Welcome to TERRIL & CO.

Terril & Company is an independent wealth management company founded in 1979 by John “Joe” Terril. Since then, referrals from satisfied clients and third-party professionals have fueled virtually 100% of its growth.

The company takes a highly personal approach to serving clients, which typically include high net worth individuals, trusts and private/corporate retirement plans.

Members of the Terril staff answer their own phones and truly offer close, personal service.

The investment selections Terril makes are based solely on their potential to produce positive, long-term returns for clients. The firm derives 100% of its revenue from client fees and 0% from commissions tied to the sale or purchase of securities.

Fundamentals foremost; patient, often contrarian investing

Recognizing that “bandwagon” investing and playing momentum historically result in catastrophic losses, Terril & Co. searches for investments with characteristics or catalysts not fully appreciated by markets. As a long-term investor (usually three years or more) Terril will hold out-of-favor investments until positive change in their fundamentals becomes evident. While Terril hunts for unrecognized investment opportunities, it stows investor capital in liquid short-term investments to produce income and protect principal.

Terril & Co. believes that its willingness to make disciplined investing decisions apart from “the crowd” is central to its success. Why? Because many professional money managers chase performance and buy the ”hot” investment trends of the day.

Psychologically, it’s far easier for managers to buy the investments their peers are buying because being wrong with “the crowd” is more comfortable than being wrong while standing alone.

Many investors – professionals included – are apt to underestimate investment risk. In bull markets, they are eager to buy more of what is high in price. They tend to manage to performance benchmarks and are more inclined to expand risk boundaries. In bear markets or with out-of-favor assets, their evaluations often fail to reflect the truism that many times, when an investment is low in price, significant financial risk is already eliminated.

Seeking 3X the reward for risk assumed

Terril & Co. seeks to manage risk by searching for investments with the minimum long-term potential to return three times the reward for the risk assumed.

It evaluates all forms of potential investments: equities and fixed income (domestic/foreign); preferred stocks (convertible/straight); commodities; exchange traded funds (ETFs); precious metals; MLPs and GPs of exchange-listed energy infrastructure trusts; real estate investment trusts (REITs); venture capital; and private placements.

Terril’s disciplined approach helps to remove emotion from investment decision-making. It tends to buy when the price reaches a favorable risk/reward threshold, which can lead Terril to being lightly exposed to markets that it believes are over-valued. The firm’s independence also frees it to take profits in successful investments when peers fear being underinvested.

Targeted annual return goal

Year to year, Terril & Co. seeks to generate 3% to 5% real growth (over and above inflation, taxes and fees) in client portfolios. Historically, wealth managers who consistently deliver investment returns in this range are rated in the top tier of investors.

Terril’s standard for acceptable investment return differs markedly from that of industry-driven money managers. In a year when the S&P 500 declines 21%, those managers are pleased to report a 17% loss to clients.

Fee scale reflects total return sensitivity

Conscientious cost control and an equitable fee structure help boost the net return to clients. Fees, calculated and billed quarterly, are entirely negotiable. Terril does not bill in advance. An advisory contract can be cancelled at any time without penalty.

The firm derives 100% of its revenue from client fees. It does not charge or accept any type of commission or other compensation for the sale or purchase of securities.

Fee scale

Market value of managed assets Annual fee as a percentage of managed assets
Up to $1 million 1.0%
$1 million to $3 million 0.75%
$3 million to $5 million 0.6%
$5 million and above 0.5%

*Illustration: Presuming the negotiated fee to manage a $1 million portfolio is 0.75%, the cost to the client is $7,500 on an annual basis. If a client can earn 5% self-managing a portfolio, Terril & Co. needs to earn 5.75% to justify its involvement.

Clients receive an easy-to-understand, two-page investment performance report every quarter. The report clearly presents eight key financial metrics.

