Registered Rep.: On April 1, The Motley Fool, the parent company of Motley Fool Asset Management, played an April Fool's joke to make a point about the company's investment philosophy. Can you explain what happened?
Bill Mann: The founders of The Motley Fool made an announcement that company documents had been made public on “WikiLeaks,” and that we'd have to come forward about our company's secret practices of giving out misleading investing advice to capitalize on short-term movements. It was also revealed that we had been testing a short-term trading platform, so we rolled out a consumer version called ZippyTrade2000. We received 4,000 emails from people wanting to buy the trading software, but it was all a hoax. We're trying to teach something important with our joke. We're not, in fact, high-frequency traders; we're long-term investors. There's a lot of opportunism in the market, as people are feeling like they haven't prepared for retirement.
RR: How do you go about picking stocks?
BM: When choosing a stock to put in one of our funds, we get to know the security we invest in. We're not aiming for statistical value; it's not a math problem. I like companies that are employee-owned, similar to us. We have skin in the game, and it allows us to make mistakes. One good example of a security we own is Telefonica, a Spanish telecommunications company with a huge percentage owned by the founding family. They have operations all over the world.
RR: Have you marketed to advisors?
BM: Most of our distribution is through individual investors, but a significant part of our capital will come from advisors. We brought on a registered rep, Carl Hendley, who's out talking with reps about the funds, and we're putting some money into marketing to reps this year. There are a lot of reps who get us, but there are a lot who are trying to fill out a style box and trying to make sure we're in certain sectors of the market. This is not a good fit because of the unpredictability of what we own. That said, a lot of advisors understand why we're critical of the industry. There's too low a level of focus on transparency, performance and on the fees associated with it.
