How We Approach Our Work.

There is a tremendous amount at stake in determining who to partner with when hiring an advisor. Most firms try to earn that trust through highlighting their assets under management as if size is aligned with high-touch relationships (it is not). At Private Capital Management, while we manage substantial assets too, we do not believe that numbers are what makes a firm worth trusting. We define a win differently: not by how big we are, but how well we serve the people whose money we manage. We measure our success by the longevity and strength of our relationships — built on shared values, honest communication, and portfolios positioned for long-term, tax/cost-efficient growth. We neither desire nor expect to be the right fit for all investors, and our boutique model speaks to that expectation.

A key factor to be aware of when working with the team at Private Capital Management is that our firm’s DNA is based on proprietary equity research that focuses on valuation analysis and has periodically included activism.  Our team includes past and present members of public-company boards and, on two occasions (one currently), the Chairman of the board of companies we have invested in.  The firm’s partners have also earned considerable wealth for their families, and we eat our own cooking.  While today’s “broker-advisor” model engenders significant separation between the advisor you work with and the investments you hold, when working with our firm you are dealing directly with professional investors. We are serious when we describe ourselves as professional investors rather than brokers (repackagers of others’ work and thinking).  If that is not a distinction that you value as much as we do, this is probably the wrong fit.

We have been investing for clients in Naples, Florida, for nearly 40 years.  That means we’ve often worked with and for clients who’ve already celebrated their 60th birthday and have gained a sophisticated understanding of the importance of “sleep.”  Investing for sleep means that we fine-tune portfolios to manage against downside market risks – the types of portfolios that can be maintained during periods of tumult, recession, or geopolitical uncertainty.  The right portfolio is durable, whereas the wrong portfolio is one that leaves a client feeling anxious and struggling to sleep when market conditions are hard.

It is common to see our building's parking lot half full at 2:00 PM on a workday. We have been an anchor tenant in this building for 25 years now. Fifteen years ago during market trading hours this parking lot was jammed. While technology has enabled other tenants (all financial services firms) to work from home or elsewhere, we believe in the power of being at the office – collaborating, sharing, and debating the ideas that allow us to run our clients' money well. Because brokers today centralize and outsource investment decisions, they can focus their time prospecting for new clients and buying you lunch. By contrast, we are an "old-school" investment boutique with our cars in the parking lot.  This tells you that we are here to serve, relentlessly focused on finding the right investments to suit your needs and grow your capital.

Our concierge services team, a group of six team members, is here to serve you, our clients. In Naples, where the large institutions are all chasing the same $25 million to $100 million clients, many prospective clients tell us that they get subpar service. This is why our concierge team was created. Particularly for our more seasoned clients, the simple kindness of offering to drop off a form for signature, sending a car to your home to pick you up for a meeting, or communicating directly with your CPA and estate planning team can make all the difference in a lasting relationship. Long ago we recognized that our clients value a firm that understands we are in the "solutions" business, ready to serve you professionally and respectfully when and where we can. Do we charge extra for this? Not a chance. It is our privilege to serve you.

Our firm was created here in Naples by Miles Collier in 1986 to serve him and his immediate family. Our Naples office is our headquarters, where all but one of our partners reside. THIS IS OUR HOME, and that means two important things. It means we know and understand this community and that the way we conduct ourselves and treat you matters greatly. While Naples has changed tremendously since the 1980s, it remains a small town where we work by reputation as a collection of professionals who have an enduring understanding of what it means when we say that "integrity matters." At our firm, partners and employees measure their time here in decades, not years.  This is a stark contrast with the unsettling trend among some brokers, CPAs, and estate planning attorneys who seem to change employers every two to four years. Brokers can "cash in" when they drag their clients (you) from firm to firm, but the lost opportunity and focus that results from those moves are hard to measure. We recently took a firm photo of everyone who has been with us for more than 20 years. That group is pictured below – it comprises 40% of our current employees and more than one-half of our firm's owners.

We talk about defining wins, and this determines how we work together and what creates enduring and successful investing partnerships with our clients. The other side of that coin demands that we also define what failure looks like and how it happens. Internally, we talk a lot about longevity. For decades, studies have shown that the average retail investor captures somewhere in the vicinity of one-half the market's return over time.  While this sounds implausible, it is a finding that has been confirmed by many studies for decades now.

So how do we fail you? We fail if we prioritize our fee stream over your success. The truth is that many clients rely on us to balance out their investing instinct to chase the "hot dot" and quit on a proven investment during a period of explainable underperformance. Too many advisors simply seek to assuage their clients’ desire for the next hot thing, since counseling them to "stay the course" can be akin to telling our kids to eat their broccoli. We fail you when our advice facilitates you chasing fads, encourages portfolio changes that are made abruptly or emotionally, or deviates from our responsibility to help you prudently deploy capital opportunistically with a healthy degree of skepticism toward conventional wisdom and the most popular investments of the day.

Particularly among high-net-worth clients we too often see portfolios that are unduly complex and difficult to assess due to moving parts, costs, tax inefficiency, and general ineffectiveness. Our view is that complexity most frequently serves the advisor far better than it serves you (the client). Portfolio complexity does not equate with portfolio success or compounding. If your portfolio construct requires you to pay an advisor simply to explain to you what you own and why you own it, the relational value resides with the person who controls that information. For many advisors this is both self-serving and far too common.

We accept complexity when and where needed within a portfolio.  However, our experience also tells us that complexity can introduce higher costs, tax inefficiency, and undermine client confidence in their portfolio during times of market duress. Since we define wins in terms of longevity and compounding unrealized gains, we see unnecessary portfolio complexity as an obstacle to your level of confidence in what you own and your ability to sleep well over time. We seek a shared understanding with our clients in the portfolios we build and maintain for them, believing that when we do that we and you will both harvest good results with a high degree of comfort and confidence during the journey. Complexity does not make an advisor smart – it is not your friend.

At the risk of oversimplifying a complex process, professional investing shares many parallels and principles with those that successful farmers have applied for centuries. First and foremost, farmers who run successful and sustainable operations recognize that they are stewards of something precious and irreplaceable - the land. When we invest client capital, we feel the weight of responsibility to steward and grow what has been entrusted to us, knowing that the assets we manage are often the culmination of a life's work or even the attainment of multiple generations.

Where farmers monitor their soil, weather, crop maturity and market price moves, we monitor valuations, interest rates, earnings growth and a broad range of broader market developments to identify businesses that are positioned to compete, endure and prosper long term across varying market scenarios. Where a farmer knows when the conditions are right to plant, we know that the success of an investment is often determined by both entry price and the exit.  Farmers are endlessly tending their fields as crops mature.  We monitor corporate progress, management’s intelligence and consistency in pursuing strategic initiatives, and the rising and falling risks associated with each investment we make. Finally, farmers know that every season has a natural conclusion - a time to harvest what has grown. Investors who succeed on their clients' behalf know that harvesting winners is important because risks rise when capital overstays its welcome.

Successful farming and investing are about disciplined commitment to an exacting and repeatable process designed to yield good outcomes. Farmers, like our team, understand that with the right process, diligent monitoring, and a keen sense of when it is time to plant and to harvest, they can succeed over cycles that can be repeated over a lifetime.