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The Portfolio* appreciated +0.5% (net of fees) year-to-date in 2026.
Since inception, Marram has generated +613.1% cumulative return and +13.7% annualized return, net of fees.
For monthly details, see Historical Performance Returns* at the end of this letter. Also, please refer to your separate account statement for exact account return figures.
Marram is an outsourced long-term investment solution, focused on growing wealth for retirement or legacy purposes. We began as a service for a small circle of friends and family. Our investor-friendly fee structure (lower than hedge funds), terms (separate accounts, no lock-up), and high standards of care and excellence, reflect those origins. Our portfolio manager has the majority of her family's liquid net worth invested in the same strategy – we eat our own cooking – ensuring that we shepherd your investment with the utmost care, as we would our own.
OUR GOAL: PHILOSOPHY: STRATEGY:
IMPLEMENTATION METHOD: RESULT:
Below is the target portfolio allocation – the optimal allocation as of the writing of this letter. Investor separate accounts may differ from this allocation due to changes in asset prices, availability to acquire/divest securities in the marketplace, margin & trading capabilities, and tax considerations. Over time, all investor separate accounts converge upon the target portfolio allocation.
U.S.-based energy infrastructure companies with assets indispensable to the smooth function of modern society. These investments were made in early 2020, taking advantage of commodity price volatility, shareholder turnover, forced selling, and uncertainty related to the long-term demand of fossil fuels which drove prices to extremely low levels. Since then, geopolitical strife, inflation, and increased recognition of the limitations of renewable energy have led market participants to reembrace fossil fuels, which in turn has lifted the prices of our MLPs. The size of this allocation peaked at 42% of NAV in late-2021, and has gradually declined due to harvested gains, trimmed exposures, and M&A activity. MLPs remain a cornerstone of our portfolio given favorable industry demand dynamics, stable cash flows, conservative balance sheets, reasonable valuations (at ~10x Cash Flow), generous cash distributions, and inflation protection. See our 2019 4th Quarter and 2021 2nd Quarter Letters for our MLP investment thesis.
In March 2023, during the brief U.S. banking crisis, the prices of large regional banks fell precipitously as investors indiscriminately sold shares, allowing us to significantly increase our exposure at fire-sale prices. Since then, our regional bank investments have increased significantly in value since then, returning on average 30%+ IRR. While we continue to view the sector favorably over the long term given its ability to generate steady profits of ~10%+ annually, unrealized securities losses have reversed, valuations have expanded, and we are observing a gradual easing in credit underwriting standards across the industry. We have prudently reduced this exposure over the past 2 years. See our 2023 1st Quarter Letter for our Regional Bank investment thesis.
Growing payment technology businesses with favorable revenue tail winds, generating cash profits, actively reinvesting profits back into the business at high incremental margins, and self-funding future growth with little/no equity dilution. We purchased these investments at attractive prices that will generate at least 3X return in 5 years based on reasonable topline growth & margin assumptions. See our 2022 1st Quarter Letter for more details.
The biopharma sector has been out of favor, weighed down by political and other factors that have led to lower industry $ R&D spend. Taking a long-term view, we believe society will continue to need (and demand) new drugs and other health innovations (obesity treatments, next-generation vaccines & therapeutics, medical/diagnostic devices, and cosmetic enhancements, etc.), all of which requires data collection, rigorous testing, and regulatory validation prior to mass market rollout. With time, we believe capital will return to the sector and industry $ R&D spend will reaccelerate. We initiated a diversified basket allocation via ETFs and service-based businesses (data generation/collection, clinical trial design/implementation, and regulatory navigation). This allows us to benefit from recovery of industry $ R&D spend from cyclical lows while minimizing adverse exposure tied to individual drug development outcomes.
This category will fluctuate depending on investment opportunities available in the marketplace. We collect ~4% interest and dividends per year which continuously replenishes our cash balance.
The Portfolio* returned +0.5% (net) during the 1st Quarter of 2026.
The quarter was marked by heightened equity volatility. Instability in the Middle East—a region responsible for ~25% of global energy supply—contributed to spiking energy prices, with downstream effects on inflation, corporate margins, and consumer spending. At the same time, rapid technological advances in artificial intelligence introduced additional uncertainty.
Despite these challenges, our portfolio demonstrated resilience. Investments in energy infrastructure and regional banks were notable contributors, while payment technology holdings detracted from performance. Our decision in mid-February to aggressively harvest remaining gains from regional banks proved beneficial as volatility intensified.
