future Will be Artisanal Everything (HAIN; AHFP)
Speak of the Artisinal Devil: "Hain Delivers Strong 4Q – Analyst Blog" (HAIN)

Just yesterday NBC's Rock Center with Brian Williams caught on and dug deep:

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