  1. Current total value of assets in portfolio
  2. Current asset allocation (expressed as a percentage of total portfolio)
  3. Bond call/put information and maturities
  4. Accrued dividends and interest
  5. Deposits and withdrawals made during the quarter
  6. Portfolio gain or loss during the quarter (expressed in U.S. dollars)
  7. Five-year history of quarterly rates of return (deposits and withdrawals time-weighted)
  8. Annual rate of return (after four quarters)

If your performance report sparks a question, please call. Your call will be answered by one of our professionals who is eager to help.

Terril also welcomes client meetings to discuss investment performance and strategy.

To review a sample quarterly report, click here.

Sample
QUARTERLY REPORT
ABRAHAM LINCOLN FAMILY TRUST *
Quarter Ending December 31, 2020
Equities 55.80%
500 Coherent Inc. 75,010
500 Qualcomm Inc. 76,170
750 Starbucks Corporation 80,235
1,000 Merck & Co. Inc. 81,800
1,200 iShares MSCI Emerging Markets 62,004
1,250 Truist Financial Corporation 59,913
1,400 Bristol-Myers Squibb Co. 86,842
1,500 Citigroup Inc. 92,490
1,500 Newmont Mining Corp. 89,835
1,750 Delta Air Lines, Inc. 70,368
1,750 Verizon Communications 102,813
2,000 Nutrien Ltd. 96,320
2,200 Marathon Petroleum Corp. 90,992
3,500 Bausch Health Companies 72,800
8,000 Plains GP Holdings L.P. 67,600
BONDS & FIXED INCOME 27.42%
140 US Bancorp Series A Pfd FLT 3.5% 135,239
5,500 Ally A FLT 6.007% 148,775
25,000 Aberdeen Asia-Pacific Income Fund 111,250
100,000 Ford Motor Credit FLT 1.29575% 08/03/2022 97,250
150,000 Int'l Lease Fin FLT 3.23% 12/21/2065 99,750
Other 4.55%
50 Ounces Gold 98,308
Cash Equivalents 12.22%
100,000 General Motors Financial Corp. 4.2% 03/01/2021 100,300
Bank Trust Department Money Market 157,680
Accrued Dividends Earned 4,176
Accrued Interest Earned 1,760

CURRENT TOTAL $2,159,680

Deposit 12/22/2020 $3,000
Balance 9/30/2020 $1,938,299
Gains from Investment** $218,381
*Abraham Lincoln Family Trust is a fictitious name to protect the confidentiality of an actual client and is representative of a typical account that Terril & Company manages with a balanced investment objective.
** Gain or loss from investment is net of any fees and includes the reinvestment of earnings.
Five Year Performance
REVIEW BY QUARTERS**
Abraham Lincoln Family Trust ^
December 31, 2020
Quarter Ending: 2016 2017 2018 2019 2020
March -4.38% * 3.31% * -0.87% * 7.59% * -23.25% *
June 2.48% * 1.88% * -0.46% * 1.55% * 12.48%
September 4.79% * 2.19% * 0.45% * 1.52% * 3.45%
December 5.87% * 1.75% * -10.72% * 5.90% * 11.26%
Annual 8.71% * 9.44% * -11.51% * 17.46 -0.64

First performance reported March 31, 1988.
* Taxable Equivalent

2015 -6.4% * 2010 17.06% * 2005 1.56% * 2000 23.88% * 1995 13.90% * 1990 8.04%*
2014 6.00% * 2009 23.55% * 2004 2.41% * 1999 0.56% * 1994 0.36%* 1989 16.36%*
2013 13.45% * 2008 -1.42% * 2003 15.11% * 1998 -1.65% * 1993 4.08% * 1988 5.05% *
2012 10.91% * 2007 5.65% * 2002 3.21% * 1997 13.76% * 1992 9.93%*
2011 -1.19% * 2006 9.33% * 2001 8.56% * 1996 7.02% * 1991 20.55%*

^ Abraham Lincoln Family Trust is a fictitious name to protect the confidentiality of an actual client.

