Brochure
Form ADV Part 2A: Firm Brochure
Garrison, Bradford & Associates, Inc.
445 Park Avenue, 9thFloor, Suite 909
New York, NY 10022
Telephone: (212) 557-7440
www.garrisonbradfordinvestments.com
March 31, 2024
This brochure provides information about the qualifications and business practices of Garrison, Bradford & Associates, Inc. “GBA”. If you have any questions about the contents of the brochure, please contact us at (212) 557-7440 or by email at bradford@gbinvest.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.
Additional information about Garrison, Bradford & Associates is also available on the SEC’s website at www.adviserinfo.sec/gov.
Garrison, Bradford & Associates, Inc. is an investment adviser registered with the Securities and Exchange Commission. Such registration does not imply a certain level of skill or training.
Material Changes During the Past Year
William Bradford sold another 27% of his shares in December 2023 to Ms. Sherli Looi, who now owns 46% of the total shares outstanding. Mr. Bradford owns the other 54%.
Table of Contents
Cover Page . . . . . . . 1
Material Changes . . . . . . . 1
Table of Contents . . . . . . . 2
Advisory Business . . . . . . . 2
Fees and Compensation . . . . . . . 3
Performance Fees . . . . . . . 4
Types of Clients . . . . . . . 4
Methods of Analysis, Investment Strategies and Risk of Loss . . . . . . . 4
Disciplinary Information . . . . . . . 5
Other Financial Industry Activities and Affiliations . . . . . . . 6
Code of Ethics, Participation or Interest in Client Transactions
and Personal Trading . . . . . . . 6
Brokerage Practices . . . . . . . 7
Research and Other Soft Dollar Benefits . . . . . . . 7
Brokerage for Client Referrals . . . . . . . 8
Directed Brokerage . . . . . . . 8
Review of Accounts . . . . . . . 8
Client Referrals and Other Compensation . . . . . . . 9
Custody . . . . . . . 9
Investment Discretion . . . . . . . 9
Voting Client Securities . . . . . . .10
Financial Information . . . . . . . 10
Advisory Business
Garrison, Bradford & Associates, Inc. (GBA) is a fee-based investment adviser registered with the United States Securities and Exchange Commission under the Investment Advisers Act of 1940. We provide discretionary, separate account investment management services to individuals, tax-exempt entities, and investment partnerships. The firm was founded in 1974 as Garrison Asset Management by William G. Garrison, formerly a partner at Century Capital. The name changed to Garrison, Keogh & Company in 1976 when Thomas F. Keogh joined from White Weld & Company. William Bradford, who had been President of NSR Asset Management, joined in 1984, and the firm’s name changed to Garrison, Bradford & Associates in 1990 when Mr. Keogh retired. Mr. Garrison retired and sold his stock to Mr. Bradford in December 2021, making Mr. Bradford the sole owner of GBA. In 2022 and 2023, he sold 46% of the company to Ms. Sherli Looi, Executive Vice President and long-time employee.
Our advisory contracts grant us discretionary authority to buy and sell securities for our clients, but not to maintain physical custody of their assets nor to withdraw cash from their account except, with their authorization, for the payment of our fee. As discussed in greater detail in the “Investment Strategy” section, we invest in a broad mix of publicly traded stocks, open- and closed-end funds, fixed income securities and cash instruments with the goal of earning an “optimum” long-term return for our clients. Each client’s portfolio is managed by the firm’s senior portfolio managers. Each portfolio is managed separately and is tailored to that client’s individual goals and objectives. We consult regularly with clients and will take directions concerning legacy (generally low-cost) positions. We will also honor restrictions that clients may impose on investing in certain securities or types of securities. However, we believe that an investment manager’s results can be fairly judged only if he has full investment discretion, i.e., the authority to make the final investment decision.
On December 31, 2023, GBA’s Regulatory Assets Under Management totaled approximately $123 million in 52 separately managed discretionary accounts. Advisory fees on those accounts are the firm’s only source of revenue.
Fees and Compensation
Fees are charged as a percentage of assets under management. We believe this method aligns the interests of the client and investment manager because fees increase only as assets increase, not as a function of trading activity. Fees are billed quarterly after the service is performed. Clients may choose to pay the fee directly, or they may authorize the custodian to pay it from the assets of the account. Our advisory agreement permits termination by either party upon 30 days written notice; during that 30-day period we will honor a request not to engage in any further trading activity.
