I created the Hirschmann Partnership (the “Fund”) to give clients an investment vehicle with competitive advantages over other actively-managed funds. Such funds have performed atrociously over the last fifteen years with more than 90 percent underperforming the S&P 500. This is unsurprising given that most suffer from conflicting incentives, impatient clients, excessive diversification and restrictive strategies.
The Fund is unique because there is no management fee and I only earn a performance allocation when returns exceed a cumulative hurdle rate. Further, I have most of my net worth invested in the Fund. Most managers earn fees based on assets under management, incentivizing them to focus on asset growth rather than returns. Only 17% of mutual fund managers have more than $1mm invested in their funds.
Long Time Horizon
I select only patient individuals as Fund investors and exclude pension funds and other institutions. Pension fund boards have appallingly short time horizons, forcing the typical fund manager to focus on short term returns to avoid redemptions.
Good investments are rare. Yet the typical fund holds many investments (e.g. a typical mutual fund holds 90 stocks), which dilutes its best ideas and thereby ensures mediocre performance. In contrast, the Fund typically holds only its five to ten most attractive investments to maximize returns while maintaining prudent diversification.
The Fund has a flexible strategy that allows it to allocate capital to the most mispriced securities even if they are not part of its typical strategy of buying undervalued equities. In contrast, the typical fund must remain invested in its primary asset class even if the asset class appears very overvalued (e.g. bond and US equity funds at present).
Only accredited investors and qualified clients will be admitted as limited partners to the Hirschmann Partnership (the “Fund”). For natural persons, investors must meet SEC requirements including minimum annual income or net worth thresholds. The Fund is being offered in reliance on an exemption from the registration requirements of the Securities Act of 1933 and is not required to comply with specific disclosure requirements that apply to registration under the Securities Act. The SEC has not given its approval to the Fund, the offering terms or the accuracy or completeness of any offering materials. A registration statement has not been filed for the Fund with the SEC. Limited partner interests in the Fund are subject to legal restrictions on transfer and resale. Investors should not assume they will be able to resell their securities. Investing in securities involves risk. Investors should be able to bear the loss of their investment. Investments in the Fund are not subject to the protections of the Investment Company Act of 1940. Performance data represents past performance, and past performance does not guarantee future results. Performance data is subject to revision following each monthly reconciliation and annual audit. Current performance may be lower or higher than the performance data presented. The Fund is not required by law to follow any standard methodology when calculating and representing performance data. The performance of the Fund may not be directly comparable to the performance of other private or registered funds. Investors may obtain the most current performance data and confidential offering memorandum for the Fund by sending a request via email to email@example.com. See the confidential offering memorandum for the Fund for complete information and risk factors.