For printable version which includes all graphs and tables, click here.
Confidence Games
“confidence game, any elaborate swindling operation in which advantage is taken of the confidence the victim reposes in the swindler.” – Encyclopedia Britannica
Narcissism, Machiavellianism and Psychopathy are three antisocial personality traits known as the Dark Triad. Individuals with one or more of these psychological attributes are likely to demonstrate a high degree of self-confidence. Often, these people are able to lie without any indication of discomfort. Adam Neumann (WeWork), Elizabeth Holmes (Theranos), Allen Stanford (Stanford Capital), Angelo Mozilo (Countrywide), Bernie Madoff, Kenneth Lay and Jeffrey Skilling (Enron), and Bernie Ebers and Scott Sullivan (WorldCom) all orchestrated confidence games. Most of these con-artists are believed to possess Dark Triad traits.
The most famous example of a confidence game was pulled off by Charles Ponzi. In the 1920s, Ponzi developed a legitimate plan to use investors’ funds to earn a risk-free profit by taking advantage of mispriced international reply coupons. However, he began to keep some of the investors’ funds for himself without their knowledge and would use funds from new investors to pay out “profits” to earlier investors. As long as there were new investors, he was able to keep the racket going, and it was easy to attract new investors when promising a 50% return in 90 days. Eventually, an investigative journalist calculated that in order to generate the required returns based on the amount of money Ponzi had accepted, the scam artist would have to buy over five times the number of international reply coupons in circulation in order to legitimately generate the promised returns.
Our latest perpetrator of a high-profile Ponzi scheme and undoubtedly a trait bearer of the Dark Triad goes by SBF, short for Sam Bankman-Fried. SBF began by building his reputation as an eccentric genius. A graduate of MIT whose parents rubbed elbows with social and political elites, SBF parlayed a successful stint as a cryptocurrency trader at well-known Jane Street into his own cryptocurrency trading firm, Alameda Research, founded in 2017. He further raised his profile by rescuing several private companies and troubled cryptocurrency exchanges. His proclamations of altruism and his political donations added to the attraction for investors who badly wished to believe they found someone with a Magic Money Machine. SBF’s disheveled appearance, social awkwardness and disinterest during business pitch meetings further added to his mystique.
After experiencing success with Alameda, SBF started FTX in 2019. FTX was an offshore cryptocurrency exchange that soon began issuing its own cryptocurrency known as FTT. Crypto investors opened accounts with FTX (the exchange), and would use the funds in those accounts to trade FTT (the digital tokens), as well as, other cryptocurrencies. Because many FTT owners held their tokens in their FTX account rather than a cryptocurrency wallet (think digital wallet accessible only by the owner), FTX was able to access the clients’ funds. While FTX was not supposed to use clients’ assets for its own purposes, it did exactly that. FTX used clients’ FTT as collateral to borrow funds to buy more FTT and to lend funds to Alameda. We will not bother going into the myriad of other alleged crimes as we are sure there will be plenty of news coverage on these transgressions.
The first domino was tipped by Binance, the largest crypto exchange and one of the largest holders of FTT. Binance announced their intention to sell all of their FTT due to deteriorating confidence in FTX’s balance sheet, which triggered a downward spiral in the price of FTT tokens. A tsunami of withdrawal requests hit FTX. Having spent much of clients’ funds on FTT and extending loans to Alameda who in turn invested in illiquid assets, FTX was unable to meet all the withdrawal demands. Essentially, this was a run on the bank. This may not be exactly how it happened, but it is believed that it is a highly likely scenario. We’ll know more when investigations are wrapped up and a trial is held.
The blockchain technology upon which cryptocurrencies are built holds great promise for use in many industries that could use the ability to create a record of a transaction between two parties that is incapable of being edited. While we are not making a judgement on the validity of cryptocurrencies as a whole, we do view them as speculative given that their value is derived solely from the confidence others place in it. The same might be said of the United States Dollar. However, the dollar has the backing of the government and is the only legal tender in the United States. It is also the only currency the government will accept for taxation purposes. The government has a monopoly on legal tender which is an enormous power. We do not believe those in power will voluntarily give up their monopoly.