The annual fee rate for new accounts is:
1.25% on the first $1 million of assets;
1.00% on the next $1.5 million;
0.75% on the next $2.5 million;
0.50% on assets over $5 million.
Accounts in the same family group are combined to receive the maximum volume discount.
Accounts which started several years ago may have different fee rates. These rates are not offered to new clients.
The minimum fee is $5,000 annually per account. In some cases, however, this fixed minimum is waived, and the stated percentage fee is applied if the client has multiple accounts or may open new accounts or add assets.
GBA generally invests directly in equities and fixed income instruments. However, cash balances invested by the custodian in money-market funds and/or strategic investments in mutual funds, exchange-traded funds, REITs and other managed entities may result in the payment, in effect, of two management fees. Besides our management fee, clients incur securities brokerage and other transaction fees (discussed in more detail in the “Brokerage Practices” section). They may also incur custody and administrative fees levied by the independent custodian, who holds the assets and is responsible for tax and other reports.
Performance-Based Fees and Side-By-Side Management
None of GBA’s fees are based on a share of the income, capital gains or capital appreciation of the assets under management.
Types of Clients
GBA’s clients include individuals and their retirement assets, and tax-exempt entities
such as charitable institutions, endowments and employee benefit trusts. Generally, there is a $500,000 minimum for a new account. That requirement may be waived, however, if the account is part of an existing relationship or if a new client is likely to contribute additional assets over time. There is no minimum size requirement for maintaining an existing account.
Methods of Analysis, Investment Strategies and Risk of Loss
Our basic investment strategy is to “optimize” real returns by investing for long-term growth while minimizing risk. Our goal is to own outstanding growth and income stocks and other securities when investment conditions are favorable and to limit losses during periods of cyclical decline in the financial markets.
Philosophically, we believe that strong risk-adjusted investment returns come from the common stocks of companies that grow their sales and earnings on a consistent basis. As a group, these stocks have outperformed most other investable asset classes over the long term, and it is our strong conviction that they will continue to do so. Purchasing these stocks when they are undervalued or taking profits when they become overvalued can enhance the return provided by the underlying growth. To reflect clients' individual needs, we diversify portfolios by the allocation of assets to cash, fixed income and equities; by the number and types of securities held; by exposure to different industries; and by various quality ratings levels. Most of our accounts are “balanced”, meaning they generally hold a mix of equities, fixed income securities and cash equivalents. At certain points in the economic and securities market cycles we will increase or decrease the allocation to these various categories depending upon our analysis of risk and reward opportunities, with the primary emphasis always on maintaining a low level of overall portfolio risk.
Mr. Bradford is a Chartered Financial Analyst with a research background. The portfolio managers see themselves as fundamental investment analysts, whose primary job is to find, research and understand companies and securities that fit our models for growth and risk control. We use many sources of information, including SEC filings, meetings with company managements, their competitors and customers, and computer screening. In following a company in depth, we focus on the “economic moat” that allows it to earn a high return on investment. We monitor and assess management’s skill in protecting its business franchise and implementing its plan, particularly when confronted with challenges such as economic cycles, technological change, and new competition. We concentrate on finding uniquely successful growth companies, rather than trying to forecast economic conditions or securities market cycles. We use models to help us judge under- or overvaluation and to time purchases and sales.
Assessing a client’s tolerance for risk, which involves the chance of the loss of principal and/or the loss of an anticipated income stream, is an important part of an investment adviser’s responsibility. Risk is an ever-present part of investing. It comes in two basic forms: market risk, which derives from cycles and unforeseen events that can affect the economy and securities markets broadly; and specific risk, which relates to fundamental problems with individual investments. GBA’s strategy for mitigating market risk is diversification and flexible asset allocation. Specific risk is addressed by intensive research and concentrating on high-quality debt issuers and companies with strong balance sheets and stable business models. Our portfolio managers know from experience that recognizing problems early and cutting losses quickly are important elements of risk control.
High brokerage and other transaction costs related to trading frequency have not been an historic risk for GBA’s clients. Because of the focus on the long-term and high-quality holdings, turnover in portfolios has been relatively low.
