Hutner Capital Management, Inc. is an SEC-registered investment adviser specializing in long-term investments in high-quality companies. We manage accounts for growth, high current and growing income, and balanced objectives combining the two. Our analysis is based on microeconomic and business principles, emphasizing true investment over speculation.           

Our clients include individuals, families, corporate pension plans, self-directed retirement accounts, trusts, and non-profit organizations. As a second- and third-generation family-owned business, we have a long tradition of serving families and extended family groups over multiple generations. In the spirit of a family office, we assist with financial planning and coordinate with legal, tax, and other professionals to develop, review, and maintain financial and estate plans.

Investment Philosophy: Investing In Quality

We look for companies that enjoy competitive advantages that serve as a moat against competition. Through microeconomic analysis we identify businesses that have maintained extraordinary profitability over time, are likely to maintain that profitability in the future, and ideally offer the capacity to consistently reinvest those profits in future growth. These hallmarks of quality — strong and growing earning power and cash flow — minimize downside risk in weak markets and translate to high long-term returns over full business cycles.

One of the marvels of the public markets is that companies such as these are available for purchase by nearly anyone. Yet a truly high quality company is rare, and many are no secret, leaving them expensively priced.

Fortunately, there is a long-standing and well-documented undervaluation of high-quality companies as a whole, meaning that their edge is such that they are worth more than their apparently rich price. And more importantly, human psychology and investor herding, amplified by financial and social media, drive companies to irrational valuations (high and low), offering attractive entry points to the patient and rational investor.

Of course, the average investor, lacking a fundamental understanding of a business beyond the latest headlines, tends to be buffeted by financial and social media enthralled with flashy new speculations, or overly pessimistic about the temporary challenges high-quality companies may face from time to time. And the investor who throws up his or her hands and just chooses an index is picking a mix dominated by companies that are low quality (since high-quality companies are rare) and overpriced (since most popular indexes are weighted by the market value of the stock).

In contrast, we look at portfolios as if we were building a holding company and acquiring various divisions. We might add a powerful brand, or a toll bridge, or a retailer with a low cost advantage. We diversify across industries, so your "company" isn't overly cyclical or tied to the fortunes of any one. But unlike the extreme diversification common today, you own a meaningful enough position of a high-quality business to benefit from it, and you avoid the inevitable exposure to low quality businesses of broadly diversified indices.

Quality as an investment factor has been studied extensively and the research papers and articles summarized in our Quality Bibliography detail the results. While approaches to identifying quality vary, the common thread through all of these studies is that high-quality companies are systematically undervalued relative to their future potential. As noted in the paper on the Nifty Fifty, even many of that group of high-flying stocks in the 1970s actually turned out to warrant their then-lofty valuations over the long run. The bottom line: assembling a portfolio of high-quality companies can give you an intrinsic edge over the rest of the market chasing volatility and beta.

Our Custodians

All client accounts are held in the client’s name by an outside custodian. Each client has a direct contractual relationship with their custodian. Our role is to manage the investments inside the accounts for our clients. We do not receive any compensation from the custodian for the relationship they enjoy with our clients.