Stacey Muirhead Captial Management


We are interested in developing a meaningful long-term relationship with everyone who shows confidence in us by entrusting their capital to our care. We attempt through strict adherence to the governing principles detailed below to attract those who expect to stay with us a long period of time. While we acknowledge the necessity of generating acceptable investment results which justify such a long term horizon, we think that an equally important determinant to sustaining a successful relationship with our investors is ensuring that they have an adequate understanding of our principles of operation including both our objectives and our limitations. We think these governing principles are what set us apart from many other investment alternatives and we believe that the understanding and acceptance of these principles by our investors will afford us a sustainable competitive advantage in our efforts to generate superior investment returns for them.

Our governing principles are:

  1. The interests of our investors always come first.

    We know that if we serve our investors well, our own success will follow. While no investment manager can guarantee results, we do promise that we will exercise a standard of care that we would expect to receive in similar circumstances. This means acting with the ultimate professionalism in all situations and being ever mindful that our reputation rests on honesty, integrity, confidentiality, meticulous attention to detail and humility.

  2. We are unwavering in our commitment to fully comply with all applicable legal and regulatory requirements.

    The investment management profession is highly regulated. Given our belief in the unassailable importance of investor capital and savings, we are fully supportive of the need for appropriate regulation in our industry. We are steadfastly committed to complying with not only the letter but also the spirit of the laws, rules and regulations that govern us.

  3. We will adhere to our investment philosophy under all circumstances.

    We want every investor who entrusts capital to our care to have an appropriate understanding of our investment philosophy and approach. While we always strive to improve our skills and to remain flexible and willing to adapt to changing circumstances, we also believe in the importance of having a consistent framework for investment decision making. We strongly encourage anyone considering allocating capital to our care to become familiar with our published investment philosophy.

    Experience has taught us that executing our investment approach is more of a marathon than a sprint. It is a long term journey where we expect to encounter the occasional bump on the road. We believe that investors will most likely stick with us if they know what to expect. We also hope that our investors will derive comfort from the knowledge that we will not deviate from our stated investment approach.

  4. Our only performance objective is to maximize the compounded annual return for our investors over the long term while seeking to minimize the risk of permanent capital impairment.

    We want our investors to both eat well and sleep well. While we are as interested in hitting investment home runs as anyone else, we also want to ensure that we don't strikeout. We report on our progress in attaining our performance objective in a variety of ways, all of which are transparent, relevant, and easily measurable by our investors.

    TOne measurement we utilize is whether we are delivering real absolute returns to our investors over the long term. To assess this, we compare our results after all fees and expenses against the rate of consumer inflation in Canada. While we do not expect to deliver positive absolute returns every year, we must do so over the long term if we are to add value for our investors. Of course, we must beat inflation by some reasonable margin to also reflect the eroding effect of any taxes on an investor’s true absolute investment returns over time.

    Another measurement we use to assess our success in attaining our performance objective is our overall results against the collective market experience. When considering our returns against those from the overall market, we are more concerned with relative performance and not by whether we are plus or minus in any single year. We believe that a year in which we are down 10% when the overall market is down 20% to be a better performance than a year in which we advance significantly at the same rate as the overall market. We know that good relative results against the overall market return will lead to good absolute results over time.

    No individual benchmark index can serve as the perfect indicator of representative returns from the overall market and we will routinely compare our performance against a variety of relevant market benchmarks. We make no attempt to ensure that our investments closely mirror any specific index and we do not expect to beat the market every year. Our experience suggests that our best relative results will most often occur during periods of declining or static markets while our worst relative results, but not absolute results, will be during periods where markets are showing significant advances. While there are certain to be good years and bad years both relatively and absolutely, we are focused on achieving returns for our investors that beat the market over the long term.

    The last measurement we use in assessing our success against our stated performance objective is to compare our results against competitive alternatives available to our investors for the deployment of their capital. While we do not expect to lead or even be near the top of the performance tables in any single year, over longer measurement periods, we recognize that we must deliver acceptable investment performance when compared to other available choices to be successful at meeting our performance objective for our investors. From time to time, we will compare our long term results against the returns achieved by a representative sample of competitive options so that our investors can assess how we stack up.