No matter how competent or successful a company or management team might be, if we do not understand how a company is making profits or if management’s investment thesis sounds like a Magic Money Machine, we will not risk our clients’ hard-earned capital by making a purchase. We view avoiding investment landmines as one of the most important aspects of the work we do for our clients. Avoiding investment catastrophes is more critical than racking up large returns. Over time, an investor can recover from underperformance, but there is no recovering from zero.
We would like to thank our clients for the confidence they have shown us. We do not take it lightly. You should know, we are stingy with our own confidence. We do not simply accept the overly optimistic guidance of management teams. We should not expect our clients to hold us to any less of a standard than we hold management teams. Therefore, we do our best to explain our investment process rather than demand blind faith. Finally, our clients’ understanding of our value approach to investing and their understanding of why we own the companies found in their portfolios will help steel their nerves during difficult times and quell the temptation to believe skies will always be clear during exceptionally good times.
History is Important: From Hercules to Sisyphus in a Year
“Don’t confuse brains with a bull market” – Humphrey B. Neill, author of The Art of Contrary Thinking
What a difference a year makes. In 2021 the S&P 500 returned an impressive 28.71%, but 2022 reversed most of those gains by delivering a negative 18.13% return according to Bloomberg. While we have held onto our 2021 stock gains and added to them in 2022, many investors have felt like Sisyphus. One of our partners recalls a conversation with a junk bond manager whose career was ended by the financial crisis of 2008. By early 2008, the funds he managed had been decimated by the reversal of liquidity conditions in the mortgage-backed security (MBS) market. Things had gone from wet and wild to drought-like. While he stared at the Lipper awards on his wall that celebrated his #1 ranked performance from previous years, the junk bond manager declared, “All this time I thought I was pushing this massive boulder by myself. I hadn’t realized I was pushing it downhill.” Unfortunately, he was late in recognizing that falling interest rates were driving the fund’s outstanding returns more than superior credit analysis. When considering one’s past performance, especially exceptionally good performance it is important to understand what drove that performance, so as not to overestimate your abilities and to know what risks might cause your fortunes to reverse.
In the story above, the slope of the hill is analogous to interest rates. As rates decline, the downward slope gets steeper. As rates approach zero, what once may have seemed like a Herculean feat such as moving a mountain-sized boulder or earning stock returns of 15% annualized for a decade becomes pedestrian, expected even.
When the slope under foot begins to flatten and then becomes an incline, momentum will allow the boulder to continue on for a short distance, but as the incline steepens the boulder eventually pauses and begins to roll backwards crushing the unsuspecting. Sisyphus did not have a choice in the matter. It was his fate to be crushed. As investors, we are not fated to be bowled over. For many years, our team has anticipated a change in the market terrain from decline to incline as zero nominal and negative inflation-adjusted rates were unsustainable. For over a decade, with the Federal Reserve Bank of the United States (the Fed) at the helm, central banks around the world invented new ways to go back to the liquidity well in order to maintain a declining surface upon which stock valuations snowballed.
Human beings are subject to numerous psychological traps that impair our judgement. One such trap is recency bias (a.k.a. availability bias) which can be defined as the tendency to overweight recent experiences rather than objectively comparing the probability of recent events repeating to the probability of alternative scenarios. Currently, it seems obvious that investors as a whole suffer from recency bias. The market has quickly recovered from drawdowns during the last decade. Consequently, investors have been fearlessly “buying the dip” for years under the expectation that the market will always get bailed out by the Fed or fiscal policy.
History tells us bailouts cannot be counted upon for long-term investing success. At some point the safety net breaks. However, experience in navigating long bear markets has been waning on Wall Street to the detriment of the average investor that relies on sound advice from an investment professional. Every year, the number of analysts and money managers that lived through the Dot-Com Bubble and its aftermath shrinks. The number is even lower for those that can claim to have been around during the Asian Contagion of 1998, Long Term Capital debacle of 1997, credit union bust of the late 1980s, Black Monday of 1987, or the double dip bear markets of 1981 and 1982. Many were still in school during the financial crisis of 2008 which was triggered by deteriorating credit standards in subprime mortgages dating back to 2005. As time grows between the last crisis and the present, recency bias easily blurs the judgement of the unwary who ignore the lessons of history. When you have never experienced a crisis, you are more likely to miscalculate the likelihood of another crisis occurring and the degree of damage it may inflict.
