Page 37 - April Report2022

Resilience
Investment/Finance Committee meeting minutes (6)
JSF’s cash position at the end of January was $2.1 mill. Net cash raised from the above investment actions total $3.5 mill giving JSF total cash resources of $5.6 mill. Over this 5-month forecast period outgoing cash expenditures are expected to total $3.3 mill (i.e. grants of $1.5 mill, operating expenses of $0.8 mill and Private Capital net outflows of $1.0 mill) leaving the JSF cash position as of June 30, 2022 at $2.3 mill.
7. Baxter Street International Equity – New Investment of $10 million - Prime is very high on
this non-US public equity manager. JSF has been on the Baxter waiting list for close to two years. Originally Prime envisaged a $6 mill investment but given the growth in the JSF portfolio Prime
now feels $10 mill is more appropriate. Baxter is focused on high quality growth companies with a concentrated portfolio of roughly 40 names. At present the portfolio is overweight IT and industrial equities. Baxter has underperformed over the last year so Prime feels the timing is good for this investment. Prime feels Baxter will complement the other two non-US equity managers – Silchester (value bias) and the Vanguard ETF – both of which will be reduced by $5 mill to fund the Baxter investment. The Committee agrees with the Prime recommendation to make a $10 mill investment in Baxter and fund this by $5 mill redemptions of Silchester and Vanguard Non US Developed Markets Index Fund. Eventually Prime envisages a further $5 mill reduction in the Silchester investment in the favour of the Vanguard Index Fund leaving $10 mill invested in each of the three non-US equity managers.
8. Semper Vic/Gardner Russo Update – Gardner Russo & Quinn manages the Semper Vic Partners LP fund, which totals $10.2 bill in size. JSF has been invested in this fund since 2007 (14 years) and as at January 31, 2022 the investment totaled $8.6 mill or 3.1% of the total JSF portfolio. Semper Vic is classified as a global equity fund. Over the last 10 years Semper Vic has delivered average market performance.
Gardner Russo is a folksy, lean organization with Thomas Russo (65 years old) and his son Christopher constituting half of the key decision makers. The fund’s portfolio is very concentrated with 5 names making up 50% of the portfolio (Berkshire Hathaway – 15%, Alphabet, Nestle, Mastercard and Compagnie Financiere Richemont). Portfolio turnover is minimal. The portfolio has a value bias although Russo claims he is style agnostic.
Prime likes Russo and thinks Semper Vic is a good investment to hold in the current rocky investment climate. However, in the long-term Prime will be looking at alternative ideas.
9. MAP/Heritage Fund Consolidation – In late 2021 MAP consolidated the 13 MAP Funds into a
single fund: the MAP Heritage Fund. JSF was an investor in three of these funds whose value totaled an estimated $4,413,000 as of June 30, 2021. These MAP funds have generated excellent returns
over the last 20 years. To Prime and the Committee this consolidation makes conceptual sense however we had several questions (unanswered) outlined in a November 22, 2021 memo sent to
Rick Morrison (and the Investment Committee). We note the estimated value of the JSF investment
in the MAP Heritage Fund was down to $4,154,040 as at December 31, 2021 despite strong energy markets. The only unusual distribution from MAP funds during late 2021 was $112,992 in December 2021. The Committee would be interested in Prime’s current view on MAP Heritage. MAP is part of the Private Capital portfolio over which Prime has discretion. Subsequent to the meeting Prime provided additional information on the MAP Heritage Fund.
10. Investor Fees – Prime presented an excellent rundown on base fees paid to various JSF fund managers plus fees paid to Prime Buchholz (JSF investment advisor) and US Bank (JSF custodian). Base fees totaled $2,628,210 or 0.91% of assets in 2021. This ratio has risen slightly over the last several years because Private Capital funds have risen as a percentage of assets and fees are higher in this space (see below).
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