    Finally, while our thinking is that ten years or even more represents a true long term horizon, we believe that five years is the absolute minimum time period that constitutes long term. Ideally, any measurement period should include both strong and weak market conditions to be truly representative. We would discourage anyone with less than a five year view from allocating their capital to our firm.

  5. We want to do well for ourselves only when we do well for our investors.

    Most of our compensation is derived from our pay for performance arrangement with our investors. This arrangement not only rewards us for superior returns but penalizes us for poor results. While not ensuring success, we would like to think that this emphasis on pay for performance more closely aligns our interests with those of our investors than most other investment alternatives. This arrangement also forces us to act frugally with respect to the ongoing operating expenses paid by our investors and to continually look for ways to appropriately reduce costs. Further, because we have no third party marketing affiliations, there are no sales charges for our investors to either contribute or withdraw capital.

  6. We keep our personal investment capital invested alongside our investors.

    Put simply, we eat our own cooking. We want our investors to know that our capital is invested on the same basis as their capital. When our investment results are poor, we hope that our investors will derive some comfort from the fact that we will also be suffering in a similar fashion. Jeffrey Stacey maintains all his investment capital in the Stacey Muirhead funds. Jeff, along with members of his family, are collectively the largest investors in the Stacey Muirhead funds. Other Stacey Muirhead personnel also have significant personal investments in the Stacey Muirhead funds.

  7. We see ourselves as investment focused rather than marketing driven.

    Quite simply, we do not measure our success by the size of assets under administration. We are always more concerned with generating excellent investment returns on the assets we already manage than we are with gathering additional assets under management. Consistent with this view, we will stop accepting capital from new investors rather than allow excess capital to dilute our long term investment performance. If we must make a choice, we would rather be the best than the biggest. We are committed to a standard of fair and honest competition and try to attract investors based on our own merits. In fact, we believe that the best relationships result when new investors find us through recommendations from existing, satisfied investors rather than through extensive sales and marketing efforts on our part.

  8. We embrace a standard of candid and fair reporting in all of our written communication.

    Our overriding reporting mindset is one of presenting our investors with the information we would want to know if the roles were reversed. As such, our reporting is focused on what we own and why we own it. In defining candid, we mean presenting all the pluses and minuses needed to make an informed judgment about our operations and results. By fair, we mean taking all reasonable steps to ensure that everyone receives the same information at the same time.

  9. We will conduct an investor presentation at least once a year at which we will report fully on our operations and results.

    We think that it is important for our investors to have an opportunity to hear directly from the people who are responsible for allocating their capital at least once each year to receive an honest and candid report on our operations and results. We are also pleased to answer all questions anyone may have at these presentations. While we are committed to providing exemplary service and will always do our best to meet the needs of our investors, we view these investor presentations as one of the cornerstones of our reporting relationship with our investors.

  10. In an intellectual capital business such as ours, the principal asset our firm possesses is its people.

    We seek to attract and retain a committed team of people to our firm who possess an abundance of ability, work ethic and integrity. We believe in supporting our people with all the resources and training necessary to create and sustain an intellectual competitive advantage. We also strive to exploit the benefits of a partnership culture through a highly incentivized compensation structure for everyone based on the overall success of the firm. Without the best people, we cannot be the best firm. We strive to maintain a working environment based on collegiality, teamwork, trust, respect for each other and an unwavering commitment to excellence. Finally, we believe it is important to have fun at work.

  11. We believe in the importance of supporting the communities from which we benefit.

    We have a fundamental aspiration to be about more than our own self-interest. Our corporate policy is to donate at least 1% of our pre-tax profits each year to charity. We also encourage our people to be active in our communities and to contribute financially and through volunteerism.

“If principles become dated, they’re not principles.”

Warren Buffett


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