Dear Friends,

Instead of beginning with a summary of investment performance, I begin with even more important news. As many of you know, my wife Leann has cystic fibrosis, a rare and life-threatening genetic disease that affects the lungs and digestive system. After being in the hospital six times in 2017, Leann and I traveled to Duke University so she could be evaluated for a double lung transplant. It was an exhausting five days of tests and meeting with everyone on Duke’s transplant team. Duke later told Leann she is a good candidate for their program and Leann decided to join.

Leann's decision means she and I will be temporarily relocating to Durham at the end of January. Depending on how well Leann does, we could be in Durham for four months or up to a year. As the Chief Investment Officer and sole employee of Andvari Associates, it is important for all clients to know that in the coming months most of my time will be spent caring for Leann—not our investment portfolios.

With that said, I have reassured clients with the following points.

First, my investment strategy is to have a limited number of securities in portfolios—20 or less—and to have the top 5 make up a significant portion of each portfolio. This makes it easier and more efficient to keep up with what we own and to consider new opportunities.

Second, I prefer to invest in securities and companies that do not require daily attention. Good companies with good management teams have higher chances of earning strong returns over a long time despite any short-term difficulties that inevitably happen. However, I do and will still review everything we own, every day, and will be prepared to act as circumstances dictate.

Third, I am invested in nearly all the same securities in which clients are invested. This is a huge incentive for me to maximize gains and minimize losses. Balancing my time between caring for Leann post-transplant and caring for clients will be a challenge, but it is one I can handle.

Finally, I will not be alone in caring for Leann. When the time comes for transplant, Leann's parents will be with us in Durham to help. Leann's father is Executive Director of the Georgia Chapter of the Cystic Fibrosis Foundation and his employer expects him to be there.

Please keep us in your thoughts this year.


For the full year of 2017, Andvari is up 18.9% net of fees versus 21.8% for the S&P 500. Focusing on the performance of just the taxable accounts Andvari manages that have a mandate for achieving maximum total returns over the long term, these accounts were up 25.0% net of fees. Below, the table shows Andvari's composite performance figures against three benchmarks while the chart shows the cumulative gains of a hypothetical $100 investment.






Despite not owning any of the largest and best performing companies in the S&P 500 (like Google, Facebook, or Amazon) and despite having a meaningful allocation to fixed income assets because of the IRA accounts we manage, Andvari's net performance for 2017 of 18.9% was quite good on a relative and absolute basis. With the U.S. economy chugging along and with increasing levels of optimism, it seems like 2018 might be another good year for investment performance. However, I continue to caution that investment returns over the next 5 years are unlikely to match what we have experienced in the prior 5 years.

I am extremely thankful for the trust, understanding, and encouragement I’ve received from all clients over the years and especially as we head into 2018. I wish everyone a happy and prosperous year.


Douglas E. Ott, II

¹ “Andvari Total” represents all of Douglas Ott’s investment accounts and all the discretionary accounts Andvari manages where it takes an active role in picking individual stocks and receives a fee. From 12/31/12 to 4/12/13 results included only Ott’s personal and retirement accounts—the first Andvari clients transferred their accounts on 4/12/13. Andvari believes including Ott’s performance figures for the first 4 months of 2013 is fair as he managed those assets similarly relative to later clients. Results are net of management fees (1% per annum), time-weighted, and includes all cash and other securities. The indexes and funds are listed as benchmarks and are total return figures and assumes dividends are reinvested and net of their respective underlying fees.


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Investment strategies managed by Andvari Associates LLC ("Andvari") may have a position in the securities or assets discussed in this article. Andvari may re-evaluate its holdings in such positions and sell or cover certain positions without notice.

This document and the information contained herein are for educational and informational purposes only and do not constitute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This document contains information and views as of the date indicated and such information and views are subject to change without notice. Andvari has no duty or obligation to update the information contained herein. Past investment performance is not an indication of future results. Full Disclaimer.

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