Item 5: Fees and Compensation
Description
Giverny bases its fees on a percentage of assets under management:
approximately 1% per annum (0.25% of assets per quarter).
Current client relationships may exist where the management fees are higher
or lower than the fee listed above. Giverny may charge a lesser or greater
Giverny Capital Inc.
investment advisory fee based upon mutual agreement with the client and for
certain criteria (e.g., historical relationship, type of assets, anticipated future
earning capacity, anticipated future additional assets, dollar amounts of
assets to be managed, related accounts, account composition, negotiations
with clients, etc.). Lower fees for comparable services may be available from
other sources.
Fee Billing
Clients engage Giverny to provide investment management services on a fee-
only basis. The Firm charges an annual investment management fee based
upon a percentage of the market value of the assets managed by Giverny.
The annual investment management fee charged is approximately 1.00% of
the market value of a client's assets under management, inclusive of cash
and accrued income.
Giverny's annual investment management fee is paid in arrears on a calendar
quarterly basis (i.e. January 1, April 1, July 1, and October 1) and calculated
based on ¼ of the annual fee (approx. 0.25% per quarter) of the market value
of a client's assets under management on the last trading day of the prior
calendar quarter. Unless otherwise directed by the client, Giverny’s
management fee is debited on a quarterly basis by the custodian directly from
the client’s account.
If the investment management relationship begins subsequent to the
beginning of a calendar quarter, then the initial fee is prorated over the
remaining days in the initial calendar quarter and debited on the first day of
the following quarter. In the event that the client terminates the engagement
prior to the end of a calendar quarter, the investment management fee is
debited from the client's account on a prorated basis using the number of
days in the calendar quarter that the client's account was under management
and the market value of the account on the day the engagement was
terminated.
Giverny's fees are not adjusted to reflect account deposits or withdrawals
during a quarter. If a client has more than one account with Giverny on which
investment advisory fees are charged, then the fees computed can be based
on the combined market value of those accounts, and the management fee
can be charged to any of the client’s underlying accounts as deemed most
appropriate by the Firm. In the situation where multiple accounts exist under
the same household, then all accounts can be treated on a combined basis
for the purpose of calculating fees and account size.
Giverny reserves the right to negotiate the management fee under certain
circumstances. Giverny does not impose a per client minimum for investment
management services but does have the discretion to do so if the initial
account value is deemed too small to cover expenses related to the
management of the account. The Firm considers accounts of less than
$250,000 as small in proportion to their associated expenses for U.S. clients.
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Other Fees
We buy and sell client securities through the client’s custodian. There are
commission charges assessed to these transactions which are debited
directly from the client’s account by the custodian. These charges depend on
the custodian/broker rates. Giverny does not receive any portion of the
brokerage commissions and/or transaction fees that the client pays to the
custodian or broker. (For more details on brokerage practices, please see
section Brokerage Practices of this Brochure.)
Although Giverny typically selects individual equity securities on behalf of
clients, and therefore avoids additional management fees, a portion of a
client’s account may be invested in money market or other types of mutual
funds (“Fund” or “Funds”). These Funds charge investment management
fees. The advisory fees paid by a client to the Firm are distinct from, and in
addition to, the fees and expenses paid or allocated to a client as a
shareholder of a Fund. A complete explanation of fees and expenses
charged by the Funds is contained in the prospectus delivered by each Fund.
Termination of Agreement
Giverny reserves the right to terminate any client relationship for any reason.
Such termination is done in writing by the Firm and the management fee
would be prorated according to the number of days that a client’s assets were
under management by the Firm.