The knifing winds. The numbing cold. The snapping dogs. The foreboding darkness.
For Daniel F. Dent, these are the recollections of the Iditarod dog sled race - or perhaps another day on Wall Street.
Dent, who twice participated in the storied Iditarod, is also a Baltimore money manager with one of the best-performing funds in the country.
Like an ad campaign for a national bank that asks what can investors learn from events outside the world of finance, Dent said that principles he has absorbed from the grueling 1,100-mile race from Fairbanks to Nome, Alaska, have made him a better money manager.
"People might feel it is kind of far-fetched," Dent, 63, said of the comparison, "but the more I think about it, the more meaning it has for me."
His three-year-old DF Dent Premier Growth Fund, which has $23 million in assets under management, is up a robust 15.11 percent in the 12 months that ended Aug. 31. That made it the fourth-best-performing multi-cap fund in the country out of 426 funds, according to Lipper, a New York-based mutual fund research company. The fund's three-year annualized return was 4.77 percent, ranking it 16th out of 339 funds.
Morningstar, the Chicago-based mutual fund tracking company, gives five stars, its highest ranking, to the fund.
"In the time that it has been around, it has offered pretty good risk-adjusted returns. It is way above average so far this year," said Dan Culloton, a mutual fund analyst at Morningstar.
Dent has been an analyst and money manager for more than 35 years. The majority of the $1.8 billion he handles is for private clients, companies, pension plans and endowments through D.F. Dent and Co. Stocks that are held in the portfolios he manages have an annual return of 16.2 percent in the 10 years that ended in June, according to the firm's annual report, beating the Standard & Poor's 500 stock index's return of 11.8 percent.
One of Dent's "lessons from the trail" is to always be prepared.
"People who have never raced a dog team cannot possibly understand the attention to detail and planning that is required," he said.
A sled being pulled by 16 dogs at about 12 mph isn't unlike a portfolio of companies, with disparate parts that need to act in concert and that demand attention to detail. The musher, or driver, needs tools to change dull sled runners, ointments and bandages for injured dogs, food, batteries, clothing, a pistol to shoot an angry moose and extra light bulbs for the headlamp.
"If the bulb in your headlamp goes and you have got a bulb at the bottom of your sled underneath a bunch of dog food, you have got a problem," Dent said. "Simple little details like extra light bulbs and knowing exactly where they are - you have got to really pay attention to the detail."
Before buying a stock, Dent prepares by talking with management, reading financial filings, including the fine-printed footnotes, and meeting with customers and suppliers. He and his staff of five researchers and portfolio managers meet executives from about 15 different companies a month.
"We really try to figure out what is happening from a lot of different perspectives, and try to drill down and dig at what the nitty-gritty details of these companies are," Dent said. "You just keep looking and looking and looking until you find something that has just the right characteristics. If you are searching all of the time you find something where you don't see a lot of recommendations ... a little light goes off, 'This company and management has really got something going.'"
Like a headlamp slicing the Alaskan night, Dent zeroed in several years ago on Fastenal Co., a Minnesota-based company that sells construction supplies such as nuts, bolts, screws and washers.
"How would you like to invest in a company that distributes nails and bolts?" Dent asked. "Most people would say, 'No way.'"
But Dent was drawn to Fastenal as an investment, in part because management receives small salaries but owns a large share of stock in the company.
Fastenal's co-founder, Robert A. Kierlin, has a reputation for frugality - a characteristic Dent admires in companies he invests in. Kierlin, for example, once met analysts in Baltimore at a business-class hotel in the Inner Harbor but stayed at a cheaper motel off the Baltimore Beltway to save money. And instead of flying from Minnesota to the Maryland meeting, he and his management team drove 1,000 miles in a mini-van so he could visit Fastenal stores on the way.
Dent's mutual fund bought Fastenal shares in August 2001 at $31 a share. Since then, the shares have nearly doubled to $59. The fund holds 13,000 shares worth nearly $767,650.
"Fastenal is the best-managed company that I have seen in over 35 years as an analyst and portfolio manager," Dent said.
Another lesson Dent applies as a money manager and a musher is to remain focused, no matter what is swirling in the markets or on the tundra.
Dent was never a favorite to win the Iditarod, the famed race first run in 1966 to memorialize the life-saving delivery of serum that quelled a diphtheria epidemic in Nome in 1925. He was too tall at 6 feet 4 inches, too heavy at more than 200 pounds and too inexperienced, experts said. His aim was modest by many racers' standards - simply to finish.
After some short training races, Dent's first Iditarod in 1999 ended in disappointment. Nine hours into the contest, one of his dogs stumbled. The others, who had not trained or lived together long, attacked it. Dent broke up the fight but was bitten so badly he was forced to drop out.
A year later, he was back, with a new, more seasoned and better-trained team of dogs. He completed the journey in two weeks and finished 63rd out of about 80 racers. He let some racers pass him, he said, because he was ahead of schedule and feared his wife and oldest daughter wouldn't arrive in Nome on time to see him cross the finish line. He was a more focused musher on his second try, he said.
"You run the race based on the capabilities of your team and what you can do," Dent said. "You don't pay attention to what everyone else is doing. There are a lot of mind games going on during the race."
Some racers start like jack rabbits to tire the competition, or they downplay their dog teams' ability before the race, hoping other mushers will discount them.
"The single most important thing as it relates to investment management is that you run within yourself," Dent said. "We try not to jump onto different fads or strategies that are shorter-oriented. We basically try to continue operating within the areas of our knowledge and experience."
A client recently wanted Dent to put money into commodities, but the money manager advised staying focused on his strategy of investing in growth companies. Dent also shies away from more exotic strategies such as derivatives or hedge funds that periodically rise as fads among investors.
Dent's holdings in the insurance industry reflect his against-the-grain philosophy. After the terrorist attacks on the World Trade Center and Pentagon three years ago, investors began dumping insurance stocks, fearing a flood of claims. Dent did the opposite, diving in to buy shares of RenaissanceRe Holdings Ltd., an insurance company that is among the largest holdings in the DF Dent Premier Growth Fund.
"Everyone was running for the hills," Dent said. "We loaded up."
What other investors did not realize is that the claims paid would quickly be recovered by higher insurance premiums. The 15,000 shares held by DF Dent Premier were worth about $790,500, according to the fund's annual report, more than double the purchase price.
"We try not to be distracted. We try to focus on what we know how to do," said Dent, who, when either dog-sledding or investing through harsh times, recalls a Winston Churchill admonition: "Never, never, never give up."