Peattie Capital

Over 40 years of hands-on experience in both fixed income and equities is the single most important qualification.

Having started my career with eight years in fixed income markets at Credit Suisse First Boston and subsequently advising families and foundations on wealth management, I bring a unique combination of extensive fixed income and hands-on equity management to my clients. Since I opened Peattie Capital in 2007, I have successfully managed client assets in good times and bad.

There is no such thing. Clients range from a single mother with no financial experience to another professional money manager who has been in the business for over 50 years. And their range of net worths is from $2mm to well over $100mm.

Several clients have been with me since the 2000-2003 downturn, demonstrating that I bring stability and loyalty to the table and clients know that I will always act with their best interest at heart and can provide customized and competitive solutions to their needs.

Yes, absolutely!

Many clients have both a customized investment account and their retirement account at Peattie Capital. The benefits of doing so range from giving me a more holistic insight into their overall situation to providing flexibility and tactical opportunities to position them in a volatile and fast-moving environment without generating taxes.

There are two main reasons. First, the prevailing culture and priorities at many of the larger firms, especially with regards to private wealth management, are just too divergent from my own. For example, one of the core principles of Peattie Capital is that I will always act in my client's best interest. In contrast, the major banks and brokerage firms are only held to the much lower standard of "suitability".

Secondly, being independent allows me to survey and access a broad range of research and services from anywhere, rather than being beholden to the products of any one single firm. This is an important benefit to clients because it means that I can search for the very best solutions for them.

PCM is a client of Schwab Institutional, which provides all the support and resources that any major firm would. So my clients and I are getting the best of both worlds. As Schwab says, and I agree, PCM is independent, but not alone.

PCM's sole compensation is the management fee. I send an invoice quarterly and clients have the option to pay by wire transfer, check, or having fees deducted from their account.

There are no incentive fees or lockups. The money belongs to the client, who can have it at any time.

Depending on the transaction Schwab may charge a small commission, however that is very rare. PCM does not participate in the commissions.

I think it is useful but limited.

Starting out with a fixed income/equity/real estate split may be fine, but allocating between style boxes within the equity component has definite limits which are not fully understood by investors.

People believe that an asset allocation program is the best way to manage their wealth, because they think it diversifies away market risk. I disagree, and hereby warn you that, if you have such a program and expect it will protect your wealth in a down market, you are mistaken. In a down market, equity correlations go to one, with the result that your overall returns will mirror the market, broadly speaking.

The most important limits to an asset allocation program are that it does not diversify away market risk, and it cripples the ability to take advantage of imbalances and short-term opportunities as they arise. Increasingly, intelligent investors are questioning the value of an asset allocation program.

The biggest beneficiary of an asset allocation program is the advising firm, due to the steady fees these programs generate. Investment banks, in particular, have unpredictable and lumpy business models, which is why they tend to trade at a lower market multiple. The fees from asset allocation programs help smooth out revenues for them.

In the past, many brokers and investment advisors within an investment firm had discretionary investment authority over some portion of a client's assets. When these firms became worried about their liability should any of their brokers commit infractions or criminal acts, they began emphasizing the asset allocation model. Their brokers and advisors initially collect the funds, and, via an asset allocation program, disburse the funds to third party managers to invest. In addition to smoothing revenues, this removes legal and public relations risks the firm might experience.

Registered investment advisors, such as Peattie Capital, are required to always act in the best interest of their client.

No, but my most valuable investing lessons come from Pat Duff's investment class at Columbia Business School where I learned the importance of doing extensive research and the value of independent thinking. Duff was a recently retired partner at Tiger Asset Management when I took his class in 1996.

I am also a big fan of John Maynard Keynes because of his successful transition from being a "macro" investor to becoming a stock picker.

There are many ways to skin the cat, from Charlie Munger's "it's better to buy a great company at a fair price" to Stanley Druckenmiller's (paraphrasing) advice to move fast and have a starter position as soon as you have a concept.

Every client has access to his/her account via schwaballiance.com, and can log in and see or do anything 24/7. In addition, representatives from Schwab Alliance are available at 1-877-575-2157 during normal business hours.

PCM and the client can enter into a limited power of attorney, which provides PCM with discretionary investment authority over an account held somewhere else. In this case, any commissions go to that firm.

Anyone 100% satisfied with the services and performance from an existing advisor shouldn't bother with PCM. On the other hand, more and more intelligent investors are questioning services they receive because:

a) they don't believe firms always act in their best interest,

b) the standard "asset allocation/diversification" model that is widely touted at the major firms has been coming under scrutiny because of its poor performance during sharp downturns, and

c) Clients want to have a direct relationship with the portfolio manager, not just a representative.

Ideas can come from anywhere, and I also follow a number of strategists and research services.

There's no shortage of information; more important is to be able to identify important information from fluff.

Portfolio construction is entirely dependent on the goals and situation of each client. That said, I tend to be somewhat concentrated, with typically 20-25 positions per portfolio, and they are weighted rather than say, 25 positions of 4% each.

There are no industry limits as I believe in being flexible and, to a degree, opportunistic. But again, portfolio construction is a function of client goals.

As to position limits, I will buy up to 10% of a portfolio in a single name, but only when I have the highest possible conviction and there is enough liquidity. I don't let anything grow beyond 15-16% of a portfolio.

To emphasize that I manage separate accounts....everyone is different and I'm trying to create something that addresses their unique needs. I am trying to make it as personal an approach as I can. No one's getting lumped in with anyone else here or sold the flavor of the day. It's all about doing what's best for each individual client. Plus, I like the alliteration, I think it's alluring.

To provide the best possible service I can; to always act with integrity and in the best interests of my clients; to create as "user-friendly" experience as I can, and to have as open and transparent approach as possible. From a market perspective, to always protect client assets from a meaningful decline in value and for PCM my goal is to grow to $100mm assets under management.

I would think I could handle up to 25 clients or so without sacrificing service or performance, which will always be paramount to me. In terms of assets, I'm not sure where that gets me because, as I mentioned, several people I'm involved with have extreme wealth.

At some point I could reevaluate my business model and perhaps hire a bigger team or perhaps just stop where I am. For now I am very happy being a one-man show.

Rarely, but more than never, and only in the more aggressive accounts I might use inverse ETFs to help offset a concentrated position in any given industry.

More often I raise cash, but that has limits as selling triggers capital gains taxes and presents the problem of when to get back in. Generally, I prefer to keep investments for the medium to long term as long as the fundamentals and thesis for owning is on track.

Charlie Munger has a nice example of how taxes eat into returns for anyone interested.