CEDAR FUND

PURPOSE

Cedar Fund is a limited partnership managed by a General Partner, Harris Harper Counsel, Inc. which is a Registered Investment Advisor. The Cedar Fund was established in 1988 for the benefit of pooling investors monies into one fund that would function like a mutual fund investing in the equities market. The partnership operates similarly to a mutual fund because it is based on a net unit value (similar to the Net Asset Value NAV of a mutual fund).  Cedar Fund offers several advantages, by pooling funds we can provide:     

     • Access to money managers not available to the general public;

     • Lower costs

     • Distributions are not taxable until all the capital deposited by the partner is first withdrawn;

     • The fund focuses on identifying superior money managers, usually in mutual funds but occasionally in stocks. 

STRATEGY

In the simplest terms, value investing is buying an asset for less than it’s worth. It is about finding a well-run company with outstanding long-term prospects and investing at a time when its stock is selling at a discount. And if the stock isn’t selling at a discount, it’s about having the discipline and patience to wait until the price comes our way.

Benjamin Graham, regarded as the father of value investing, coined the term "margin of safety" and considered it to be the central concept to value investing.  This margin is the difference between what we believe the company’s intrinsic value is and the price of the stock. As value investors, we first measure what an informed buyer might pay for a whole business, and determine if the stock price reflects that appraisal.

Thus, we believe the value investor, perhaps more than any other type of investor, is more concerned with the fundamentals than other influences on the selected investment .  

It is this strategy that drives Cedar Fund’s strategy.  Our objective is to find managers who embrace these basic disciplines and make them available to our clients that may not be available otherwise.

PRINCIPLES   

Perservation of Capital  — We seek to offer our clients a prudent place to invest  their capital, and to provide them superior returns over the long-term, while emphasizing preservation of capital.

Long Term Perspective  —  We never try to predict the direction of the stock market.  It is impossible to anticipate what the market is going to do in the immediate future, long term the market is going to be higher.  Therefore we will continue to stay fully invested and will not raise or lower our cash positions in response to a questionable guess at the market.  If our cash position is changed it will be because we see the lack or abundance of good opportunities.  One notable feature of our portfolio over the years is how rarely we have changed the holdings.  A study showed how the changing of investments can hurt performance.  For example, from 1984 to 2002, the average stock mutual fund delivered an average annual return of 10.2%. The average individual stock investor, who changes investments frequently, achieved an average annual return of 2.6% over those years. The average investor tends to chase performance and switch funds, which causes inferior results. When we invest in a new mutual fund or stock, we do so with the intention of holding it at least ten years.

Discipline   — We are investors, not traders. From decades of experience, we know shorter periods of relative underperformance are part of achieving your longer-term goals. Our patient, disciplined approach allows you to succeed over market cycles.  We find value wherever it may live, even when contrary to general opinion. This means you rely on our judgment, discipline and focus on absolute (not relative) returns 

Integrity  — We place our client's interests above our own. We focus on our investing efforts, rather than asset gathering. We will not expand our business unless we are comfortable that our client's interests will not be harmed. We will restrict access to the partnership if we believe that will benefit our existing clients.

Communication  —  We seek to communicate to our clients openly and honestly, striving to provide the information we would wish to have if our roles were reversed.

PERSPECTIVE

"The most realistic distinction between the investor and the speculator is found in their attitude toward stock-market movements. The speculator's primary interest lies in anticipating and profiting from market fluctuations. The investor's primary interest lies in acquiring and holding suitable securities at suitable prices. Market movements are important to him in a practical sense, because they alternately create low price levels at which he would be wise to buy and high price levels at which he certainly should refrain from buying and probably would be wise to sell."  - Benjamin Graham

7327 FYXEN RUN • ROANOKE IN 46783-9328 • EMAIL: Harris Harper Counsel Inc.