Dear Friends,

For the full year of 2018, Andvari was up 1% while the S&P 500 was down 4.4%.1 The table below shows Andvari’s composite performance figures against three benchmarks while the chart shows the cumulative gains of hypothetical $100 investments.

The markets and Andvari’s holdings declined significantly in the fourth quarter. Many factors seemed to contribute: trade tensions with China, worries over the Federal Reserve hiking interest rates too quickly, a volatile U.S. political environment, and Wall Street analysts ratcheting down earnings estimates for 2019. However, as the Blondie comic suggests, I ought to say “I really don’t know”—it is just impossible to say exactly which factors cause the market to go up or down.

What I do know with much greater certainty is that Andvari clients have ownership interests in a collection of high quality businesses run by excellent management teams. Virtually all these businesses have extremely predictable revenues with many of them growing at double-digit rates. All these businesses have ample capital to deploy at high rates of return, whether it’s by reinvesting in their own business, acquiring other businesses, or repurchasing their own shares. By concentrating our investments in a small number of these types of businesses, it is far more likely that Andvari’s performance over the long-run will exceed that of the market.

Andvari's Holdings


Reflecting on 2018

The past year was a volatile one. On the investment side, performance in the first three quarters was outstanding and then a disheartening fourth quarter dropped overall performance to nearly zero. However, I am pleased that Andvari's composite performance was positive against the market’s negative performance.

On the personal side, in January I moved from Atlanta to Durham, North Carolina with my wife Leann so she could get a lung transplant from Duke University Hospital. After thirty-plus years of cystic fibrosis, Leann's lungs had reached the end of their usefulness. I visited Leann nearly every day for the nearly 70 days she was in the hospital pre- and post-transplant. I would have been there every day had I not gotten stress-induced shingles.

It was an amazing day when Leann was discharged in May. Leann could more easily do the simple things in life, like dressing herself for the day or shopping for groceries, without feeling exhausted. We also did some big things. Leann was able to visit her sister and her niece in Charleston several times. Leann and I vacationed in Ashville, where we honeymooned and where my sister and brother-in-law now live. We could start thinking about our future in terms of years now that Leann had a shot at not being in the hospital every few months like she was pre-transplant.

And then Leann suddenly got an infection which her body couldn't fight. She died on November 1 after being admitted to the emergency room on October 31. I spoke at Leann's funeral service (click here to download my speech). I moved back to Atlanta in December.

Life during the past year would have been so much more challenging without the love and support of my family, friends, and clients. I'm thankful to everyone who expressed their condolences, especially to those who checked in on me multiple times and to those who shared with me some of their own deeply personal stories. It's an amazing world where people, some of whom you’ve never even met, give you their time to help ease your pain.

As a passionate cyclist who worked his butt off to go from beginner to somewhere near the vicinity of semi-professional, I will always remember the saying, "It doesn't get easier, you just get faster." One can say something similar about life. It doesn't get easier, you just get more experience. There will always be different challenges ahead of us. Beyond mountains, there are mountains.

I look forward to the future and I am grateful to have a meaningful part in the lives of my clients.


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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