In mid-September, Cerner Corp. (CERN) was removed from a prestigious list: The Morningstar Wide Moat Focus IndexSM.

The Index is made up of two components. Morningstar describes them this way:

“Companies must have an economic moat rating of wide (meaning we think they have advantages that will fend off competitors for at least 20 years), and their shares must be among those trading at the steepest discount to their fair value estimates in our coverage universe. (Our fair value estimates are determined through independent research by the Morningstar Equity Research

I am frequently asked about whether I prefer return on capital versus return of capital in my investments. My initial answer to this question is usually

The second quarter saw some dramatic movement at the end of June as Britain voted to exit the European Union. The reaction to this left the markets down during the quarter.

The Standard & Poor's 500TR was down by (0.38%), the Morningstar Total US Equity Index was down (0.8%), and the Nintai Proxy (70% Vanguard US Equities Total Market Index, 15% Vanguard Global Equities Total Market Index, and 15% cash) was down (1.3%). The Nintai Charitable Trust Portfolio was down (2.1%) net fees. For this year through June 30, the S&P 500TR is up 3.8%, the Morningstar Total US Equity

This was quite a year from both a personal and professional perspective. The biggest change was the dissolution of Nintai Partners and the creation of the Nintai Charitable Trust.

Having fought cancer for five years, I simply don’t have the energy to be on the road 250 days of the year traveling to see clients and answering phone calls at all hours of the night. Also, I have focused on my passion for value investing. Working with the Charitable Trust as well as consulting with Dorfman Value Investments has been a pure joy. I simply couldn’t work with more pleasant

“Don’t ever be deceived about big data and informatics in healthcare. The vast majority of data and informatics are transactional – structured, codified and mechanical in nature. Going forward, nearly all the companies expounding on paradigm shifts, tipping points and cloud-based ecosystems will fail. Never forget healthcare is a business industry. Partially for-profit and partially not-for-profit but an industry nonetheless. And industries will always seek out business solutions rather than theoretical solutions. So far, Big Data and healthcare informatics are mostly theories in search of a problem to solve.”

- David Geoghegan

Nelson Hsu – a fellow contributor here at

This is the first public quarterly report of the Nintai Charitable Trust. The Trust is a legacy portfolio of Nintai Partners that ceased operations earlier in 2015. I personally manage the Trust Portfolio and serve as chief investment officer.

The third quarter saw some dramatic movement leaving the markets down significantly during the quarter. The Standard & Poor's 500TR was down by 6.4%, the Morningstar Total U.S. Equity Index was down 7.5%, and the Nintai Proxy (70% Vanguard U.S. Equities Total Market Index, 15% Vanguard Global Equities Total Market Index, and 15% Cash) was down 8.8%. The Nintai Charitable Trust

***** Please note this article has been amended to reflect additional changes during the market drop of August 24th. During the initial minutes of the market opening, Paychex (PAYX) dropped below our limit order of $41.75 and we took an initial position in the company. In addition, we added to our current holdings of Collectors Universe (CLCT), Computer Modelling Group (CMDXF), and Computer Systems and Programs (CPSI). These transactions are reflected in the portfolio summary at the end of the document. ******

This year was truly a year of change at Nintai. Not only have we closed down our management

We were recently talking to a fellow investment manager and somewhere in the conversation - quite nonchalantly - they mentioned that we weren't really value investors. I laughed at the comment and asked why they thought that was the case. They stated (and I paraphrase here) that essentially we were growth-at-a-reasonable price investors because we didn't invest in true value companies. They went on to say our companies were too successful (measurement wise), had not suffered recent operational or strategic crises, and were too richly valued to be considered truly "value" stocks.

This gave me great pause as I truly

Portfolio results

The markets were relatively flat during the quarter. The S&P 500TR was down by (0.86)%, the Morningstar Total US Equity Index was down (1.20)% and the Nintai Proxy (70% Vanguard US Equities Total Market Index, 15% Vanguard Global Equities Total Market Index, and 15% Cash) was down (0.84)%. The Nintai Portfolio beat the averages gaining 0.55% net all fees. Year-to-date (YTD) the S&P 500TR is up 0.96%, the Morningstar Total US Equity Index is up 0.88%, and the Nintai Proxy is up 1.03%. The Nintai Portfolio is up 8.82% YTD net all fees.

Several stocks drove our performance

We were reading two very interesting articles in the past few days. The first was The Science of Hitting's "Process vs. Outcomes, Revisited " of April 7, 2015 and the second was "False Discoveries in Mutual Fund Performance: Measuring Luck in Estimated Alphas

Last week we used Computer Programs and Systems (CPSI) as a company with a

Analysis of a