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Meet successful mother-daughter mutual fund team

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Candace and Amelia Weir, a mother-daughter team of mutual fund managers, are outliers.

Of the 10,000 or so funds available to U.S. investors, only 179 were run by all-women investment teams as of the end of 2020, according to Morningstar. That accounts for less than 2% of the teams and less than 1% of investor assets.

By contrast, 70% of funds and 60% of investor dollars are managed by all-male teams. And although Morningstar didn’t track this data, it’s a pretty good bet that at least some of these teams include fathers and sons. After all, how many financial firms include “& sons” right in the name?

Given the overall numbers, it’s an equally good bet that the Weirs are the only mother-daughter team in the business. That hasn’t stopped them and their team at Albany, New York-based Paradigm Capital Management from achieving terrific results.

Over the past decade, Paradigm Micro-Cap, one of three mutual funds they manage that invests in small-company stocks, has returned an annualized 13%. That’s better than 97% of small-company U.S. mutual funds.

Below, the Weirs share the secret to working successfully with family, and offer advice for women hoping to break into a male-dominated field.

The interview has been edited for clarity and brevity.

‘We’ve always trusted each other in a fundamental way’

Ryan Ermey, senior reporter: Candace spun Paradigm out from another business she founded in 1994. How did you two come to be in business together?

Candace King Weir, Paradigm chief investment officer: Amelia had gotten out of business school, and worked at Paine Webber and two other hedge funds. I had a very good co-portfolio manager, who in 2007 had decided to depart and start his own firm. I was feeling a little, like, “Whoa, this is a lot for one person.”

I forget when Amelia and I started talking about it, and I had great reservations about family and business. But we talked it through several different times, and finally we agreed as long as it didn’t come between us as mother and daughter, we had a shot. Now, 14 years later, and I’d say it’s gone very well.

I think the true essence of it is we’ve always trusted each other in a very fundamental way. I know she always has my back.

Ermey: Is there a secret behind successfully working with family?

Candace: I think you really have to have a true sense of, one, “Do I really want to be in this business, regardless who owns it?” And, two, “What’s the terra firma of my relationship?”

I think you have to have a very firm sense of, I trust this person. You have to go through one of those filters. Because once you’re committed, especially in a family, it’s not like, “Hey, come on in my office, I wanna tell you why it’s not working.”

Amelia Weir, Paradigm senior vice president: One part is, do you want to get the firm regardless of the ownership? Do you think the firm has a good process? Do you think the firm has a good team?

And then the other part is, you really have to have candor and honesty about your own and each other’s thought processes, because you’re not going to suddenly teach someone to think your way, right?

‘Speaking up is a muscle. It’s something you have to keep doing and practicing’

Ermey: Your investing results speak for themselves. Do you think that being women in a male-dominated industry has helped you as investors?

Candace: I would say to some degree, yes, for two reasons. One, last week, I had three or four calls with CFOs and every one of them was a woman. I think that we’re all evolving, and when it comes to these young female CFOs, I think they like to reach out and they like talking with another woman.

Second, we constantly have management teams in the office, and I think they like the dynamic. And when they get here they see we both get the game, we’re both pretty bright. And we’re going to ask hard questions, but we’re going to do it nicely. It’s an artform, I promise.

Amelia: We are very polite. And I mean, you can be polite regardless of gender. But I think our style, we’re a pretty soft touch. We don’t get mad, we don’t yell at people. And I can picture being at other companies where there’s a fair amount of ego, where people actually think it’s OK to not actually be particularly pleasant to people.

Maybe you blew the quarter, and maybe it was in your control, maybe it wasn’t. Maybe it makes someone feel better to yell at the CFO. But we know we don’t do that.

Ermey: What would be your biggest piece of advice for women looking to crack into this field?

Candace: Maybe one thing I would say is you’re better off at a smaller shop where you can evidence what your talents are, your ability to work long and hard. But I don’t think there’s any secret formula to this. If you have a dream, stick with it. Because I really think as a rule, you can make that happen.

Amelia: I’ve been going to conferences for 20 years, and sometimes I just look around the room and count the ratio of men to women. Depending on the sector it could be 90-10 or 75-25, but usually somewhere in the middle. You go to breakout sessions, and some guy will have no qualms asking the most basic question. I would die if I raised my hand and asked that question.

So I think some of it is about not underestimating yourself, because half the time the question you have in your head is probably three times more thoughtful than the people actually raising their hands.

Speaking up is a muscle. It’s something you have to keep doing and practicing.

‘Having a long horizon gives you that confidence and conviction stay the course’

Ermey: Your fund has a terrific long-term record, but small-company stocks have been crushed so far in 2022 in a volatile stock market. How do you handle things when stocks are down?

Amelia: Candace has been here longer than I have, but when I think back over the past two decades, when you think about ’08-’09, you think about the spring of 2020, we’ve had some very precipitous downturns.

For us, it is reassuring in the moment, but also kind of proven out over the longer horizon, that the process remaining consistent is really critical, I think, to maintaining that long-term outperformance. And you can’t always promise or deliver it quarter to quarter or calendar year to calendar year. But what we do see is over the longer term, really knowing your names, doing your bottom-up research, going back to our own internal process really adds a lot of value in terms of your conviction in your names in those real dislocation downturns.

But also, then you participate in the rebounds when they inevitably happen, because you can’t time them and you can’t predict them. Having a long horizon gives you that confidence and conviction to stay the course.

Ermey: What are you looking for when considering whether to add a new company to your portfolio?

Amelia: We look for valuation disconnects, under-followed, under-appreciated names, and very strong free cash flow profiles. Because the thing I’ve really seen over 08-09, 2020, and through today, and prior to that as well, is that these companies have the ability to control their own destinies.

Ermey: Your process involves having in-depth discussions with companies’ executives, which individual investors can’t do. But what are the sorts of things retail investors could look for when assessing a stock?

Amelia: One thing worth looking at: Is there a steady dividend? Are there other things like high free cash flow that add some support or stability to the company? Because by default if a company has a steady dividend or consistent dividend, it has confidence in its own balance sheet and cash-flow profile.

Candace: If you’re really a novice investor, for lack of a better term, it’s good to start out with companies that have a track record — that have been in businesses for over a decade — so you can say, well, they have gotten through this. It’s not somebody who did a SPAC or an IPO three months ago. Who knows where they’ll all end up?

Starting out, I’d go with a company that has a track record.

The views expressed are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses.

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