Disciplinary Information
Neither Mr. Bradford, Ms. Looi nor any principal or employee of GBA has ever been involved in a disciplinary or legal event related to investments, an investment-related business, or any fraud, false statements or omissions, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses.
Other Financial Industry Activities and Affiliations
Mr. Bradford and Ms. Looi have no other financial industry activities and affiliations that might create a conflict of interest with clients.
Code of Ethics, Participation or interest in Client Transactions and Personal Trading
GBA is a fiduciary and is legally held to a standard of care that requires putting clients’ best interests first at all times. We have a written Code of Ethics, re-subscribed to annually by all employees, which states that clients' interests are always foremost, and that all clients will be treated fairly and equally. A copy of this document is available to clients or prospective clients upon request.
Potential conflicts of interest exist when investment advisers own the same securities as clients or participate in client transactions. For example, Mr. Bradford and Ms. Looi are trustees of the firm's Profit-Sharing Retirement Plan, which often buys and sells the same securities as clients. Additionally, principals and employees of our firm are permitted to own the same securities as clients. When done in a way that avoids conflicts of interest, we believe clients appreciate knowing the adviser’s money is invested right alongside theirs. In certain instances, principals and employees may participate in “bunched” (combining more than one account) orders with clients.
If an account in which an employee has a personal interest participates with clients in a bunched trade, that order is entered after other separate client orders in the same security have been completed. All participating accounts receive the same price and pay a pro rata share of expenses. Personal trades in a security are not permitted until all pending client trades in that security have been executed. GBA pre-authorizes, monitors, and keeps records of all personal trades.
GBA policy provides for cross transactions among clients under circumstances which are equally beneficial to both parties. Such transactions are effected through an unaffiliated broker; the price is equal to the mean between the bid and ask as quoted and confirmed by independent sources. In very limited cases GBA principals and employees may participate in cross transactions with clients if the reasons are sound and the trade is in the client’s best interests without showing favoritism at the expense of other clients. All cross transactions are documented in our trade records and client files.
Brokerage Practices
GBA is not a broker. Each client selects the custodian who will have physical possession of his or her assets, which often determines an account's primary brokerage relationship. In these cases, we attempt on behalf of the client to negotiate commissions and fees as low as possible and closely monitor and discuss with the client the broker’s trade execution capability, fee competitiveness, product offerings and service levels.
When clients can "trade away" from their custodian, GBA exercises its discretion in selecting brokers. Our intent is to obtain “best execution” and capture the maximum possible value of our investment decisions. Factors influencing the choice of a broker for a given trade include execution capability, commission rates, merchandise availability, client direction, research services provided, trade settlement efficiency and other services.
When possible, orders from several clients may be grouped together to receive lower commission costs and better execution. In a bunched order, each client receives the same average price and pays a pro rata share of the commission (except that smaller clients may pay a minimum ticket charge).
Research and Other Soft Dollar Benefits
We allocate discretionary brokerage commissions by balancing best execution in trading against the help brokers' proprietary investment research and other services give us in achieving our clients' goals. Thus, we may select a broker in recognition of research services provided, and for the same reason we may pay a broker a higher commission than what another broker might have charged for the same trade. Research and other services furnished by brokers through whom we effect transactions are used in servicing all accounts, even though not all accounts participate in payment of the related commissions.
We have a "soft-dollar" relationship with one broker, in which they deliver the payment to two independent third-party data and pricing service providers. We pay the broker a certain amount of commissions, and they in turn pay cash to the providers. In such an arrangement we first determine that the commission rate is reasonable relative to the values of the brokerage and research services received, paying particular attention to best execution. In 2023, approximately 4% of our total commissions were paid as soft dollars. While all clients benefited from the services, only 6% of clients participated in payment of the related commissions; 30% of those clients’ commissions were paid as soft dollars, at rates at least as low as the average for all our commissions. Over the past three years, an average of 10% of the cost of the services was paid with commissions, with the remainder a cash expense to GBA.
Brokerage for Client Referrals
When selecting or recommending brokers, GBA does not consider whether we receive client referrals from that broker or a related party.
