Gregg Powers wrote: >>>>>Second, my firm runs $3.2 billion of 'other-peoples-money'. This means that I am a fiduciary and required to prudently manage my client's assets. Qualcomm's rapid appreciation created an arithmetic conundrum for me and my firm. If we never sold a share, we would have held more than $1.2 billion of the stock and QC would have represented over thirty percent of our assets under management. Despite my analytical sentiments on the topic, such would have been an indefensibly large, irresponsible and potentially legally actionable, allocation for a firm that represents itself to clients as value-oriented and diversified. Beyond this, many of my clients impose strict limitations on maximum position size, i.e. no security can exceed 5%, 10% or 15% of total portfolio value etc. In these cases, our sale decision was contractually stipulated. Within the context of the above, we sold the minimum amount of stock that we could as fiduciaries. As Moat correctly pointed out, QC is still PCM's largest position by a very large margin, so our sale decision was NOT linked to a change perceived fundamentals or some change in my sentiments towards the company or its management.
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Given your insight of this business and its potentials, I wonder what W.E.B. would have done for his clients?
Perhaps you could set up a separate vehicle to deal with the "problem" (e.g. for those clients who opt not to take capital gains). Imagine back in 1986, and again in 1991, one understood that the right way to think about DOS and Windows was to think in parallels to a language, a language like English (we can't rip Windows out for the same reasons why we can't rip English out). Imagine back in 1990 one understood that that same thought applied to Cisco's routers (Cisco's routers talk to each other using its own proprietary language, hence blocking out all other devices). Imagine one understood that, and then reduced his holdings during the *early* years of those companies' ascendency (rather than *adding* shares).
PCM was QCOM's largest holder, you were *early* due to your *insight* (of its IPR).
If I was a client of PCM and had all this gain (up 8x?), I would much rather you used your *insight* to deal with the stock rather than selling it based some arbitrary rule (imposed by PCM, SEC, certain clients, or whatever).
Businesses like these don't come around in tech land very often right? Is there a more creative way for PCM to deal with this "problem"? (Individuals have such an advantage!)
I hope you did not mind the suggestion (and that's all it is, a suggestion). Thank you for being here on SI. |
