PERFORMANCE FOR THE PERIOD 6/1/2011 – 11/30/2011
The GoodHaven Fund +.84%S&P 500 Index (with dividends reinvested) -6.25%
PERFORMANCE SINCE INCEPTION 4/8/2011 – 11/30/2011
The GoodHaven Fund +2.60%S&P 500 Index (with dividends reinvested) -4.80%December 23, 2011
Dear Fellow Shareholders of the GoodHaven Fund (the “Fund”):
Since inception, the GoodHaven Fund has outperformed the S&P 500 Index(with dividends reinvested) by approximately 7.4% – this is a good start, but not yetworth celebrating.
We have been reasonably cautious in deploying the Fund’scapital and the Fund still has a significant chunk of cash allowing us to investopportunistically.Although we try not to be overly influenced by macro events, we talked last Mayabout issues with European financial institutions. Since early fall of last year,financial media outlets have discussed little else. We remain deeply concerned aboutunsustainable financial trends both here and abroad. Governments are borrowingenormous amounts to finance out-of-balance budgets and to paper over private losseswhile central bankers are helping by hugely expanding their balance sheets andkeeping interest rates low. In turn, investors are now rightly questioning whetherthese trends can continue.If too much debt is the problem, it should be axiomatic that even more debt can’tbe the solution. Accordingly, we remain skeptical about proposals that play for timeby shifting debt around. Eventually, losses must be realized and sound fiscalmanagement restored. To paraphrase economist Herbert Stein, “Trends that can’tcontinue [mathematically], won’t.” Markets have a way of eventually forcingpoliticians to act, whether they want to or not.Notwithstanding the above concerns, it rarely pays to be overly negative aboutthe future. Even in the Great Depression of the 1930s, the stock market bottomoccurred less than three years after the crash of 1929. The economy remained erraticwell afterwards, but investors who had cash or liquid securities from past prudencewere rewarded by investing when pessimism was rampant.The good news for long-term investors today is that headlines are negative,individuals have been withdrawing from mutual funds at a breakneck pace for nearly__________
1 We still do not consider performance over short periods to be particularly meaningful. A couple of years from now, we hope to happily omit this footnote.