Skin in the Game – My Portfolio

Next time you sit down with your advisor, ask him or her a simple question:  

How do you invest your own money?

Don’t settle for a simple “well, uh, I have some stocks and bonds, and, umm, some CDs”…ask them specifically what their allocation percentages are, and what funds they use etc.  Many find it very uncomfortable to disclose and many will refuse to do so!

As far as fund managers, many managers don’t even invest in their own funds.  (Here are a few articles on how little managers invest in their own funds here, here, and here.)

In addition, many commentators are willing to provide you with plenty of advice but just try getting them to disclose how they invest their own money – impossible!  How many commentators can you identify that invest in their own funds and are transparent with where they invest? They are happy to give you advice, but forbid they tell you how they invest!  A client asked me the other day how I invested my own money, and I thought that was an interesting idea to just go ahead and write it up. 

This post really has no meaning to you in the sense that you should invest in the best possible way for your situation and your risk tolerances and goals.  How I invest should really have no bearing on how you invest, other than knowing a manager has “skin in the game”.  That sounds basic but it is true.  Anyways, I thought I would outline my portfolio below to let you tag along with how I think about the world and investing with my own personal money.

By far the largest percentage of my portfolio is ownership in my company Cambria Investment Management LP, in the ballpark of 50-95% of my net worth depending on how you value the company. Other illiquid investments include ownership of The Idea Farm, a small passive equity stake in AlphaClone, a share in our family farmland in Kansas, and a share in family real estate and land.

Since Cambria alone dominates my net worth, the actual investable portion is smaller but certainly meaningful.  My horizon is very long term and I have a high risk tolerance.  

Of my investable portion, all of it is invested in our funds and strategies.  Below, in order of size:

Global Tactical private fund, Global Value ETF, and equal amounts of the Shareholder Yield ETF and the Foreign Shareholder Yield ETF.  All of my cash flows simply funnel into these four investments on a periodic basis.  As you can see, my holdings are dominated by foreign stocks, portfolios that can and do have the ability to move to cash (and have a high exposure to real assets), and stocks returning lots of cash to investors.  I am least exposed to traditional bonds but for me they are not that attractive for my time horizon and goals.

If you don’t believe me, or want to see how much your manager is invested in his own funds, the filings are public so go take a look!

So, next time you are chatting with your advisor or broker, or hear someone giving lots of advice at a conference, ask them one simple question: “What do you do with your money?”