Investing in Founder-Led Companies
"… there are certain structural advantages that founders may have … The social capital and moral authority that comes from being the founder and having built many of the company’s key products means that on balance people trust you more and give you the benefit of the doubt more when you make tough calls ... Everything is easier with social capital.”
- Mark Zuckerberg, Founder/CEO of Facebook
People matter. A lot.
Wouldn’t it be great to invest alongside leaders who ...
have a track record of success?
have significant “skin in the game”?
have incentives that are closely aligned with shareholders?
The person who gave birth to the company is often best equipped to nurture, lead, and inspire the people who comprise the company. This can lead to better products, happier customers, and even better capital allocation decisions. Research suggests that this can result in better long-term stock returns. For instance, a recent study by Bain & Co. found that within the S&P 500, the companies whose founder was still deeply involved performed 3-times better than the other companies over a 25-year period (1990-2014).* Intrigued, we began to explore how we might invest in a passive (index) of founder-led companies. Ultimately, we found a solution that did this (an ETF). However, we did not like its cost structure or portfolio selection methodology. This led us to design our own. We are thus pleased to announce Fielder’s Founder-Led strategy. It is not a fund or ETF but rather a basket of ~50 individual stocks of founder-led firms.
Passive (index) investing should not be mindless investing. We believe our Founder-Led strategy is a way to invest passively in a more “mindful” universe of companies. For more information, you can download a report on our Founder-Led strategy HERE.
Yours in the Fielder,
Frank Byrd, CFA
*Zook, Chris. “Founder-Led Companies Outperform the Rest — Here’s Why”. Harvard Business Review. March 24, 2016.
Disclaimer: The Founder-Led strategy may not be appropriate for all clients. Please consult with your financial adviser. The Founder-Led strategy is comprised of smaller and more volatile stocks, and as a result may involve a higher degree of risk. While the information presented herein is believed to be accurate, Fielder Capital Group LLC (Fielder) makes no express warranty as to the completeness or accuracy, nor can it accept responsibility for errors appearing in the document. Fielder is under no obligation to notify you of any errors discovered later or of any subsequent changes in opinions. Nothing herein should be construed as a recommendation to buy or sell any of these securities. It should not be assumed that any of the securities, transactions, or holdings discussed will prove to be profitable in the future or that investment recommendations or decisions Fielder makes in the future will be profitable or will equal the investment performance of the securities discussed herein. Fielder or its employees may have an economic interest in securities mentioned herein. This information is intended only for the recipient of this email. Under no circumstances should this report be shared with or forwarded to anyone else without the express permission of Fielder.