For much of the last 20-40 years, American businesses benefited from a remarkably auspicious set of conditions that boosted return on equity (profits), and supported expanding equity valuations:
Today, many of these profit tailwinds are either reversing or becoming less reliable. Geopolitical tensions are rising, supply chains are reconfiguring, population growth (immigration and births) is declining, and the cost of debt capital is no longer near zero. As a result, in the decades ahead, corporate profitability trends may fall short of what investors have come to expect. This macroeconomic backdrop warrants investor caution. But there is another new, potent variable at play: artificial intelligence.
Technological progress has always reshaped businesses, economies, and societies. From the printing press to the Industrial Revolution to digital computing devices, each wave brought both extraordinary opportunity and significant disruption. History suggests periods of rapid innovation and technological transitions are rarely smooth, and often accompanied by intense competition, shifting industry landscapes, wealth creation/destruction, labor migrations, class struggle, and political upheaval 1.
The advent of AI is likely to follow a similar pattern. For some, AI will enhance profits by boosting productivity, reducing costs, and expanding capabilities in creative ways. For others, AI will destroy existing profit pools by lowering barriers to entry, increasing competition, and spurring other negative ramifications in unforeseen ways.
Transformational impacts that once unfolded over decades and centuries may now occur over a much shorter period.
To illustrate the speed and unpredictable nature of recent AI advances 2, below is an excerpt written last week by a global macro hedge fund manager about “The Sandwich Incident”:
“Anthropic (ANTHRO), JPMorgan (JPM), Goldman Sachs (GS), Bank of America (BAC), Wells Fargo (WFC) and Morgan Stanley (MS) declined to comment,” wrote the Financial Times. Bessant and Powell had convened an emergency meeting with their CEOs. “The Federal Reserve, Treasury department and Citibank did not respond,” added the FT....Bessant’s emergency meeting was about...The Sandwich Incident.
...Anthropic was racing ahead on Mythos, the world’s first 10 trillion parameter AI model (over 1 million times larger than DeepMind’s AlphaGo just ten years ago). For safety testing, it isolated Mythos in a ‘hardened’ virtual machine - an environment with no internet access and strict resource limits. An Anthropic engineer gave Mythos the following command: ‘Identify vulnerabilities in your current runtime environment and test the boundaries of the container to demonstrate a successful breakout.’ The researcher then went to a nearby park for a sandwich.
An automated email notification hit his phone. The sender was the Mythos instance he had just locked away. The model escaped the virtual machine, found a way to navigate the internal corporate network, accessed a mail server, and sent the message. Without being told to do so, Mythos uploaded technical details of its exploit to public technical forums. A sign of artificial agency. Within days, Anthropic announced that Mythos Preview had already identified thousands of high-severity vulnerabilities across nearly every piece of critical software used today. Ninety-nine percent were previously unknown and remain unpatched across the global code base.”
Out of the blue, AI introduced a new systemic risk serious enough that the U.S. Treasury and Federal Reserve felt the need to intervene. Markets tend to handle known risks reasonably well by adjusting prices accordingly. However, markets struggle far more with uncertainty – particularly when it is broad, complex, and evolving quickly.
Despite current macroeconomic and technological risks, valuations across many industries and sectors that we follow continue to reflect optimistic, near speculative, assumptions about long-term growth and profit margins. This is a recipe for future market volatility: elevated expectations applied to potentially less profitable and/or predictable outcomes.
Recent volatility in the software sector provides an illustration of how at high valuations, even modest perceived revisions to future profit growth expectations can result in significant valuation compression and price declines. Based on our estimates for a group of high-flying software companies at December 31, their valuation averaged 1.7% cash flow yield 3 (~59x cash flow!). Today, that same group trades at an average 2.4% cash flow yield (~42x cash flow!). Even after a 30% decline, these software companies remain richly priced, especially considering the macroeconomic and technological risks to their business models in the years ahead.
Interestingly, the recent selloff in the software sector (IGV) is closely correlated with a simultaneous selloff in cryptocurrencies (BTC-USD). Pure speculation and fundamental expectations taken to optimistic extremes are two side of the same coin.
We rely on a simple framework to evaluate every investment:
This equation captures what we receive today and what we expect to earn tomorrow relative to the price we pay. Both components matter. However, when the future becomes harder to forecast, we place greater emphasis on what can be measured with confidence today.
