Where in the world are
you located? And how do I pronounce Islamorada?
 Islamorada in
the Florida Keys. The name means "purple isle," and its halfway between
Miami and Key West.
The key to pronouncing Islamorada is to know that the "s" is silent. aisle-a-more-AH-dah.
Once you get good with that,
try conch, Bahia Honda and Lignum Vitae.
What is the Tarpon
Folio?
Our portfolio manager has nearly all of his family’s life savings invested in the Tarpon Folio.
The Tarpon Folio is an innovative,
investor-friendly alternative to the traditional actively managed mutual
fund. It's built on a model we call a spoke fund. It is more transparent, takes more concentrated positions and
is significantly less expensive than the vast majority of mutual funds.
The portfolio is managed for long-term growth using value investing principles.
Fees are 1.25% of assets annually, assessed on a monthly basis. Turnover,
taxes and trading are minimized in the fund, and investors can customize
their accounts in several key ways, including tax
preference. Each Tarpon Folio account is also protected by three
types of insurance for a maximum of up to $11.5 million.
Here is a brochure on the Tarpon Folio, and more
info can be found
on this webpage.
This table also compares the Tarpon Folio with a mutual fund.
What is the Gecko
Folio?
We invest alongside our investors in the Gecko Folio, too. It's also a spoke fund.
In addition to the characteristics above, Gecko is managed to maximize income as opposed to capital appreciation like the Tarpon Folio. Gecko contains both stocks and bonds. Stocks chosen for the fund have similar characteristics to those in Tarpon and include secure and growing dividend yields. Bonds in the Gecko Folio require a few different analyses, too.
More
info can be found
here. Join our email list.
What is a spoke fund? Where can I find out more about spoke funds?
A spoke fund is a group of separate investor accounts linked to a portfolio containing most of the liquid net worth of that fund’s manager.
“Spoke fund” is short for “hub and spoke” model. The portfolio manager’s money is the hub and the spokes lead to each investor’s account. Any changes in the hub are simultaneously made in the spoke accounts. Thanks to technology, this can all be done pretty easily. Here is a simple illustration.
Find out more on our founder's blog, Cale In The Keys. Here is the definition of a spoke fund. Here is why Cale built a spoke fund to begin with instead of a hedge fund or mutual fund. And here is more info for other portfolio managers looking to build their own spoke fund.
What's with the
logo? 
It's a backcountry cowboy - a fishing guide
who specializes in the flats and backcountry areas of Florida Bay. He's
wearing a balaclava as
protection from the sun, and holding a pushpole to
move his skiff around the flats, which are typically too shallow to
motor through.
What is your investing
philosophy?
We
are a value
investing firm. That means we view buying a stock as purchasing
a long-term partial ownership position in a business, not as
a piece of paper that changes hands daily. We manage others'
money the same way we manage our own, and because of that, we
tend to study a company carefully prior
to investing. We build focused portfolios of 15 to 20 meaningful
positions in the common stocks of good businesses run by managers
we admire. We do our own research, keep transactions costs
low, buy for the long-term and above all ensure we buy shares
when they are cheap. We are solely concerned with getting
a good price on the shares of a few great businesses - independent
of economic forecasts, Wall Street consensus and financial media
noise. We believe this is the only rational way to invest.
Are you
aware you named your fund after a fish?
 Yes. Tarpon are
a revered sport fish in the Keys, where they also go by the name "silver
king." Tarpon can grow up to eight feet in length, live for fifty
years and weigh more than 200 pounds. In addition to
acrobatic leaps and large silver scales that resemble armor
plates, tarpon have wide, clear eyes, which we thought was a
pretty good metaphor for value investing.
And the 'Gecko Folio' name has its own origins...but you'll have to ask us about those in person.
How are you different from other firms?
Click here for the long version. In short, here are four of IIM's biggest
differentiators:
- We are an independent, fee-only firm, which means we
have no conflicts of interest and have taken a fiduciary
oath.
- We have invested a significant portion of our own savings in the Tarpon
Folio. It is estimated that only 43% of mutual fund managers
own shares in the portfolios they manage.
- We provide full transparency into what we are doing with your money,
and why, and attempt to educate our investors as much as possible about
the companies we all own.
- Our fees are low and based on how well we do our job, which is to find
the best possible companies we can to include in the Tarpon Folio.
The Tarpon Folio is also significantly different from the average actively
managed mutual fund, as described
here.
Who will be managing
my money?