** The above performance are the actual results of a $5-$10 million retirement plan under our management, is net of any fees and includes reinvestment of earnings and is managed with a balanced investment objective; results were achieved with the following asset ranges: Equities 0-50%; Fixed Income 15-95%; Cash Equivalents 0-80%; and Other 0-10%. We believe the above to be indicative of our average historical results. However, such results are not guaranteed. Future results may be materially different. It is possible for accounts to lose money.

Written Blog: Thoughts on the Economy

Thursday, March 10, 2022

Markets are much changed since our last letter. There are many issues behind the moves. The main issues are inflation, the Russian invasion of the Ukraine, falling covid cases, the outlook for interest rates and the outlook for the world economy.

Covid cases are falling sharply in most of the world. Many countries are slowly dropping travel restrictions while simultaneously re-opening their economy to pre-covid levels. We expect this trend to continue and result in strong economic growth around the world. While inflation is a threat to this increased consumer spending, we believe recent geopolitical events will increase this trend. Consumers are showing a propensity to spend. They lived through the threat of covid. Now they are confronted with a dictator in Russia potentially destroying world peace. Both events are creating a reason for consumers to examine their “bucket list” with the goal of crossing off a few entries. This may be travel, buying a new vehicle or a new house, adding a pool or extension to their existing house, buying different clothes, attending sporting events etc. A recent survey of Europeans revealed many people saying they always wanted to visit the United States. They now pledge they are going to do the same. Good for the U.S. economy.

The Russian invasion of the Ukraine is tragic in the suffering and deaths it will cause before it is over. The economic results are not as certain. A world-wide recession that some predict is not a certainty. Higher prices for certain commodities are more of a guarantee. While difficult to deal with the prices, it is not a precursor to ruining the world economy. We hope that a negotiated end to the invasion can come soon.

Before the invasion, inflation was moving significantly higher. This was sure to bring about an increase in interest rates in the U.S. and elsewhere. There is nothing that changes our opinion about inflation. If anything, the war will cause inflation to be even higher than pre-war. Interest rates will need to go higher than previous expectations. Central Bankers including our Federal Reserve may go much slower in raising interest rates due to concerns about the Russia/Ukraine tragedy. This will only assure that inflation and interest rates are headed higher.

We expect bond prices to trade much lower between now and year end regardless of what happens overseas. Only keeping durations as short as possible will prevent fixed income losses. The stock market will trend lower over the year marked by intermediate periods of rallies, only to later make new lows. Buying the dips will not work. Commodity stocks are performing well and will be a small area of the stock market that will perform. Commodity prices from beans, corn, wheat, oil, natural gas, copper, gold etc. will be volatile, but are not going back down to levels of a few years ago. The Nasdaq YTD is down 17%, the S&P is down 11.4%. Energy stocks are, on average, up 35%. Global metals and mining are up 11%. Commodity related stocks are, on average, up 20%.

Our managed portfolios are showing slight gains YTD. Our positions for the last 18 months have avoided high flying Nasdaq issues with little investment merit, while concentrating on good cash flow generating companies with positive exposure to inflation.

We view a strong world economy. However, we believe the best investment approach is one of selection and caution.

PAST THOUGHTS


Client Security/Privacy

Terril applies physical, electronic and procedural safeguards that meet industry standards for client security. It does not warehouse sensitive data (such as social security numbers) in its firewall-protected computer network. Its office is video-monitored 24/7.

All client communication, including your name, contact information and questions, is kept strictly confidential and made available only on a “need to know” basis to members of our staff. Click here to read our privacy policy.


Registered with SEC

“Terril and Company” is the operating name for Terril Brothers, Inc., an SEC registered investment advisor and a corporation wholly owned by John “Joe” Terril. Click here to view a copy of the firms SEC registration. “Click here to read Form CRS”. If you would like a paper copy of the firm’s registration statement, please call.