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Coho Capital Management, LLC’s H1 2019 Investor Letter

Coho Capital Management, LLC is an Oregon-based investment management firm founded by Jake Rosser in 2007. The company recently released its investor letter for H1 2019 – a copy of which is available for download below. Prior to founding Coho Capital, Rosser held equity research positions at various companies including Auxier Focus Fund, Pacific Crest Securities, and Alliance Consulting Group. He holds a master’s degree from Tuck School of Business.

In the letter, Rosser announced that the fund returned 20.7% for the first half of the year, which compares to the S&P 500’s 18.5% return. He explained that the firm continues to invest in ‘misunderstood’ and ‘special’ businesses and provided details about recent investments.

“Dear Partners,

Coho Capital returned 20.7% net through the first six months of the year compared to a return of 18.5% for the S&P 500. Despite an ebullient market, we continue to find value in misunderstood business models and special situations. We detail one of our recent purchases below.

“Ben Graham had a lot to learn as an investor…. buying those cheap cigar-butt stocks was a snare and a delusion.” – Charlie Munger

The dean of value investing Benjamin Graham beat the market by an average of 2.5% a year over two decades and essentially invented security analysis as a profession. Graham focused his analytical efforts on the discrepancy between price and value and maintained strict rules on selling once the two converged. He was a cigar-butt investor through and through, happy to take the last puff if the price were right. Given his formulaic approach, it is interesting that Graham made the vast majority of his fortune by violating his signature rules; First with position sizing, putting 20% of his assets in a single stock, Geico, and second by never selling, despite Geico’s valuation premium. In what is surely one of the greatest stock investments of all time, Geico rose over 200-fold from Graham’s purchase price.

“Ironically enough, the aggregate of profits accruing from this single investment decision far exceeded the sum of all the others realized through 20 years of wide-ranging operations in the partners’ specialized fields, involving much investigation, endless pondering, and countless individual decisions.” – Benjamin Graham, Postscript of the Intelligent Investor

Many investors begin their education by studying Benjamin Graham, and they are right to do so, as an investment approach premised upon careful study and prudence is sure to protect individuals from their biological impulses. Safe and careful, however, while necessary, are not enough on their own to deliver outsized returns. Cheap is great, but we want cheap and good. One way to define good might be to assess what made Geico such a spectacular investment.”

You can download a copy of Coho Capital Management, LLC’s H1 2019 Investor Letter here:

Coho Capital Management, LLC’s H1 2019 Investor Letter

You can also see the list of our 2019 Q2 investor letters and download them on this page.