Directed Brokerage
GBA permits clients to direct brokerage. In most cases this direction is exercised through the client’s selection of the independent custodian, who often becomes the primary and sometimes the exclusive broker. Such a custodial relationship may be more expensive than alternatives, for reasons such as fixed commission rates or the inability to aggregate orders. GBA regularly consults with clients about brokers/custodians’ best execution capabilities. Where applicable, GBA informs clients that lower-cost fee alternatives exist.
Review of Accounts
Mr. Bradford and Ms. Looi are the portfolio managers and make all investment decisions as a team. Each is familiar with all accounts and is empowered to act in the other’s absence. Accounts are priced daily, and investment performance is reviewed for inconsistencies. Because of the daily review activity, the familiarity of the managers with all accounts, and the senior status and close working relationship of the managers, we believe no formal internal review procedure is necessary.
GBA uses the Advent Portfolio Accounting system to maintain account records, permitting accurate reports to be produced at any time. The Advent software and all client accounting records are located at a secure site in the internet cloud, administered by Amazon Web Services. This allows for remote access of all client records. Custodians also maintain client records.
Accounts are reconciled with custodians’ records to ensure accuracy. Each client receives a monthly report showing current market value and original cost of all investment positions via mail or e-mail. Available optional reports include transactions, income received, investment performance calculated using timeweighted and dollar-weighted industry standards, realized gains and losses, commissions paid, and other customized formats. Clients also receive regular monthly reports from their independent custodian. E-mail, telephone calls and meetings are scheduled as appropriate.
Client Referrals and Other Compensation
GBA pays a fixed monthly fee to an unrelated third party for client lead generation. Advisory fees on client assets under management are the firm’s only source of revenue.
Custody
GBA does not maintain physical possession of any client assets. We believe that an independent custodian, who issues regular statements that should be carefully reviewed and compared with ours, helps to protect clients from abuses that can occur if trading discretion and physical possession of the assets are concentrated in one entity.
Under recent SEC guidance, GBA is technically considered to have “custody” if the client authorizes us to deduct our management fee from assets in the account under a Standing Letter of Authorization. When this is the case, we are required to satisfy ourselves that the custodian 1) is qualified to maintain client funds and securities and 2) sends regular account statement to the client, including notice of the deduction of the fee.
Investment Discretion
Our investment management contract is a limited power of attorney granting us “discretionary” authority to buy and sell securities in a client’s account. This means that we are authorized to enter orders without prior approval from the client. We believe such an arrangement is important to clearly assign ultimate responsibility for investment results. Thus, while we consult regularly with clients to understand their investment goals and are pleased to discuss our strategies and tactics in as much detail as the client desires, we reserve for ourselves the final decisions as to what, how much and when to buy or sell. We believe our clients' role in our ongoing relationship is to communicate their objectives and judge the results of our investment decisions.
In order to give clients a more complete picture of their financial situation, we may at times include their non-discretionary or "legacy" securities positions in our reports. We may offer advice on such holdings, but they are excluded from our calculations of fees, investment performance and assets under management.
Voting Client Securities
GBA no longer votes proxies for its clients and instructs custodians to send all proxy materials directly to the client. We made this decision reluctantly several years ago when the SEC imposed new record keeping and due diligence requirements for proxy voting that we felt a firm our size would have difficulty meeting. We do vote proxies for the company's own retirement plans, however, and clients are welcome to inquire as to how and why we voted as we did.
Financial Information
Because GBA does not collect prepaid fees and maintains custody only in the limited sense that we may be authorized to deduct our fee from assets in clients’ accounts, a balance sheet is not required to be included with this brochure. We nevertheless believe our financial condition is strong.
Form ADV Part 2B: Brochure Supplement
William Bradford III
Sherli Looi
Garrison, Bradford & Associates
445 Park Avenue, 9 Floor, Suite 909
New York, NY 10022
Telephone: (212) 557-7440
www.garrisonbradfordinvestments.com
March 31, 2024
This brochure provides information about William Bradford III and Sherli Looi that supplements the Garrison, Bradford & Associates (“GBA”) brochure. You should have received a copy of that brochure. Please contact us at (212) 557-7440, at the above address or by email at bradford@gbinvest.com if you did not receive our brochure or if you have any questions about the contents of this supplement.
Additional information about Garrison, Bradford & Associates, Inc. is also available on the SEC’s website at www.adviserinfo.sec/gov.
