Institutional Asset Management

TFMS is a competitive choice for asset management, though not in the traditional mold. Our experience has shown that many of the conventional approaches to portfolio management, such as alpha and beta analysis, tend to understate risk; a situation Mandelbrot demonstrates handily in The Misbehavior of Markets.  This is not to say our record is unappealing on these factors, just that we understand their flaws and do not rely on them.  Instead, we choose to rely on a more detailed analysis of individual issues based on a modified cash flow return on investment model.  This model was developed at Callard Madden & Associates (now Ativo Research) and based on the Noble prize winning work of Merton Miller and Franco Modigliani. This approach allows us to create a concentrated "popcorn" portfolio with more reliable risk management when compared to simple volatility on the downside and considerable upside potential. The term popcorn refers to the simple fact that upside potential is over a long-term investment but the precise timing of its 'pop' is unknown.

Our income investment strategies utilize the same downsize analysis techniques as our equity strategies but the upside is not evaluated for capital appreciation but for income production. This has allowed us to develop an income producing portfolio which has generated high single digit income returns while consisting of fully liquid and exchange-traded instruments.  This strategy is more volatile in its market value than a traditional fixed income portfolio but our record shows that the income remains through the down swings and the valuations of our selections are among the first to recover.