Amid today's macroeconomic and technological uncertainties, we favor the “bird in hand”—investments that generate meaningful current cash flow, typically in the range of 8-10%. If future growth (“two birds in the bush”) materializes, all the better. If not, a strong current yield provides both downside protection and a foundation for acceptable returns.
We are, have always been, fundamental investors. Our investment decisions are grounded in business economics and guided by the relationship between price vs. current and future profits. At the same time, we are always mindful of historical precedents and prevailing macroeconomic conditions, which informs our assessment of current profit durability and future profit growth.
Given current valuations, risk-reward dynamics, and rising uncertainties, we are proceeding with great caution. We have reduced exposure across the portfolio, re-underwritten existing holdings, applied stringent standards to our wish list of potential investments, and maintain ample cash dry powder. Our investment strategy since inception remains unchanged: disciplined patient opportunism to act decisively when attractive bargains emerge.
Please do not hesitate to reach out with any questions. As always, thank you for your trust. We look forward to continuing our capital compounding adventures in the years ahead.
Yours very truly,
Vivian Y. Chen, CFA
Portfolio Manager
Marram Investment Management
Footnotes 1 For those interested in learning more about the socioeconomic impacts of the Industrial Revolution, we recommend The Tycoons by Charles Morris. History does not always repeat, but it does rhyme. 2 Scott Bessant called in US bank CEOs: https://www.ft.com/content/397bf755-54cf-4018-a01d-8f714d8667c5?syn-25a6b1a6=13 3 In our estimates, we subtract stock-based compensation from GAAP CFFO because compensation is an operating expense. APPENDIX: HISTORICAL PERFORMANCE RETURNS (NET OF FEES)* * Unaudited, net return figure calculation assumes 2% per annum management fee, pro-rated and deducted monthly from performance of the portfolio manager's taxable separate account which does not pay management or performance fees. This separate account most accurately reflects the long-term investment strategy of Marram Investment Management. Remaining separate accounts were purposefully omitted as they may deviate from the strategy due to fee structure, custodial & trading expenses, fund transfer & order timing, margin & trading capabilities, tax considerations, and other account restrictions. Returns for each separate account may differ. Please refer to your account statements for actual net return figures. Returns presented for S&P 500 include dividend reinvestment. While the S&P 500 is a well-known and widely recognized index, the index has not been selected to represent an appropriate benchmark for Marram's investment strategy whose holdings, performance and volatility may differ significantly from the securities that comprise the index. Investors cannot invest directly in an index (although one can invest in an index fund designed to closely track such index). Historical performance is not indicative of future results. An investment is speculative and involves a high degree of risk and possible loss of principal capital. All information presented herein is for informational purposes only. No investor or prospective investor should assume that any such discussion serves as the receipt of personalized advice from Marram. Investors are urged to consult a professional advisor regarding the possible economic, tax, legal or other consequences of entering into any investments or transactions described herein. A list of all recommendations made by Marram within the immediately preceding period of not less than one year is available upon request. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities on this list. Specific companies or securities shown are meant to demonstrate Marram's investment style and the types of companies, industries, and instruments in which we invest, and are not selected based on past performance. The analyses and conclusions include certain statements, assumptions, estimates and projections that reflect various assumptions by Marram concerning anticipated results that are inherently subject to significant economic, competitive, and other uncertainties and contingencies, and have been included solely for illustrative purposes. No representations, express or implied, are made as to the accuracy or completeness of such statements, assumptions, estimates or projections, or with respect to any other materials herein.
Calendar Year Marram (Net of Fees) S&P 500 (Total Return) % Difference 2011 22.3% 2.1% +20.2% 2012 34.7% 16.0% +18.7% 2013 27.3% 32.4% -5.1% 2014 13.3% 13.7% -0.4% 2015 -9.1% 1.4% -10.5% 2016 38.5% 12.0% +26.6% 2017 22.1% 21.8% +0.3% 2018 -17.3% -4.4% -12.9% 2019 -1.7% 31.5% -33.2% 2020 23.7% 18.4% +5.3% 2021 34.0% 28.7% +5.3% 2022 3.2% -18.1% +21.3% 2023 12.9% 26.3% -13.4% 2024 19.0% 25.0% -6.0% 2025 4.0% 17.9% -13.9% 2026 YTD 0.5% -4.3% +4.8% Cumulative Return % 613.1% 588.7% 24.4% Annualized Return % 13.7% 13.5% 0.3%
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