William Bradford III
Born: 1943
Educational Background and Business Experience
Graduated from Bowdoin College in 1965 with A.B. in History. Attended New York University Graduate School of Business Administration. Started with Standard & Poor’s. Analyst with Eastman Dillion, Union Securities. Portfolio Manager of National Growth Fund at National Securities. Portfolio Manager and President of NSR Asset Management. Joined Garrison, Keogh & Company (now Garrison, Bradford & Associates) in 1985, Executive Vice President 1990-2021. President since 2021.
Chartered Financial Analyst (CFA): This professional designation requires the successful completion of the CFA Program consisting of three levels, each culminating in a six-hour exam, and an annual pledge to adhere to the CFA Institute Code of Ethics and Standards of Professional Conduct.
Chartered Investment Counselor (CIC): This professional designation requires a CFA charter, employment with a member firm of the Investment Adviser Association, and adherence to the IAA’s Standards of Practice.
Disciplinary Information
No involvement in a disciplinary or legal event with any bearing on investment management.
Other Business Activities
No other financial industry activities and affiliations that might create a conflict of interest with clients.
Additional Compensation
No compensation for advisory services to non-GBA clients.
Supervision
The portfolio managers at GBA supervise each other, as more fully described in the “Review of Accounts” section of the GBA brochure.
Sherli Looi
Born: 1958
Educational Background and Business Experience
Graduated from Victoria University of Wellington, New Zealand in 1980 with a Bachelor of Commerce & Administration, majoring in Accountancy and Business Administration. Earned a professional certification as a Chartered Accountant from the New Zealand Society of Accountants. Attended William E. Simon Graduate School of Business at the University of Rochester. Started with Peat Marwick Chartered Accountants, Wellington, New Zealand. Worked at Chase Manhattan Bank in Malaysia, Singapore, and New York City, and Gramercy Capital. Joined Garrison Bradford and Associates in 2012. Senior Vice President 2015 and Executive Vice President in 2023.
Registered Investment Advisor Representative under Series 65.
Disciplinary Information
No involvement in a disciplinary or legal event with any bearing on investment management.
Other Business Activities
No other financial industry activities and affiliations that might create a conflict of interest with clients.
Additional Compensation
No compensation for advisory services to non-GBA clients.
Supervision
The portfolio managers at GBA supervise each other, as more fully described in the “Review of Accounts” section of the GBA brochure.
Additional Information: CRS March 21, 2024
GARRISON, BRADFORD & ASSOCIATES, INC.
We are registered with the Securities and Exchange Commission as an Investment Adviser. Brokerage and investment advisory services and fees differ, and it is important for retail investors to understand the differences. Investors can go to https://www.investor.gov/CRSto research advisory firms and investment professionals and find educational materials about broker-dealers, investment advisers and investing.
What investment services and advice can you provide me? We provide discretionary separate account investment management. We are not a broker, do not offer consulting services such as financial or tax planning, do not sell proprietary investment products, and do not offer wrap-fee programs. Discretionary means we decide what, how much and when to buy and sell investments for you without your prior approval. We will, however, take directions concerning low-cost legacy holdings. We will also honor restrictions you may impose on investing in certain securities or types of securities. Separate account means that your account is managed independently to achieve your individual objectives, not combined with others in a pooled fund. Our stated minimum for starting a new account is $500,000. There is no minimum to maintain an existing account.
Given my financial situation, should I choose an investment advisory service? Why or why not? An adviser may be the right choice if you do not have the time to manage your own investments or want a professional with a certain level of skill and experience. An adviser selects your investments, monitors them regularly, and decides when they no longer fit with your situation. An adviser is held to a standard of care that requires putting your best interests first at all times. Still, an adviser may not be the best choice if you anticipate making few changes in your investments and prefer to pay fees on a transactional rather than on-going basis.
How will you choose investments to recommend to me? We choose investments based on your risk profile, which we will discuss with you regularly. We invest our clients’ funds in a broad mix of publicly traded stocks, open- and closed-end funds, fixed income securities and cash instruments. We do not use any propriety products created or managed by our firm, but we may invest in publicly-traded and widely-available products offered by others. We monitor the securities we own daily as a part of our regular investment process. We make our investment decisions primarily on the basis of our own investment research. More information about the types of investments we make, our investment philosophy and general strategies, and our approach to mitigating ever-present investment risk can be found at the SEC website at https://adviserinfo.sec.gov/firm/brochure/105603or on our company website at http://www.garrisonbradfordinvestments.com/brochure.html.
