Private Value Management, LP is an investment management company established in 2003 to manage the investments for an Annapolis based Family Office. In 2006 we started a private pooled investment fund, CVPLP, as a vehicle to manage equity investment capital for other accredited families and institutions. Our investment approach is one of identifying companies having sustainable competitive advantages allowing them to produce high levels of free cash flow and earn high returns on invested capital. We invest when the shares of the business are available at prices representing an attractive discount from the company’s true intrinsic value. The larger the difference between current price and value the greater the margin of safety and the more attractive the company is for investment. We believe we can do this best by investing in securities where experience, specialization and superior analysis can offer an investing edge. We are regularly willing to invest in businesses whose shares might generate short-term Fund underperformance in order to position the Fund in a way that provides the best opportunity for better long-term results.
We exercise considerable patience with our investees resulting in very low annual portfolio turnover in order to gain the benefit of compounding inherent in successful long term growing businesses. A wonderful business purchased at an attractive price has little risk in the long run despite the likely possibility of significant price fluctuations in the short run due to the natural vissicitudes of the stock market. We employ adequate diversification for risk control purposes but prefer to concentrate our assets across 25 to 30 investees and will often have 50% of our assets invested in our top 15 investments. We aim to invest larger amounts in businesses having lower price to value comparisons and will reduce exposure to those businesses when the value gap narrows.
Our investment focus is long term and we are interested in working with clients who are aligned with our value investing philosophy, who appreciate our independence of thought and who possess the emotional stability to recognize the wisdom of buying bargains during price declines. Having stable clients with a long-term orientation is crucial to the eventual success of both the client and the investment management firm. We think investing is hardest when it seems easiest and is much easier when others are rushing for the exits. Our willingness to invest amidst declining share prices is the best way we know to build positions in good businesses at attractive prices. We have learned that the best values with the greatest margin of safety are more abundantly available during declining market environments. We keep our fund fully invested whenever shares of attractive businesses can be bought.
EXCELLENCE IN INVESTING
By this we mean sticking to a value discipline geared towards providing attractive long term results and the willingness to invest in securities or industries that are out of favor or misunderstood. We don’t follow the crowd and don’t mind being different. Or goal is to compound capital for eventual net worth as opposed to managing to short term benchmark comparisons. Investment succeess requires discipline, patience, a healthy dose of skepticism and the willingness to lag the market in the short run as a means to investing in securities that can outperform over longer term measurement periods. We fully understand that managing other people's money is a heavy responsibility and appreciate from our own experience how difficult it is to accumulate and preserve wealth.
Adding value requires a knowledge advantage than can come only from years of experience and a continual focus on reading and learning. Our research is a simple approach centered on basic valuation vs. price analysis which we beilieve are important elements required to identify companies that can deliver attractive long term investment returns.
ALIGNMENT OF INTERESTS (OUR MONEY ALONG SIDE YOURS)
We put clients’ interests ahead of our own and treat all clients equally. We pay strict attention to potential conflicts of interests always avoiding them when possible and dealing fairly with them if not. We operate under the theory if all of our day to day practices and business behaviors became known there would be no grounds for complaint. We believe it is important to treat clients as we would want to be treated if our roles were reversed. We are a significant investor in the Fund and substantially all of our investment activities in marketable securities conducted outside the Fund are positioned similar to that of the Fund.
COMMUNICATION WITH CLIENTS
We want to communicate with clients in order to meet their individual needs and strengthen our relationship with them. Our goal is for every investor to have a complete understanding of our operating philosophy and approach to managing investment capital. We report performance monthly and show our results compared to typical relevant market averages. In our reporting to clients, we accurately state our achievements and believe it is just as important to explain our mistakes as our successes.
MANAGEMENT FEE ARRANGEMENTS
We believe our management fee arrangement should compensate us fairly for the work we do and the value we add for our clients as a means to a constructive business relationship. Fee arrangements should be structured in a way that motivates us to act entirely in our client’s best interests and they should be fair, competitive and explicit. All client investment amounts of comparable size pay comparable fees for the same service.
MICHAEL H. COOK
MANAGING MEMBER OF THE GENERAL PARTNER
Michael is the founder of Private Value Management, LPand is the investment manager and general partner for Cook Value Partnership, LP. In 1986 Cook founded Berkshire Asset Management, Inc. , a registered investment advisor where he served as President, CEO and Chairman of the research and investment policy group. Berkshire managed $750 million in equity and balanced portfolios for wealthy families and institutions. The firm was sold in September 1999 to a large NYSE financial services company and Mr. Cook continued as CEO for a period of three years and in 2003 established his family investment office. Mr. Cook holds a BA from Wilkes College and has served on a number of Boards of private and public corporations, foundations and endowments. Cook is currently a member of the endowment fund committee at The Key School in Annapolis, Chairman of the endowment fund for Friends of Acadia in Bar Harbor, Maine and is a member of the investment advisory committee for the Edna McConnell Clark Foundation in New York City. Cook is also of member of the Boston group of TIGER 21 ~ the premier peer-to-peer network for high net worth investors.