Mr. Rolfe: Wedgewood Partners was founded in 1988. We are a boutique investment management firm. We have one single investment philosophy. We are a focused, large-cap growth firm. We are based out of St. Louis, Missouri. Our clientele consists of both high net-worth families as well as institutional accounts. As we speak, we manage approximately 530 million.
TWST: This has been an unusually tough 24 months in the stock market with its ups and downs and record volatility; how did you fare during this period, especially with a focused portfolio like you have?
Mr. Rolfe: Well, to be blunt, and not withstanding the ripping market since last March, we have more than held our own, but it's been tough. At times, really tough. Without a doubt one of the worst bear markets on record - and the greatest test of any of our careers.
Everyone in this business, no matter what side of the table they sit on - client, consultant, manager - has been put through a career-ringer. It's been a severe test of intestinal fortitude and intelligence; it's been a test of investment philosophies and investment processes; it's been a test of firm's business models, it's been a test of resilience. All that said, we believe we came through rather well.
You specifically asked about our "focused" philosophy. Focused portfolios are often assumed to be "riskier." Many could be, I suppose. But we have a long history of managing through bear markets reasonably well. We have not gotten crushed in past bear markets.
In down markets, the weaknesses of a focused strategy - or any investment strategy really - would no doubt come to the fore - particularly the very brutal bear market in 2008, and into early 2009. Let's face it. If you were a fully invested, long-only manager, there was little place to hide. Managers of all stripes were mauled pretty good - bad pun, but it fits.
We are somewhat pleased to report that during the six consecutive quarters the stock market declined - from September 2007 through March of 2009 - -44% in the S&P 500, and a -41% decline in our style benchmark, the Russell 1000 Growth Index, we (our client composite portfolio) declined roughly -30%. Again, we say that we're somewhat pleased. Obviously sharp negative numbers are not fun, but on the other hand, there were more than a few instances of managers large and small, unknown and very well known, that really got hammered hard during the Great Bear Market of 2007-2009 which, of course makes it doubly difficult to regain losses. Now to the rebound. We're very pleased to report that as we speak we're considerably ahead of our benchmark since the March lows - and up 62% year-to-date.
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