Tim Eriksen’s outstanding presentation from the Value Investing Congress 2014, “Size Matters – Smaller is Better.” Tim’s First Internet Bancorp (NASDAQ:INBK) pick gained over 100% after his Las Vegas 2013 presentation.
About Time Eriksen
Founded firm in 2005. Based in Lynden, WA
In 2010-11 Sold 25% of management firm to a group led by Zeke Ashton of Centaur Capital. Started Cedar Creek Partners fund in January 2006.
Education:
M.B.A. – Texas A&M University ’97;
B.A. – The Master’s College ’91
Experience:
Walker’s Manual Inc. ’04-’06 – Covered unlisted, Micro-Cap and Community Bank stocks.
Peter Kiewit & Sons ’99-’04 – Administrative Engineer on $600 MM Benicia-Martinez Bridge.
Why is Smaller Better?
“It is impossible to produce superior performance unless you do something different” John Templeton as quoted in The Outsiders by William Thorndike Jr., p.1
“If you spend your energies looking for and analyzing situations not closely followed by other informed investors, your chance of finding bargains greatly increases.” Joel Greenblatt, You Can Be A Stock Market Genius, p. 23
“ample investment opportunities may exist in the securities that are excluded from consideration by most institutional investors. Picking through the crumbs left by the investment elephants can be rewarding.” Seth Klarman, Margin of Safety, p. 54
Size Matters: Smaller is Better!
Primary focus on companies with little coverage – Small Caps, Micro Caps, Unlisted Stocks, Spinoffs, Stocks <$5, etc.
Approximately 60% of public companies have a market cap < $100 MM
Historical Performance
- For the 50 Year Period ending in 2011
- $1 Invested in Large Cap stocks would have grown to $83
- $1 Invested in Small Cap stocks would have grown to $263
- For the 10 Year Period ending in 2011
- Average Annual Return for Large Caps was 5.0%
- Average Annual Return for Small Caps was 9.1%
Tim Eriksen: Conclusion
Smaller funds have a structural advantage over larger funds since the smaller fund can reap the benefits of investing in smaller stocks!
Tim Eriksen – First Internet Bancorp: What They Do
- Internet based bank that strives to provide all the services of a traditional brick & mortar bank with better rates, lower fees, and real-time online account access.
- Offers personal and business banking, investments, and loans
- E.g. Free checking. $500 min., pays 0.55% APY, up to $6 ATM rebate
See full Tim Eriksen’s Presentation on First Internet Bancorp in PDF format here.
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