In times of market turmoil, scars and gray hair are invaluable. Fortunately, we have both along with institutional memory. Not only have our partners lived through a number of financial and economic crises, we also have had the great fortune of drawing upon the experience of wise mentors whose careers date back to the 1950s. The lessons from history and the lessons handed down by mentors help us to not only resist recency bias, but exploit turmoil for the benefit of our clients. Turmoil often leads to poor, emotionally-driven decisions by many investors that lack experience and have ignored history. Applying experience, a wide historical reference and a disciplined value approach to investing increases the likelihood of turning tumult into opportunity.
What Will the Fed Do in the Face of Lower Inflation?
The latest (December) year-over-year change in the Consumer Price Index (“CPI”), the government’s measurement of inflation for consumers, came in at 6.5%. This was in-line with the average estimate of surveyed economists and significantly lower than June reading of 9%, which is the peak so far for this cycle. After three consecutive CPI readings that were either lower than or in-line with analyst estimates, the market seems to have grown optimistic that the Fed will end rate hikes soon and begin cutting rates not long after that despite the Fed’s rhetoric to the contrary. However, this next chart shows that prices are still more than 15% higher since January 2020 according to CPI. The fact that the government’s method of measuring inflation is significantly lower than it was in June does not mean inflation is over or under control, only that it has slowed.
Consider the following conversation between a police officer and a driver:
Officer: License and registration, please. Driver: Is there a problem officer?
Officer: Do you know what the speed limit is? Driver: 65?
Officer: Well, do you know how fast you were driving? Driver: I’m not sure.
Officer: 85 miles per hour! Driver: Whew! A mile back, I was doing 100.
Officer: Oh! Well, then you can be on your way. Have a great day!
The officer’s last response does not seem reasonable, and the belief that the end of inflation is near seems to be separated from reality as well. Inflation is still well over the 2% target rate that the Fed proclaimed years ago when CPI growth hovered near 1%. While the prices of some consumer items have receded from their peaks, most remain well above their January 2020 price as shown in the Price Change at the top of the page. Energy costs, which permeate the economy as inputs for most goods and many services, also remain high. Furthermore, the lack of investment in new supply (see chart nearby) suggests average energy prices will remain high for an extended period of time. Finally, the extraordinary investment discipline shown by the oil and gas industry in limiting the development of new oil and natural gas production creates a further inflationary conundrum for the Fed. Increasing interest rates raise the cost of capital to invest in new production increases, which will likely result in oil and natural gas suppliers demanding higher prices before investing their capital into expanding supply. Paradoxically, the Fed’s rate hikes that are supposed to stomp out inflation may actually contribute to it.
Because the quickest road to 2% inflation is a recession, possibly a deeper than average recession, the Fed will likely have to live with higher levels of inflation for a longer period than the market expects. We are not saying the probability of the Fed pushing the economy into recession is insignificant, but we do not believe that recession is the goal. If we do experience a significant recession, the Fed will likely return to the reinflation playbook of low rates and massive mortgage and bond purchases. Our clients own companies with balance sheets that should be able to weather a recession better than most, and the prices of the goods and services these companies provide should benefit from any attempt to reflate asset prices.
The Importance of Staying Invested
Capitulation is the period when even the die-hard optimists throw in the towel leaving no buyers at the current market price. During capitulation, positive recency bias is banished by reality. This is when sellers are forced to accept lower prices in order to attract buyers. As capitulation gains momentum, it will not be too long until there are no investors left willing to sell at the market price. With no more downward pressure on stock prices from sellers, a market bottom is established.
Understanding how something happens is not the same as knowing when or where it will happen, so please do not think that we pretend to know when markets bottom or peak. However, there are signs that let you know when you are in the neighborhood of a bottom or peak. In the case of bottoms, capitulation is a dependable marker that you are in the same zip code as the bottom.
While fund flows were negative in four of the last six weeks of the year, they ended 2022 as a net positive on a cumulative basis (see Fund & ETF Flows nearby). We would continue to describe investors as overly optimistic about the broad stock market. We can think of no better current example of this misplaced optimism than ARK Innovation ETF (Nasdaq:ARKK), the popular electronically traded fund that is heavily invested in the slickest tech names, which we wrote about on page 3 of our 4th Quarter 2021 Commentary. In 2022, investors entrusted ARKK’s manager, Cathie Wood, with almost $1.3 billion new dollars despite back-to-back -23.38% and -66.97% returns in 2021 and 2022, respectively.
