- The objective of the fund is to create wealth for partners by achieving an investment return on partnership capital exceed that of a benchmark such as the S&P 500. As managing member of the partnership this is what we seek to accomplish. If we are unable to achieve this objective over a reasonable period of time, it is our feelings that partners would be better served and would create wealth much faster by investing in a low-cost passive index fund such as that offered by Vanguard.
- The investment partnership will always maintain a long investment perspective. Partners should similarly have a long-term investment horizon. Historically, the overall market has witnessed periods of volatility and periods of decline may be experienced over prolonged periods of time. As such, year to year results whether positive or negative should not be considered reflective of the overall performance of the partnership. Market prices may move upwards, remain generally unchanged or decline over a number of years. Therefore, performance should be judged based on the performance of a period of a no less than 3 years, but preferably for longer periods, say 5 years or more. Ideally, performance should at least cover the full cycle of the industry in which funds are invested.
- Partnership investment returns are calculated based on the purchase and sale of marketable securities and are therefore dependent upon market prices. As noted above, market prices may move upwards, remain generally unchanged or decline over a number of years. Most importantly, market prices however may not necessarily be reflective of the long term economic value of the underlying business. Therefore, we may from time to time witness instances in which the market price may decline, while concurrently the economic value of the underlying business may have risen.
- The Managing Partner of the WestRock Investments, has the sole responsibility of making all investment decisions. Therefore, poor performance should be attributed solely to poor decision making on the part of management. It should be noted that investments are undertaken when it is believed that taking such action will result in a high likelihood of achieving above average returns on the capital invested. And that the likelihood of this occurrence will be much greater than the likelihood of capital loss. Above all else, investments are identified and selected based on their perceived adequacy of investment safety.
- Investment returns are specifically not guaranteed at any time, nor will they ever be guaranteed at time in the future.
- The partnership will attempt to minimize management fees to Limited Partners to the greatest extent possible. The partnership currently charges a management fee. However, it should be noted that although this fee helps to defray the cost of managing the investment partnership, it does not fully cover all of the management costs. These excess costs are absorbed by the Managing Partner. Investment returns generated by the partnership are first allocated to the Limited Partners. This initial return is defined as the investment hurdle. If the hurdle investment return is not achieved, no allocation is made to me, the Managing Partner. Any return over and above the hurdle is divided between the Managing and Limited Partners as per the Limited Partner Agreement. Salient terms of the Fee Schedule can be found here. This arrangement is intended to foster greater financial alignment, and therefore overall investment results between the Managing Partner and Limited Partners.
- A High-Water Mark is in effect, meaning that in years when the investment returns do not meet the agreed upon hurdle, the deficit will be carried forward to the next period. Carry backs will not be allowed.
- Interactive Brokers serves as the custodian for partnership funds. The platform allows for redemptions of your investment capital quarterly, as per the Limited Partner Agreement. In addition, dividends you receive will be directly credited to your account. Remember, the Managing Partner does not have custody of your account, nor does the Managing Partner have the ability to remove your investment capital from your account. You have sole control of the capital in your account.
A more thorough and detailed explanation of partnership terms are laid out in your limited partnership agreement. Please do not hesitate to contact us should you have any questions or concerns about the investment partnership.