Why Invest?

Can Active Management Provide Value?

Why not just invest in an index like the S&P 500?

I believe that actively managing a low-cost, concentrated portfolio of high-quality value stocks will outperform the general market over the long run. Large investment companies and pension funds have limits and restrictions on what they can invest in. This puts the smaller investor willing to do some research at an advantage.

Most large money managers can only consider investing in large capitalization stocks because they have to deploy a large amount of capital and can’t justify investing in smaller companies. This results in smaller companies being less followed, less analyzed. This can result in the astute small value investor chance to find undervalued stocks.

Large money managers also have to stay consistently invested when security prices are overvalued.

This again provides us, as value investors, a chance to cash out and wait on the sidelines until better opportunities arise. In investing, sometimes the best thing to do is nothing at all.

Investing directly in a low-cost S&P 500 ETF is a good answer for most people that don’t believe the market regularly provides inefficiencies and opportunities that can be taken advantage of.

As more and more investors take the easy way and index, the better it becomes for value investors like us. This is because less investors will be performing research and analysis to find undervalued companies.

As long as there are people that believe the market is perfectly efficient and can’t be beaten, there will be opportunities for value investors to outperform and generate superior returns. I believe that the market is mostly efficient but acts irrationally at times.

People talk about diversification, but I consider investing in a basket of 500 stocks that I have no idea about to be a form of “de-worse-ification.” Billions of dollars are invested in stocks with complete ignorance of underlying business fundamentals. This strategy is for guaranteed mediocrity.

I’d rather invest in 6-12 high-quality companies that I’ve thoroughly researched and intimately know. That’s what this investment fund will be all about.

As long as portfolio turnover (how frequently stocks are bought and sold) and expenses remain low, a value investing strategy can provide superior returns. I expect to turn over my portfolio no more than once or twice a year. I’d love to be able to find companies that I can hold forever, but it only makes sense to sell stocks once they’ve reached or exceeded their intrinsic values. That frees up cash to find other bargains.


The goal of my fund is, first and foremost, the preservation of your capital.

I expect my investments to have a margin of safety with high upside and limited downside. It’s a “Heads we win, tails we don’t lose much” kind of strategy.

Secondly, It is to generate positive returns on your capital that outperform the general stock market.

Most money managers are paid if they beat a certain index or benchmark, even if they lose money. So if the S&P loses 15% and the manager only loses 10%, they still get paid. I don’t believe managers should be paid for losing clients’ money. This is why I set an absolute level hurdle rate for me to surpass in order to get paid performance fees.

I only get paid a performance fee if my investors make greater than a 5% return in any year. This aligns my interest with my investors.

For Interested Investors

  • All investor money is managed in separate accounts via the Interactive Brokers platform.  A link is sent to investors allowing them to open an account.
  • RTN Investments never has physical custody of investor funds, but is allowed to make buy or sell decisions for investor accounts.  This allows investors peace of mind that funds are always in their control.
  • RTN Investments is a small firm, allowing each individual investor to get personalized attention and ensuring effective communication.
  • 1% management fee charged for qualified investors, 2% management fee charged for non-qualified investors.

  • Qualified investors pay a performance fee of 20% of profits in excess of a 5% hurdle rate.  If the hurdle rate isn’t achieved, there is no performance fee charged.
  • Non-qualified investors do not pay a performance fee.
  • RTN Investments uses high-water marking so investors don’t pay performance fees unless the investor’s account has reached a new high over a certain period.
  • The hurdle rate contingent performance fee and high-water marking helps to make sure that the client’s interests are aligned with RTN Investments.

See RTN Investment’s form ADV  link below to get more details about fees, methods of analysis, and the business in general.

Current Holdings

Below is a list of current holdings by RTN Investments.

  • Micron Technology (MU)
  • Canfor Corp (CFPZF)
  • Thor Industries (THO)
  • Advanced Energy Ind. (AEIS)
  • Louisiana Pacific Corp. (LPX)
  • United Therapeutics (UTHR)
  • Current holdings as of January 3, 2019