The fact that many investors have continued to add money to stock funds, and the market’s enthusiasm for a CPI reading slightly lower than the 40-year high indicates investors are ready to pile back into a stock market that still trades at a historically elevated valuation (see the Price-to-Earnings chart nearby). This behavior bears no resemblance to capitulation.
While this lack of capitulation indicates that we must continue to exercise extraordinary care in avoiding companies with high valuations or copious levels of debt, we do not live in fear of capitulation. As shown on page 5 of our 4th Quarter 2021 Commentary, our clients’ portfolios share little in common with the S&P 500 Index and other broad stock indices. This enables us to not fear capitulation like most investors. Capitulation may sound scary, but it is the point of the market cycle where value investors tend to earn their keep and find the most bargains.
No one knows with any significant degree of certainty when a recession or a bear market is going to happen. If someone claims they can presage recessions and bear markets with great accuracy, they are telling you they have a Magic Money Machine and we are telling you Magic Money Machines do not exist. We can gauge the risk of a recession or bear market occurring, but there are many factors that can delay or speed their onset.
Given what might appear to be a lot of handwringing over possible recession, inflation and bear markets, you might be surprised to know that we are quite optimistic. We have been finding investment opportunities with greater regularity than was the case pre-pandemic. As mentioned above, our clients’ portfolios bear little resemblance to the stock market in general. We have assembled a portfolio of stocks of companies with bright futures. These companies should benefit from a myriad of trends that include but are not limited to: demand for all forms of energy, the need for more efficient food production, investors increasing exposure to active investing, the proliferation of IoT (internet-of-things), revolutionary advances in healthcare and shifting of supply chains.
We find it important to note that many of our best performing investments have been made during bear markets when the world felt scary. However, it is very difficult for most potential investors who are sitting on the sidelines to jump into the market during peak fear. Consequently, it is important to remain invested and remain focused on financially strong companies that can weather negative scenarios. This approach makes it easier to be in the market when bargains appear in abundance, usually during peak fear.
Did You Know Berkshire Hathaway …
In our 3rd Quarter 2021 Commentary, we mentioned that we often gain exposure to high growth industries through indirect exposure or via a “back door” investment. In this edition of our quarterly commentary, we want to highlight some “back door” exposure that benefits us as shareholders of Berkshire Hathaway (NYSE:BRK/A, BRK/B). Most people who are aware of BRK know that it is one of the largest insurance companies in the world. However, Warren Buffett, Charlie Munger and company have added substantial value to BRK as a holding company of numerous businesses spanning many industries.
…is one of the largest owners of renewable power among all publicly traded North American utilities including 9% of U.S. wind capacity and 2.86% of U.S. solar capacity?
Berkshire owns several regulated and unregulated utility businesses through its subsidiary, Berkshire Hathaway Energy (“BHE”). The BHE utilities include MidAmerican Energy Company (“MidAmerican”), PacifiCorp, NV Energy and BHE Renewables (“BHE-R”). The nearby table reports BHE’s 2021 year-end renewables portfolio.
When MidAmerican completes it 2,092-megawatt Wind PRIME project, it will have reduced its CO2 emissions by 75% from 2005 levels. PacificCorp’s 2021 integrated resource plan is expected to yield a 69% reduction in CO2 emissions from 2005 levels by 2030. NV Energy has yet to bring on significant company owned renewable energy projects. However, it has contributed over $257 million for 39,300 private solar projects at customer locations. Also, the Public Utilities Commission of Nevada has approved NV Energy’s plan to bring on an additional 1,190 megawatts of new solar projects and 590 megawatts of energy storage capacity. Finally, in addition to BHE-R’s 15 gigawatts of sustainable generation assets, the company is also developing a lithium business to supply electric vehicle battery manufacturers. The brine that is processed from BHE-R’s geothermal wells is rich with lithium, and the energy used for lithium production is 100% renewable. If the spring 2023 pilot project to upgrade the lithium into battery-grade lithium carbonate is successful, construction of the first commercial plant could begin as soon as 2024.
