Author Archives: Kathryn

An Open Letter to Warren Buffett and Quicken Loans – $1 Billion Women’s NCAA Bracket

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Women face daunting health and socioeconomic problems across the globe.  Thanks to efforts of the Gates Foundation and The Giving Pledge, awareness of these issues is on the rise.  But it also hits close to home right here in the U.S.
Just 23 of the Fortune 500 companies have female CEO’s, and it doesn’t get much better with the next 500, just 23 there as well, for a total of 46 out of the top 1,000 U.S. companies being run by women.  This bleeds all the way up from the bottom, with 1/3 of women in the U.S. living in poverty, according to the recently released Shriver Report.  This is here at home in the U.S., a country that is a global leader and influencer.  Like you, Warren, I am a portfolio manager.  I have done well with my company, but I cannot do what you can do: shed light on this issue from the very top.   Please introduce a $1 Billion NCAA Bracket contest for the Women’s Tournament.  It wouldn’t be March Madness without everyone being included.
Thank you,
Kathryn Schwartz
Pawleys Capital Management
Sources: Catalyst, The Shriver Report – A Woman’s Nation Pushes Back from the Brink.
© 2014 Pawleys Investment Advisors, LLC. All rights reserved.

Beware Rising Interest Rates

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As of March of 2012, the 10 year U.S. Treasury yielded 2.35%, and pundits said rates could not go lower – they did.  Afraid of the stock market plummet that coincided with the economic downturn, investors have fled to the safety of fixed income investments.  Following the recession of 2008-2009, investors poured over $1 trillion over a few short years into bond funds.  In the meantime, the S&P 500 has more than doubled in value, and those investors have missed out on historical investment gains.  There is a saying that while history may not exactly repeat itself, it definitely rhymes.  I caution against “reaching for yield.”  Longer term bond funds with below average quality will face downward pressure in a rising interest rate environment as new bond issues become more attractive than the older, seasoned bonds held by funds.  During 2013, long term U.S. bonds lost -9.92% as interest rates started to rise.

Launched in 1973,  the Vanguard Long Term Investment Grade Bond Fund is the oldest Vanguard bond fund.  When the Fed started raising short-term interest rates in 1993-1994, the fund plummeted over 17%.
VWESX

VWESX November 1993 through December 1994 – Yahoo! Finance

The time period from October, 1993 to November, 1994 was one of the most difficult times for bond funds.  Spoiled by the high rates of the 1980’s, investors sought alternatives to low rate bank deposits, CD’s and money markets.  Money poured into bond mutual funds in the months preceding this time period.  When rates started to rise, short-term funds and those funds that invested in lower quality securities lost significant amounts of money.  Fast-forward to today – interest rates have already started to rise, so it is VERY important to review bond mutual fund holdings for duration and average credit quality.  When rates rise, in general, the most volatile bonds are those with the longest maturities, deepest discount prices (such as zero-coupon bonds) and low credit ratings, so these are areas that investors should consider avoiding.  As always, review your overall asset allocation percentages and be sure you have a written plan for your financial goals.

By focusing on short-intermediate term high-quality bond funds and ladders of highly rated individual tax-free municipal bonds, investors can mitigate the downward pricing pressure created by a rising interest rate environment.  Keep your “safe” money safe.

© 2014 Pawleys Investment Advisors, LLC. All rights reserved.

NEW Updated Pawleys Dividend Fund and Pawleys Growth Fund Results

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NEW complete three-year performance through 2013: Pawleys Capital Funds

Last October, as a part of the Jobs Act, Congress gave a mandate to the SEC to lift the ban on hedge fund advertising.  While the structure of the Pawleys Dividend Fund and Pawleys Growth Fund classifies them as South Carolina hedge funds, the advisory fee is 0.75% compared to the hedge fund standard of 2% PLUS 20% of any profits.  The funds are both long-only domestic equity funds, and do not use any type of leverage.

If you are a real numbers-nut, here is additional detail about the fund performance, including performance benchmarking versus the Barclays Hedge Fund Index, historical performance net of fees, volatility and risk/reward ratios.

Pawleys Dividend Fund 2013

Pawleys Growth Fund 2013

© 2014 Pawleys Investment Advisors, LLC. All rights reserved.

Risks and Disclosures: 

This information regarding our services is not an offer of securities or investment advice and is provided solely for prospective clients to contact us.  Past performance does not indicate future results and you may incur losses.  

The Limited Partnership Interests offered hereby have not been registered under the United States Securities Act of 1933, as amended (the “Securities Act”) or any applicable state or foreign securities laws.  The Interest have not been approved or disapproved by the United States Securities and Exchange Commission (“SEC”) or any state or foreign regulatory authority nor has the SEC or any state or foreign regulatory authority passed upon the accuracy or adequacy of this private placement memorandum or endorsed the merits of this Offering.  Any representation to the contrary is unlawful.  Please contact Pawleys Capital Management, LLC to obtain a Private Placement Memorandum. An investment in one of the Pawleys Funds presents risks which are outlined in the Memorandum.   You must qualify as an accredited investor according to the Securities Act of 1933 (“the Act”).  Banks, insurance companies, registered investment companies, business development companies and small business investment companies meet the definition of accredited investor.  Natural persons must have an individual (or joint if married) net worth that exceeds $1 million excluding the primary residence, OR income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.  Business entities qualify if all equity owners are accredited investors.  Trusts must have assets in excess of $5 million, and may not have been specifically formed to acquire the securities offered.  Charitable organizations, corporations or partnerships must have assets exceeding $5 million.  Please consult with your tax or legal counsel if you have any questions regarding Rule 506 of Regulation D of the Act.  Resale restrictions apply. 

If you do not qualify as an Accredited Investor, please contact us regarding our Advisory Services which are available with no minimum financial requirements.  Advisory clients enjoy enhanced customization of portfolio management and financial planning services.  Pawleys Investment Advisors, LLC is a Registered Investment Advisory Company – SEC Firm CRD #155199.