 The portfolio manager for the Tarpon Folio is Cale Smith,
the managing partner of Islamorada Investment Management. Read a letter from Cale here.
Formerly the managing director of Hawk Associates in Key Largo, Florida, Cale
also served as the director of research for the firm's AMI Research division. Prior
to joining Hawk, Cale was the lead equity analyst for an independent
research provider near Washington, D.C. and provided analysis for a hedge fund
run by the managing partner of the firm. In addition, Cale has held management
positions in several telecommunications companies, including the world's first
commercial Internet service provider and an international RF (radio frequency)
engineering firm. Cale also competed in the 2000 Olympic rowing trials as a single
sculler.
Cale is an honors graduate of the U.S. Coast
Guard Academy where he majored in management. While on active duty in the
U.S. Coast Guard, Cale served as a deck watch officer on a buoytender in
Honolulu, Hawaii. He also served as a lead instructor at the National Aids
to Navigation School in southeast Virginia. He obtained an MBA from the
College of William & Mary in 1998 and holds an executive certificate
in financial planning from Georgetown University.
Cale is married to Margie of Glenview, Illinois, and they have two daughters. The
Smiths moved to Islamorada from Washington, D.C. in 2005. There are three
generations of Smiths living in the Keys.
What happens if
he is eaten by a shark?
The money and securities in your Tarpon Folio account are held by our custodian FolioFN,
and are protected by three levels of insurance for a maximum of $11.5 million
per joint account. You are provided with full contact info for Folio during
the sign-up process. In the event anything unfortunate should happen to
the portfolio manager, you will still be able to contact Folio directly to withdraw
your money as appropriate. In addition, Islamorada Investment Management
has made arrangements with another fee-only firm to assist our clients with
transitioning their assets after such an incident.
How do I know my
money will be safe?
See the answer to "eaten by a shark" above. While
no one can insure you against a decline in the value of your portfolio
holdings, the cash and securities in your Tarpon Folio account will
be as secure as possible. We cannot move, transfer or otherwise
run off with any of your money. All we can do is buy and sell
securities in the account set up for you. In addition, you can
check for any disciplinary actions taken against us by searching
this site (our record is squeaky clean), and we will provide you
with our Form ADV Part II during our initial conversations as more
background.
What kind of stocks
do you invest in?
We invest in companies that have underappreciated strengths
when trading at inexpensive valuations. We are seeking companies
with attractive owner's
earnings, a large margin
of safety and a signficant chance for large gains over the long-term. We
pay particular attention to the company's financial fundamentals and
competitive positioning. We also look for opportunities among
companies experiencing forced selling by their current investors, which
might include spin-offs, low-priced companies, and/or companies emerging
from bankruptcy.
We do not attempt any economic forecasting, nor do we obsess over short-term
results - whether good or bad. We also do not unnecessarily limit
ourselves to specific size companies nor industries. We do stick to companies
and industries we know and understand, however, including the consumer
discretionary sector, media and transportation companies, select financial
companies, certain technology subsectors and telecommunications.
How old is your
firm, and will it be around in three years?
Islamorada Investment Management was formed in August
2008. The Tarpon Folio was launched in November of 2008. The Gecko Folio was launched in January 2009. We
are well-capitalized and intend to be around for the next 30 years.
Does the world
really need another fund?
The Tarpon Folio isn't just another fund. While
the world probably doesn't need another mutual fund or hedge fund,
we think investors have long deserved something as transparent
and low-cost as the Tarpon Folio - run by a manager who is accountable
by both action and net worth. We're in it together with our investors,
and we intend to maximize the return per dollar of fees paid by all
of us.
Do you know Jimmy Buffett?
Ah, no. But never mind Jimmy...listen
to Islamorada's own Dave Feder. Buy "Saranade". You'll
pass out.
Who can
I call to go fishing with down there?
Captain
Rich Tudor or Captain
Ted Wilson.
When is it acceptable for
tourists to feed the seagulls?
Never.
Do you have a blog?
Absolutely not. They are a blight on civilization.
Never before has so much been written by so many and read by so few. Blogs
are nothing more than the egotistical rantings of various maladjusted wonks
addicted to the sound of their own echo chambers. Never
mind. Blogs are great! Here is ours: http://www.caleinthekeys.com
Do you use Twitter?
Yes we do. http://twitter.com/caleinthekeys
How can
I make a really good margarita? 
Watch
this video for a secret email address and the world's finest margarita recipe.
|
