Sunday, November 9, 2008

ISLAMORADA -- Cale Smith, 35, has long-term plans for his new investment company.

In fact, for folks who are thinking about their own long-term investments, this is the best time to enter the market, said the former hedge fund analyst and managing director of Hawk Associates, a Key Largo investor relations firm.

He expects the recently approved federal bailout plan to eventually free up credit and get Wall Street back on its feet.

"America is about to refinance," said Smith, a registered investment advisor. "The Fed is injecting $250 billion into the banks, and banks will leverage that eight times up to $2 trillion. That is the most direct way to get the banks to loan money.

"There's a lot of fear out there and I know there is going to be some pain, but this is the best buying opportunity we'll see in the next decade," he said. "I'm very confident in America and our ability to recover."

Smith, a former Coast Guard officer who earned his master's degree in business administration at the College of William Mary, recently launched Islamorada Investment Management, an investment company he says is much different from the big brokerage houses, given that he and his family invest in the same markets as his clients.

"We eat our own cooking," he said. "A significant portion of my family's net worth is invested in the same portfolio that we'll be opening up as the Tarpon Fund [in November] to anyone with $100 to $100,000,000 to invest."

"There's a whole suite of investments out there. Our service is narrow," he said. "I follow the philosophy of Warren Buffett [because] Wall Street investing is somewhat flawed."

Smith explained, in a nutshell, that with the Buffett approach, you're not just buying paper like big brokerage houses.

"You're buying part of a business as if you were a business owner, and to be successful, you need to know about that business," he said.

Smith said fundamental value-investing principles require buying for the long-term and assessing a company's strengths "from a top-to-bottom" analysis.

The Tarpon Fund, he said, is based upon this concept of "value investing," of getting a good price on the shares of a few great businesses, independent of economic forecasts, Wall Street consensus and financial media noise.

"The mentally challenging part is going against the screaming pundits on TV who have been telling people to pull their money out of the market," he said. "You must look objectively at all that's out there when you invest. Think beyond a year, and by all means, turn off the TV."

Smith said watching TV for objective financial advice is like watching TV for pinpoint hurricane forecasting. He sees too much hype and speculation and not enough substance in each.

Smith will provide each Tarpon Fund investor with his or her own separate account with around-the-clock online access.

"Each account is insured up to $7 million by FDIC and Lloyd's of London," he said. "That's one of the leading questions people have been asking lately."

Islamorada Investment Management is an independent, fee-only firm, which means it is not affiliated with any larger firms, nor does it earn any money in commissions, referrals or mark-ups of any kind, Smith said.

"The firm's revenue is tied directly to the portfolios I manage," he said.

Smith says his long-term goal is simply to invest wisely.

"This is what I love to do," he said. "If I can do this for the rest of my days, I'll be a happy man."

Smith can be reached at csmith@islainvest.com or on his cell phone at 305-522-1333.

sgibbs@keysnews.com