Saga Partners, an Ohio-based investment management company, released its Q2 2019 Investor Letter – a copy of which can be downloaded below. The firm is known for being value-oriented and investing on misunderstood or undiscovered yet high-quality companies. Founded by Joe Frankenfield and Michael Nowacki in 2016, Saga Partners manages a public equity portfolio in separately managed accounts.
Joe Frankenfield held various roles at PNC and KeyBanc Capital Markets before co-founding Saga Partners. As a CFA charterholder, he is experienced in corporate banking, asset and liability management, and equity research. Frankenfield holds a bachelor’s degree in finance from Miami University.
Michael Nowacki ran Nowacki Asset Management before starting Saga Partners with Frankenfield. As a portfolio manager, he is experienced in managing customized accounts for clients. Nowacki holds a bachelor’s degree in economics from Ohio State University and a master’s degree in finance from Ohio University.
In its recent letter, Saga Partners announced its upcoming annual meeting with investors, which will be held on August 24. In addition to that, it also talked about its growth three years after inception. The firm now has 50 investors and manages over $16M.
“Annual Meeting & General Update
We’re excited to host our second annual meeting on Saturday, August 24. We think this is the best opportunity for us to speak directly with our investors and for you to better understand how your money is being managed. More details will be sent out soon and we hope to see you there!
As we approach our third year since launching the Saga Portfolio, we have been privileged to grow with a great group of investors that align with our philosophy. We have expanded outside our original group that largely consisted of close family and friends and now have over 50 investors and ~$16 million under management.
The minimum investment for new accounts remains $100,000. The minimum exists largely because managing many smaller accounts can eventually become burdensome. Several individuals have approached us with interest in investing but may not have had exactly $100,000 when rolling over an old IRA or brokerage account.
We understand people in their 20s, 30s, or 40s, may be earlier in their careers and have smaller total funds to invest than some more established investors. We like investing money for people who really align with our philosophy and typically do not have access to investment strategies like the Saga Portfolio. Hedge funds require accredited investors while Saga Partners does not have that limitation since we are structured as a registered investment advisor. There are fewer good investing options for non-accredited investors outside passive index funds. Later in the letter we go into more detail about the many pitfalls of actively managed portfolios, particularly within the mutual fund industry.
At this point we are still small enough that it can make sense to take on smaller new accounts with the expectation we are starting a long-term relationship that will last for many years to come. We can make exceptions on the minimum initial investment on a case by case basis if it makes sense to do so.
To help simplify our “back office” operations, we will only accept new accounts at the beginning of each quarter, with the next date being October 1. As a two-man shop, Mike and I have to wear many different hats and this will help streamline the onboarding process for new clients. We are always trying to simplify any administrative processes so we can spend as much of our time wearing our most important hat as Portfolio Manager. Existing investors can continue to contribute money as they wish.”
During Q2 2019, the fund reportedly outperformed the benchmarks. The Saga Portfolio returned 11.3%, which compares to Russell 2000’s 2.1% and S&P 500 Index’s 4.3%.
During the second quarter of 2019, the Saga Portfolio (“the Portfolio”) increased 11.3% net of fees. This compares to the overall increase, including dividends, for the Russell 2000 and S&P 500 Index of 2.1% and 4.3%, respectively.
The cumulative return since inception on January 1, 2017 for the Saga Portfolio is 73.0% net of fees compared to the Russell 2000 Index and the S&P 500 of 19.3% and 38.1%, respectively. The compounded annual return since inception for the Saga Portfolio is 22.1% net of fees compared to the Russell 2000 and S&P 500’s respective 7.1% and 13.0%.”
You can download a copy of Saga Partners’ Q2 2019 Investor Letter here:
You can also see the list of our 2019 Q2 investor letters and download them on this page.