About Me
Dan Sievers, CFA
Dan Sievers is the founder of Sawbill Capital LLC, an investment firm with a concentrated long-term intrinsic value strategy. Prior to founding the firm in 2024, Mr. Sievers was a Partner and Research Analyst at Fiduciary Management, Inc. since 2009. Mr. Sievers’ investment career began in 2008 as an associate analyst at Evergreen Investments (later part of Wells Capital Management). Mr. Sievers received a B.A. in Mathematics (Magna Cum Laude) from Boston College.
Business Principles
INVESTORS ARE PARTNERS
Partners have mutual obligations to each other.
Our obligation to investors is to do our very best on their behalf while doing business in an exceptional way, and consistently providing them with clear, timely communication on how their capital is being managed and how our investment process is being implemented. Ideal investors are those whose objectives are aligned with ours, who focus on evaluating process over short-term outcome and who, within reason, maintain a long-term time horizon.
Broad Fiduciary Duty
Our duty is first and foremost to our investors.
When we take on the responsibility of managing someone else’s money, we owe them our best efforts toward achieving the agreed upon goals. Any conflict arising between the long-term best interest of the investor and any other consideration, including our own financial interests, will be resolved in the interest of the investor. The standard to which we hold ourselves is not whether the investor would agree to something or not (which may be biased by the asymmetry of knowledge and expertise between us), but rather whether we, with the expertise that we have on a topic, would agree to something if we were in the investor’s shoes.
Alignment of Interests
Mutual, aligned interests at all levels defines our culture.
Alignment of our economic interests with those of investors is the best way to assure that our actions will always aim to advance the long-term interest of investors. Alignment must permeate all aspects of the investment operation, from the fee structure, to terms, to how success itself is defined.
Success
Success is the safe compounding of investors’ capital at attractive long-term absolute rates that exceed their opportunity cost of comparable risk.
“Safe” means minimizing the risk of permanent capital loss. Our approach is designed to protect capital ahead of reaching for extra returns. “Attractive rates” refers to rates that are better than other generally available alternatives than can be obtained without sacrificing safety of principal. “Long-term” means over a full market cycle spanning 5-10 years that includes a recession, a recovery and a peak in both general economic and market conditions.
We focus on long-term results, rather than on trying to manage short-term volatility, and can add the most value when investors’ goals are aligned with that long-term time horizon.
Doing Business in an Exceptional Way
We set and follow the highest ethical standards in all we do.
Sometimes it is easy to discern the line between right and wrong. Other times there are shades of gray among the choices we face, where we can honestly say we are not sure if something is problematic or not. We believe the mere need to ask whether something is the right thing to do or not usually implies that it is not. Consequently, our practice is to stay far away from anything that is remotely questionable, even practices that are considered ‘industry standard’ or ‘widely accepted.’ A manager’s actions must pass his personal litmus test of ethical behavior, which may represent a higher standard than common industry practices.
Investing Philosophy
Several important concepts inform our investment philosophy and form the foundation upon which we confidently invest our clients’ assets:
Intrinsic Value – We believe a stock’s worth is best determined by the underlying business’s long-term economics, not by what others are willing to pay in the short-term.
Margin of Safety – We determine an investment’s margin of safety by the combination of the quality of the underlying company and the discount from a conservative appraisal of intrinsic value offered by the price.
Long-term Time Horizon – We focus on achieving the best possible safe compounding of capital over a period of many years rather than managing short-term volatility of returns.
Rational and Disciplined Execution – The market occasionally misprices securities for behavioral reasons. These arise due to market participants reacting to developments emotionally rather than rationally and to some market participants’ misaligned incentives. By remaining rational and disciplined in managing our portfolio, we can take advantage of the market’s mistakes while guarding against mistakes of our own.
Concentrated Portfolio – We seek investment opportunities that combine a company of high quality with a price that is at a material discount to intrinsic value, which arise only infrequently. After constructing a portfolio where being wrong on any single judgment should not result in a material loss of principal for the portfolio as a whole, additional diversification is more likely to increase rather than reduce risk by forcing the inclusion of increasingly inferior investments.
Investment Process
Guided by our long-term, intrinsic value approach to investment, our long-term success derives from consistently applying these three highly analytical, rational processes:
Idea Generation
Our aim is to find investments that are likely to be undervalued by employing a three step process designed to identify a broad set of potentially undervalued securities; exclude those failing to meet our quality criteria; and then prioritizing opportunities based on our assessment of quality and valuation.
Security Research and Valuation
Following our analysis of target investments, we thoroughly assess the quality of each company and rigorously estimate a range of intrinsic values. This process focuses attention on several salient factors, from the company’s quality to an analysis of key economic variables likely to impact the company, to stringent financial modeling and valuation, followed by a rigorous behavioral checklist, where we challenge our own research and potential biases in determining a company’s value.
Portfolio Construction
This final stage is designed to manage risk – in our view the potential for permanent capital loss. We size positions to ensure that an adverse outcome on any single investment will not impair the portfolio to a significant degree. We also manage risk by thinking through the correlation of long-term business outcomes among multiple investments. We allow our overall process to drive long-term results rather than being over-reliant on any individual investment decision.
Further detail on our Investment Process may be found in our “Owner’s Manual”, which we are happy to provide upon request.