…is the largest individual shareholder of Apple Inc. (NASDAQ:AAPL)?
As of 9/30/22 (date of BRK’s most recent holdings report), BRK owned approximately 915.3 million shares equal to 5.62% of AAPL shares and worth $118.9 billion as of 12/31/22. BRK’s investment in AAPL accounted for 41% of BRK’s equity securities portfolio as of 9/30/22 and for every class B share owned of BRK, our clients indirectly own 0.74 shares of AAPL.
Unlike many other tech companies, AAPL is a moderate issuer of stock options to management. Options issued have been equal to a little under 1% of shares outstanding for each of the last 10 years. Also, Buffet loves to own dominant brands (Coca-Cola Company, American Express, Bank of America, Kraft Heinz). AAPL’s brand name recognition is so positive that it is considered a lifestyle brand. Very few brands achieve this coveted status.
We have never directly owned shares of AAPL. There was a time - well before lifestyle brand status (pre-iPod) - that the shares appeared attractively valued. However, we lacked the imagination to see how it could branch out into portable music (iPod and iTunes), phones capable of taking pictures, accessing the internet and offering apps (iPhone). Like most “growth” stocks, the valuations always seemed to assume additional technological revolutions. Unlike most “growth” stocks, AAPL continued to be the leading innovator (Calm down Samsung fans. Yes, Galaxy phones are great. But they are not an iPhone.)
Some may find it strange that we have no issue with BRK’s ownership of AAPL. Let us explain. First, in the insurance business, the ability to invest customers’ premiums until future claims have to be paid is known as float. Float is essentially an interest-free long-term loan which creates a lower cost of capital for insurance companies compared to other investors as long as the underwriters do a good job of estimating future liabilities. BRK has some of the best underwriters around. This lower cost of capital allows good insurance companies, even those run by value investors, to justify paying a higher valuation for investments in good companies. Second, as shown in the table nearby, over very long periods of time, a stock’s returns should approach its return on equity (a.k.a. return on net book value). Because BRK has the ability to hold an investment for some time period approaching forever, it is able to justify paying a higher valuation for stocks than an investor with a finite holding period.
For example, if you purchase the stock of a company that consistently generates a return on equity (ROE) of 20% for a price equal to 1.50x book value and hold it for five years before selling it for 1.00x book value, the five-year annualized return will be 10.7% (see the intersection of the 5-year Holding Period column and the 1.50x Book Multiple row in the table above). However, if you are able to stretch the holding period to 25 years, you can pay 2.0 times book value and still generate a higher annualized return of 16.7% (see the 25-year column and 2.00x row). In the case of a purchase at 2.00x book multiple and a 100-year holding period, the annualized return of 19.2% (see bottom-right corner of the nearby table) is very close to the company’s 20% ROE. However, if your holding period is only one year, you can’t pay much more than 1.00x book value and hope to generate returns anything near the company’s 20% ROE.
As of 12/31/22, BRK’s AAPL ownership contributes $96.74 of value to BRK.B’s $308.90 share price. BRK’s ability to hold stocks indefinitely make us happy owners of 0.74 shares of AAPL for every BRK.B share that we own.
Bonds Begin to Produce a Semblance of Income
Bloomberg’s U.S. Government/Credit index, which includes investment grade, fixed-rate, government and corporate bonds, lost -13.6% during 2022. After subtracting 7.1% inflation, the real return of -20.7% is arguably the worst real rate of return for bonds in the last 100 years. While bond prices may have taken a beating (remember a lower bond price equals higher yield), investment-grade bond yields are still not high enough to offset the current inflation rate. If bonds prices continue to fall and inflation drops to the point that real yields turn positive, we will likely feel a little more love for bonds. Until then, we will continue to view bonds as a liquidity tool for earning some income on money that is expected to fund known expenses. Consequently, we tend to buy investment grade bonds on the near end of the maturity spectrum, which should result in lower volatility than most broad-based bond indexes.
