Horizon Kinetics – A New Year Message
January 9, 2014
Dear Valued Partner,
On behalf of all of our Horizon Kinetics colleagues, we would like to wish you a Happy New Year. 2014 is a special year for our firm as it marks the 20th anniversary of our founding in 1994. We appreciate the loyalty of our clients for making this all possible.
The asset management industry has consolidated significantly since our founding. According to Pensions and Investments, the Top 500 managers (of which we rank 412th) manage $68 trillion, with the Top 10 managers managing almost $19 trillion or approximately 28% of the total1. It’s hard to imagine how the largest managers can be nimble enough to deliver the differentiated results investors seek. It appears to us that the biggest managers are heavily reliant on ultra-liquid, high capacity strategies largely driven by a ‘digital’ thinking generation of investors. This ‘digital herd mentality’ creates significant investment opportunities for value investors. As we have written on many occasions, we firmly believe investing is a social science where the behavior of market participants shapes outcomes and returns. Despite this, Wall Street and the broader investment community continue to create countless financial products that seek to precisely engineer risk and return like a physical science – a proposition we have taken strong exception to over the last 20 years.
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