Q:  How long has Boyar Asset Management been around? A : In 1975 we began publishing Asset Analysis Focus, an institutionally oriented research service as well as managing money for primarily high net worth individuals. Boyar Asset Management, a registered investment advisor was founded in 1983 and the Boyar Value Fund (BOYAX) commenced operations in 1998. Q:  Would you describe your investment philosophy? A : We are patient long term investors who purchase the common stocks of intrinsically undervalued corporations. In our opinion, the stock market often fails to accurately reflect the real values of a company’s assets. We revalue the assets as an acquisition-minded business executive would: we take the company’s balance sheet, tear it apart, and reconstruct it in accordance with economic reality as opposed to generally accepted accounting principles. It is our belief that over a reasonable time frame either “Mr. Market,” will accurately reflect those values or the company will be acquired by a third party. We will invest in any company regardless of size as long as it meets our investment criteria. Q:  How do you go about looking for such opportunities? A : This approach is basically supported by our own internally generated research and when necessary we hire independent consultants. The in-depth research that is contained in our institutionally oriented research service is a prime generator of investment ideas. Q:  What are your stock selection strategies? A : We have systematized our stock selection strategies, and we typically buy the common equity of companies that contain one or more of the following characteristics: {{“Hidden” Assets}} Those are assets that we perceive to be undervalued on a corporations’ balance sheet. They may include real estate such as buildings and undeveloped acreage; reserves of natural resources such as coal, gas, oil or timber; cellular, cable or internet franchises. We adjust the price of these assets to their current market value in order to calculate the true worth of the enterprise. {{Undervalued Franchises}} A number of corporations have over time, created valuable consumer franchises. These products are recognized easily by consumers around the world. Such franchises are virtually impossible for potential competitors to replicate. These franchise corporations often can raise prices or even charge a premium for their products or services without losing market share. This tremendous competitive advantage is sometimes not adequately reflected in the price of a franchise company’s shares. {{Underpriced Businesses within out-of favor sectors}} Excessive pessimism about an industry or sector may result in extreme disparities between the stock price a knowledgeable private investor would pay to acquire the firm’s assets. When evaluating out of favor sectors, we consider historical earnings power, and the financial strength of companies within those out-of favor sectors. We also compare the prices at which similar corporations have been acquired in the recent past. {{Companies that own multiple businesses}} Sometimes companies that own multiple businesses trade in the marketplace at a significant discount to what these entities would be worth if they traded as individual businesses. It is our belief overtime management might elect to spinout these businesses in an effort to unlock shareholder value. {{Fallen Angels}} Well known corporations that were once the “darlings” of Wall Street, sometimes fall out of favor with the investment community due to temporary problems. Their stock prices may drop to unreasonably low levels. We take investment positions in these businesses only after determining that their fundamental prospects are not permanently impaired. Q:  How have your selections performed over the years? A : Each December, we publish the Forgotten Forty which contains snapshots of the Forty companies within our universe that have been extensively researched in the past and which we believe have the capability of outperforming the S&P 500 in the year ahead. Over the past decade this publication has significantly outperformed that index. The Boyar Value Fund (BOYAX) has beaten the S&P 500 over the past decade by more than 3% per year. Q:  What are the tenets of your idea generation and stock selection process? A : Our portfolios are relatively concentrated containing fewer than 40 names of which the top 10 holdings represent a significant portion of the entire portfolio. Each holding has been thoroughly researched, and all sell at a significant discount to our perception of their intrinsic value. Furthermore, most companies contain an identifiable catalyst that should enable the share price to materially advance during the next few years. We are not restricted by market capitalization. Furthermore, there is no systemic approach in our quest to find undervalued businesses. We are extraordinarily curious, voracious readers that are constantly searching for new businesses to add to our portfolios. Q:  Would you illustrate your research process with an example? A : Cablevision is a prime example. When we did our initial research on the company our work indicated it was selling at a significant discount to our perception of its private market valuation. Subsequently, it returned a large amount of capital to shareholders, attempted to go private, but only would do so if outsides shareholders consented, which they did not. Shortly thereafter, the Company initiated a dividend and a stock repurchase program. More recently it spun out its Madison Square Garden business (MSG). Both of these entities are still inexpensive, and we would not be surprised to see Cablevision sold, and Madison Square Garden go private in the next few years. Q:  What is your view on the price that you pay to acquire a company stake? A : This is one of the most important tenets of successful investing and most investors do not pay enough attention to it. You can buy the best company in the world but if you have over paid for it, it will turn out to be a lousy investment. We try to buy businesses at a 50% discount to our estimate of intrinsic value. Q:  What is your sell discipline? A : We sell a position when its price approaches 80% of our estimate of its intrinsic value, unless the company’s assets have materially increased in value. Then we will continue to hold. We always take a very conservative approach when valuing a corporation’s assets. Not only do we examine comparable transactions that have occurred in the recent past, but we take a further haircut in terms of prices paid by those acquirers. Q:  What are sources of risks and what do you do to mitigate them? A : There are many ways to mitigate investment risks. Most importantly is to look for companies that are trading at a relatively large discount to what an acquirer would pay for it. This creates a margin of safety. Of course, we are subject to market volatility like all investors but we are more focused on preventing permanent capital loss, rather than a temporary reduction in our portfolio’s valuation because of market fluctuations. Our conservative approach in valuing assets and our in-depth research also gives us additional protection.