2022 Milestones
FRM ended the year with outstanding relative performance in both equities and fixed income portfolios. Equity returns beat both the broad market and value indices by a very large margin – our second-best year ever and only a fraction less than 2001 (another year when our disciplined approach avoided lots of pain). Although absolute returns were modestly positive, most of our companies added further to their intrinsic value, much of which continues to be unrecognized. As a result, we have a strong buy list, the largest since 2013. Our conservative approach to managing bonds paid off with very significant out-performance in a year where all bond index returns were negative. As mentioned earlier, it was the worst year on record for inflation adjusted, real returns on bonds.
On November 16 of this past year, we advised many of you of the passing of Tom Hill, our friend, colleague, and partner. We celebrated his life the following Saturday with several hundred others there to pay tribute. Tom was better prepared for death than any man we have ever known, and that included not only his own soul, but the preparation of his family, his friends, co-workers, and business affairs as well. We learned so many things from him throughout our long association, but none more important than the need for acknowledging, cultivating and sharing “the beauty of Jesus and …the great gift of God’s love and forgiveness,” to quote his obituary. The highest compliment we can pay to our friend is that, through his example, he made everyone with whom he came in contact a better person. We will strive to do the same as we go forward without him.
There were many positive things that happened this past year, and we will start with some exciting news about the FRM family that some of you may have already heard. Meredith and Tommy Moll had been hoping to add to their family following the birth of Catherine (Bunny) in 2018. Just prior to the start of the pandemic, they committed to adopting with the help of The Call, a non-profit that recruits, trains and supports foster and adoptive families by mobilizing local churches in assistance. Late in 2021, they got “the call.” A wonderful brother and sister, with only 14 months between them, made for a heavenly fit with Bunny exactly in the middle in age. All the technicalities were finished and Miller and Lillian (Lilly) came to be part of the Moll family right before Easter. Prior to having any children, Tommy and Meredith had agreed that they wanted four, and sure enough, concurrent with the adoption process, Meredith became pregnant. Tommy had to immediately sell his beloved pick-up truck in favor of a suburban. Their house and their courage were made ready, and Charlotte Langley Moll was born on October 8th weighing exactly eight pounds and measuring 20.25 inches. If you are keeping score at home, that’s Miller (4), Bunny (4), Lily (3) and Charlotte (now 3 months). Christmas certainly had to be both wonderful and memorable for the Molls this year!
Zach and Taylor Riley also added to the FRM family in 2022. Their second child, Rachel Hunter Riley, was born September 16. She weighed seven pounds and two ounces and was 20.5 inches long. Big sister Zoe is very proud of her, following the initial shock. We feted Meredith and Taylor with a dual baby shower at the office, which was lots of fun but kind of awkward for the guys, given their lack of experience in such matters.
As previewed last year, Gray and Mallory Millsap were blessed with the birth of their first child, Mickey Quinn Millsap on April 27. Mickey weighed six pounds and 14 ounces and was 19.75 inches long. Gray and Mallory live in Dallas where Gray is an emergency room physician (he has some stories). Both sets of grandparents live in Little Rock, which makes for more visits from Mickey. Mark and Mary seem to be making more trips to big D as well.
Early in the year, Lauren Sanders was promoted to Controller. In 2021, Lauren had assumed most of the duties that Gail O’Donnell had vacated upon retirement. Lauren is a CPA and is eager to take on new challenges. In addition to Controller, Lauren also leads our portfolio accounting and reporting work, always with a smile on her face. Along with Abby McKelvy, CPA (CFO and Chief Compliance Officer), Stephanie Hills (Primary Client Administrator) and Trina Boyd (Portfolio Accountant), FRM continues to have a highly experienced and capable administrative group of whom we are very proud.
We were able to have most of our client meetings face-to-face in ’22, and for that we are very thankful. Given that things seem to have returned to normal following the pandemic, we encourage you to come to the office and meet some of the folks you may not have encountered in your dealings with us thus far. Until then, we thank you for your continued confidence in our work. It is a privilege to serve you. May God bless you and yours with good health, happiness and success in your endeavors in the new year.
Disclosure
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Foundation Resource Management, Inc. “FRM”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from FRM. Please remember to contact FRM if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services or if you would like to impose, add, or modify any reasonable restrictions to our investment advisory services. FRM is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. FRM claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. A copy of FRM’s current disclosure Brochure (Form ADV Part 2A) discussing our advisory services and fees or our GIPS-compliant performance information is available by emailing Abby McKelvy at amckelvy@frmlr.com.