Investing Intelligently
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By Kalei Cadinha-Pua`a
President, Cadinha & Co. LLC
It must run in the family. My fourth-grade daughter, who has saved most of her earnings from helping me around the house, just asked me how to make it grow faster. So we started talking about investments and how to invest wisely.
The result? She is one of the newest investors to enter the investment world. Her zest for investing brings back fond memories of learning how to invest from my father - I think I was even younger than she.
I have worked in the family business, Cadinha & Co. LLC, a registered investment advisory firm, since I was a child. I’ve swept floors, filed papers, created marketing plans, called in trades, upgraded computer software -you name it, I’ve done it. While at the time I didn’t really appreciate the opportunity such work presented, I certainly do now. Learning the intimate inner-workings of Cadinha & Co. has better prepared me for my current role as president. We work as a team, and if something needs doing, it gets done. It’s one of the reasons why we are such a great firm.
Collective teamwork is even more important today given the current economic situation. Our process depends on a strong team to execute responsibilities and to provide superior service. We are growing in these tough economic times and relishing working harder than ever. We’re looking for strategic opportunities for our clients and our company. Our results in the past few years have been considerably better than the Standard and Poor 500 Index (S&P), and our company is growing as a result. In fact, we added three new members to our team last year.
Our style of investing is based on a macro-economic focus, in some ways we’re like an economic “think tank.” We focus on the consequences of policies and how they affect asset values - then we implement the necessary changes to our client portfolios. An example of such thinking was when we forecasted the coming of the current credit crisis more than a year before it occurred, and took deliberate steps to move our clients into more-protected assets. At the time, and as we moved our clients completely out of the financial sector, many thought we were crazy.
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Our team took every opportunity to explain to our clients why we were making such drastic changes. In a few commentaries sent to clients in the early part of 2007, our CEO, Harlan Cadinha, explained, “The sub-prime borrower is simply the weakest link in the mortgage chain, and it has broken.” Neil Rose, our chief investment officer, added, “We think the chances of a U.S. recession in the next year or so are better than slim ...” How right they were!
As a result of these allocation decisions, while the S&P was down 37 percent in 2008, our typical client portfolio was down considerably less than the market. It’s not the first time our ability to forecast saved our clients substantial losses. We’ve found our forward-looking strategy works well on the upside, too. In 2007, Cadinha & Co.‘s typical client portfolio was up more than the S&P’s 5.5 percent return.
We are currently ranked at the top of investment advisers across the country. This top rating is based on our current low-risk and high-return performance - the combination that is a direct result of our investment philosophy. Our record has reached the ears of interested M a i n l a n d investors, driving them to our door. It’s interesting that at times we still encounter the stigma that many local companies face: the perception that a Mainland company can do it better. I find it funny that we occasionally still have some difficulty convincing local investors that a local firm is as good as or better than a Mainland one. Mainland investors certainly don’t have any problem coming across the ocean to a Hawaii firm.
Our macroeconomic process and our strong team have made us one of the oldest and largest investment advisory firms in Hawaii. Being locally owned, we feel that we understand what the people of Hawaii are looking for in an investment adviser. We manage roughly $600 million in assets for many local kamaaina families and investors throughout the Mainland and abroad. Cadinha & Co. was founded on the philosophy that I learned at my father’s knee: Recognize your strengths and keep improving them, look for opportunities resulting from changes in the marketplace, and be nimble and quick to adjust to them and always value good relationships. This philosophy is the foundation of our firm as much as it is the future of our firm. It’s a philosophy that works for our clients, our team and for me. I’m working on instilling it in my children as well.
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