What is your relevant experience, including your licenses, education, and other qualifications? What do these qualifications mean? We require a college degree and relevant experience for all investment personnel. Our senior executives have decades of research and portfolio management experience. Our President is a Chartered Financial Analyst, which requires three six hour exams and an annual pledge to adhere to the CFA Institute Code of Ethics and Standards of Professional Conduct. He is also a Chartered Investment Counselor.
What fees will I pay? Our management fee is a sliding-scale percentage of the assets in your account, billed at the end of each quarter. Such fees are our firm’s only source of revenue. You will pay higher fees as your assets increase. Thus, while our interests are aligned with yours to produce good investment results, we may also have an incentive to encourage you to place more assets in your account. In addition to our fee, you may also pay fees to your independent custodian (who has physical possession of your assets) or to brokers and others in the form of trading commissions, other transactional fees, account maintenance fees, or fees embedded in mutual and other funds that we may buy for your account. You will pay fees and costs whether you make or lose money on your investments, and these will reduce any amount of money you make over time. Please make sure you understand what fees and costs you are paying. Again, more information about our fees can be found in our Brochure at the SEC’sand our company’swebsites.
Help me understand how these fees and costs affect my investments. If I open an account at your $500,000 minimum, how much will go to fees and costs and how much will be invested for me? Our fee on that amount would be $1,250 billed at the end of each quarter. As noted above, you will also pay fees and costs to others.
What are your legal obligations to me when acting as my investment adviser? How else does your firm make money and what conflicts of interest do you have? When we act as your investment adviser, we have to act in your best interest and always put your interest ahead of ours. At the same time, conflicts of interests may arise. You should understand and ask us about these conflicts because they can affect the advice we provide you. Here are examples to help you understand what this means. For example, it is in our financial interest to encourage you to place more money with our firm, which might not always be in your best interest. Additionally, at times our firm’s retirement plans or employees may own the same securities we buy for you. This could create a conflict if we prioritized our interest ahead of yours when making trading decisions related to those securities.
How might your conflicts of interest affect me, and how will you address them? Our Code of Ethics, which is resubscribed to annually by all employees, states that clients' interests are always foremost and that all clients will be treated fairly and equally. We understand that to mean we should act to benefit your broad financial situation, not just the portion of your assets for which we are directly responsible. We have policies and procedures to ensure that all your trades, including contemplated trades, will take precedence over any trades in which we have a personal interest. At the same time, we believe you will appreciate knowing our own money is often invested right alongside yours. We pre-authorize all employees’ personal trades.
How do your financial professionals make money? Our employees receive a salary based on their expertise, experience, and level of responsibility in helping achieve your investment goals. All our profit after salaries and other expenses go to contributions to company retirement and profit-sharing plans, discretionary bonuses, and the owners of our firm, all of whom are employees. All our revenues come from investment management fees. Neither the firm nor any employee is paid on the basis of commissions, proprietary products, revenue sharing, principal trading, referrals or any other advisory product or service.
Do you or your financial professionals have any disciplinary history? For What type of conduct? No. A free and simple tool at https://www.investor.gov/CRScan help you research our firm and financial professionals. We also disclose any disciplinary history on the SEC website and on our company website.
Who is my primary contact person? Is he or she a representative of an investment adviser or a broker-dealer? Who can I talk to if I have concerns about how this person is treating me? Bill Bradford, a portfolio manager, President and owner of our firm, will be your primary initial contact. Any concerns can be discussed with him or Sherli Looi, a portfolio manager, Executive Vice President and owner.
Your independent custodian has a responsibility to act in your best interest and may also be able to help. The Division of Investment Management of the SEC has regulatory authority over advisers like us registered under the Investment Advisers Act of 1940. Information about complaints is available at https://www.sec.gov/tcr.
For more information about Garrison, Bradford & Associates, including a copy of this Form CRS, please contact us at (212) 577-7440 or bradford@gbinvest.com Preside