Mr. Travis: Intrepid Capital Management runs three no-load mutual funds: Intrepid Capital Fund (ICMBX); Intrepid Capital Small Cap Fund (ICMAX); and Intrepid Capital Income Fund (ICMYX). We filed to offer our fourth, and likely final, fund for the foreseeable future, the Intrepid All Cap Equity Fund (ICMCX), which will probably be available late next month. We run, depending on the market values, $400 million to $500 million in assets, largely from high net worth private clients, although some of that money is from endowment funds and one particular public company defined benefit pension fund that we've run for probably 15 years since the founding of the firm. I work closely with four analysts who are both analysts and portfolio managers, and we come at the world a little bit differently in that a lot of the securities we own are not embedded in an index. Over the 12-year life of this firm I think where we have added alpha, if you will, is by turning over a lot of rocks in the smaller to mid-cap size equities and in the non-investment grade fixed income world, i.e., junk. We have owned and do own market caps as small as $70 million to as high as a Merck (MRK) and we have at times owned defaulted debt, but that's more of an outside pitch for us. Our typical place to play in the fixed income world is what traders will call cross-over debt, common BB+ type credit, of typically fairly short maturity and duration.
TWST: Last year you said that your expertise is based on finding inefficiencies
in these markets, whether it's junk bonds, fixed income or equities. How do you
account for your success in doing just that?
Mr. Travis: I think we come at the capital markets with a very different mindset
from many of our peers, many of whom I think are governed on a relative basis,
relative to a benchmark either because a large part of their business is driven
by consultants who want to be both sector-neutral and fully invested but who
also want them to create outperformance.
I would say that's a little bit of an oxymoron in my view. We are not, at this
point, driven by consultants nor are we compensated as individuals or as a group
relative to a specific benchmark. We are very absolute return focused, and if we
don't have a valuation that we like on a business or don't feel like we are
being adequately compensated for lending money in the form of a bond, our
default option is cash, i.e., for us usually a Treasury bill, which seems to be
the default cash choice that we've had here in the markets the last six or eight
weeks with potentially some of the problems in the money market world.
Tickers included in this excerpt: ACV, CTWS, HBI, JTX, MYL, TLAB, VIRC
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