how we invest

We buy a small number of good businesses and try to own them for a long time.

A concentrated portfolio means we have to be right about the companies we own, so we only buy what we understand: durable economics, management we trust, and a price that leaves room for us to be wrong. When we cannot find that combination, we wait. Cash is a position.

Activity is the enemy of returns. We do not get paid for activity, we get paid for being right. We rarely sell, and when we do it is usually because the reason we owned it stopped being true.

That is as much a tax decision as an investment one. For most of our clients a sale is a taxable event, so the question is never simply whether we would rather own something else. It is whether we would rather own it after tax. Because we do the tax planning too, that question gets answered with your actual return in front of us rather than a general rule.

We do not use leverage and we do not sell short. Leverage creates pressure to react to things we would rather sit through, and shorting offers capped gains against uncapped losses.

We invest in public equities and, selectively, corporate debt. Everything we own, you can look up. Nothing goes into a portfolio that we have not both researched and discussed.

beyond the portfolio

Much of the value here is in what turns up. Most people have a plan that was right when it was written and has quietly drifted since.

Tax planning

Roth conversion timing, entity structure, the tax side of rental property, retirement income sequencing, and where your brackets actually leave room. We read your return. We do not prepare it.

Retirement planning

What you can spend, when to take Social Security, and how the accounts should be drawn down in what order.

Estate planning

We do not draft documents. We read the plan you have and look for where it comes apart: titling and beneficiary designations that no longer match, a plan written for a family or a tax law that has since changed, and whether there is liquidity to settle the estate without forcing a sale of the business or the property. When documents are needed, we can have them drafted by licensed attorneys and work alongside your own counsel.

Insurance and risk

A look at what you are paying for and whether you still need it, and at what you are not covered for and probably should be. The two gaps we find most often: liability coverage that never kept up with net worth, and a business owner whose personal and company exposure are more connected than they think.

who we work with

Most of our clients came to us through someone they already trusted: their CPA, their attorney, or another client. Many run businesses or own real estate, and they want one person holding the whole picture instead of four people each holding a corner of it.

We limit the number of relationships we take on. We are probably not a good fit if you want to trade actively, track an index closely, or talk every week. A concentrated portfolio will not look like the market, and there will be stretches when that is uncomfortable. It is better to say so now than to explain it later.

who we are

Brant Root, CFP®

Thirty years as a professional investor. He started as a sales-trader at Cantor Fitzgerald, spent several years in Denver investing in real estate, then five years as an analyst at Lionheart Group, a micro-cap activist fund, and was CFO and an analyst at Elixir Group, a family office focused on media, before co-founding Firethorn. He handles the financial planning and tax planning alongside the portfolio. He still owns and operates rental real estate, so the depreciation, passive loss and entity questions that come with it are ones he works through on his own returns. He is a cautious optimist. Northwestern University graduate, originally from central Illinois, now in Westport, Connecticut.

Tim Ozanne

Also thirty years as a professional investor. He started as a debt and equity analyst at Vilas-Fischer Associates, then founded Kelso Associates, a registered investment adviser, and ran it for ten years before it merged into Firethorn in 2003. He is wary by nature and focuses on avoiding losses. Western Colorado University graduate, originally from Illinois, now in Bozeman, Montana.

They met in 1997, spent five years trading investment ideas, and started Firethorn in 2002.

what we charge

Managing the portfolio is billed as a percentage of the assets we manage. It averages about 1% a year and ranges from 0.50% to 1.50%, depending on account size and complexity.

Planning is either included in that fee or quoted separately, depending on the size of the account and the scope of the work. When it is separate it is usually a flat fee, and we agree on it before anything begins.

We are paid by our clients and by no one else. No commissions, no insurance sales, no referral fees.

Your account is held at Charles Schwab, in your name. We have limited power of attorney to trade the account and deduct our fee. Schwab reports to you directly.

letters

We have written to our clients every quarter since 2003 about what we own and why. Two excerpts, written four years apart. Ask us for the most recent one in full.