These are obviously difficult and extraordinary times. While we have had many financial shocks centric to the United States and our capital markets over the last fifty years, we have not had a global crisis on this scale. And while shocks of the last fifty years have been either economic or humanitarian (usually caused by war), we have not had a global health problem of this scale. While I am not capable of addressing the science, it is obvious that the dynamic rate at which COVID-19 spreads is at the heart of this crisis.

The cornerstone of Sandhill from the beginning has been the quality of the assets that our clients own. Quality is paramount when the market takes a steep slide. When the market has a severe correction, everything gets hit badly. When the bear market is over and everything settles down, a new bull market will begin and quality will shine. Those companies that were in marginal shape prior to the crisis will either flounder or go broke. To go a step further, quality companies will actually emerge stronger after an economic shock because the marginal competition goes away. I have seen this many times through my career.

Sandhills equity portfolios (the CEA composite) were up 31% last year. As I sit here in the early afternoon of Thursday March 12th, our equity portfolios (CEA composite) are down about 21.4% year to date in 2020. So, over the last fifteen months, our equity portfolios (CEA composite) have increased in value by 3.0%. This helps to keep things in perspective.

The only relevant question is where do we go from here. Or put more aptly, how long will the bear market last and where is the bottom? No one knows.

Through my career, I have lived through the 1987 stock market crash (the market declined 21% in a day), the deep recession of 1991 (market declined 20% peak to trough), the tech crash of 2000 (the market declined 37% peak to trough), and the 2008 real estate crisis (the market declined 56% peak to trough). All of these events were extraordinarily painful on everyones financial health. Scary and unnerving. In each case, the stock market proved to be an incredible investment from the depths of each respective crisis.

There is an old saw in this business its never as good as you think and its never as bad as you think. Very true. As concerned as people are about their health and finances, this too will pass.

Ill go a step further. We are lucky to live in the United States. Our capital markets are transparent and resilient. I have great faith in them and the people who run corporate America and make our economy go.

We have been taken to task a bit for being a bit slow to communicate with our clientele. That is fair. I will tell you that the investment team at Sandhill has been working feverishly over the last two weeks to put all of our client cash to work. We have finished on the equity side. We are still working on the fixed income side where spreads have widened considerably and there are bargains for the first time in a long while.

I dont know where or when the bottom is. My guess is that we will look back and say this was a great time to put money to work. I have said to many of you: good investors are counter-cyclical they buy when there is fear in the streets and sell when they think the road is paved with gold.

We are protective of your capital and take the stewardship of your capital with the utmost seriousness. We can not control the volatility of the markets, but we can make sure that your assets are invested so that you will have profit and return and be confident in your financial security.

Our advisors are up to date on developments within our portfolio. Please reach out to them with any questions.

As always, I am available to speak with anyone who would like to call.

Thank you,


Edwin M. Johnston III

Founder, Managing Partner






This report has been prepared for informational purposes only and is neither a solicitation to buy or sell securities. Third-party information in this report has been obtained from sources believed to be accurate; however, Sandhill makes no guarantee as to the accuracy or completeness of the information. Sandhill Investment Management (Sandhill) is a registered investment advisor with the Securities and Exchange Commission that is not affiliated with any parent company. Individual results may vary. Investments may not be suitable for all investors. Performance may be materially affected by market and economic conditions. Investment strategies have the potential for profit or loss. The performance statistics disclosed above are calculated on the rates of return from accounts managed by Sandhill, as defined by the following. The U.S. dollar is the currency used to express performance. Composites includes discretionary accounts under management from the first full month at which the accounts capital is fully invested by Sandhill. Closed accounts are included in the composites through the completion of the last full month under management and are not removed from the historical rates of return. Performance presented net-of-fees is reduced by investment management fees, trading expenses, and administrative fees. Interest, dividends and capital gains in these Composites are not immediately reinvested. The Concentrated Equity Alpha Composite includes all discretionary non-wrap fee paying accounts in the all-cap core strategy which may hold large, mid, and small capitalization U.S. common stocks, American Depositary Receipts (A.D.R.s), domestic ETFs, sector ETFs, and cash. Accounts with securities that are not part of the all-cap core strategy are not included in the composite. For a full performance presentation and/or the Firms list of composite descriptions, please call 716-852-0279.