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Spring 2012 Quarterly Commentary
by Jonathan A. Shapiro of Kovitz Investment Group, 4/23/12
Theres an old adage about a six-foot tall man who drowned crossing a stream that was five feet deep on average. We believe the lesson here is well worth heeding. In investing, its not enough to survive on average. Investment survival depends not on how well one performs during periods of market euphoria, but how well you navigate through the rocky episodes. One of the byproducts and, indeed, one of the most important aspects of investing scared is that it obliges us to make sure the downside risk of our portfolios is limited in bad times.

The Impact of the Falling Dollar
by Jonathan A. Shapiro of Kovitz Investment Group, 1/17/12

Regarding the progress of the businesses we own, a useful metric we track is the Price-to-Value ratio. Conceptually, this statistic measures the current price of a portfolio company to its intrinsic value, conservatively estimated through our multiple valuation techniques. For example, Wal*Marts current P-to-V Ratio is 80%, determined by taking its roughly $60 stock price divided by our current fair business value estimate of $75. This implies, based on what we know today, Wal*Mart is roughly 20% undervalued, providing approximately 25% upside from current levels (not including dividends).

Fall 2011 Quarterly Commentary
by Jonathan A. Shapiro of Kovitz Investment Group, 10/14/11
The world is a mess. There, we said it. Yet we continue to hold stocks and even look to purchase more of them. Why would we do this if we just admitted what we admitted? The answer lies in the critical distinction between having an investment philosophy and having a market outlook.

Kovitz Investment Group, LLC Summer 2011 Quarterly Commentary
by Jonathan A. Shapiro of Kovitz Investment Group, 7/21/11
People tend to suffer greater pain from losing a given amount of money than they experience pleasure from gaining the same amount. The typical investor is therefore a pain avoider who shuns certain stocks when there is any hint of trouble. This tendency results in consistent overreaction to bad news that we believe creates opportunity. Inefficient pricing results from the excessive focus on short-term that we believe sets up a unique time arbitrage. By capitalizing on situations where uncertainty is high, but risk is low, we can put ourselves in a position to earn above-average returns.

Kovitz Investment Group, LLC Spring 2011 Quarterly Commentary
by Jonathan A. Shapiro of Kovitz Investment Group, 4/20/11
Over the past several years, we have often written about our penchant for owning high quality, large capitalization stocks. Our affinity is not due to a belief in an inherent investment superiority of large companies versus their smaller brethren. Rather, our collection of large companies is solely based on the discrepancies between price and value we are currently witnessing in the marketplace. Skipping to the punch line, we believe that at current prices large-caps (not all, of course, but those that meet our investment criteria) are a buy while small-caps are generally a sell.

Market and Performance Summary
by Jonathan A. Shapiro of Kovitz Investment Group, 1/19/11
The broad market, as represented by the Standard & Poor?s 500 (S&P 500), rose 10.8% for the quarter and 15.1% for the full year. We remain optimistic regarding forward returns, not because the market has been strong, but because we believe we still hold a basket full of undervalued securities even after these robust gains.

Fall 2010 Quarterly Commentary
by Jonathan A. Shapiro of Kovitz Investment Group, 11/7/10
As for the next decade, we are optimistic. This view is based primarily on two factors. The first is the entry level. We believe that current valuations of our portfolio holdings are very attractive, both on an absolute level and relative to history. While it doesn?t guarantee any outcome, starting at these levels certainly stacks the probabilities firmly in our favor.

Keeping a Level Head
by Jonathan A. Shapiro of Kovitz Investment Group, 7/12/10
A downward bias toward stocks was evident throughout the quarter. This was a marked, but not unexpected, change from the seemingly straight up rise stock prices made from the year earlier (March 2009) lows. The potential for global fallout from Europe's fiscal crisis and its impact on the worldwide economic recovery served as the largest drag on the equities markets during the quarter. Other negatives included inconsistent readings in the U.S. on job growth, consumer-related sales and housing.

Our Quarterly Review
by Jonathan A. Shapiro of Kovitz Investment Group, 4/16/10
With only a few temporary setbacks, the stock market has continued its move higher since touching its most recent low in early March 2009. Much hand wringing has been done over the S&P 500's approximately 75 percent move since that time, but lost in translation is the fact that prices last March implied a pending financial and social breakdown. These panic-driven prices bore little resemblance to actual or going concern business values, and measuring from that point clearly overstates and exaggerates the return. The worries facing the U.S. and many other regions are still prevalent.
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