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Stock Update: Patterson Companies

Patterson was the worst performer, on a dollar-weighted basis, in the portfolio for the year with a loss of -$442,038.  This underperformance was driven by earnings that were below expectations for the fiscal second quarter and management’s reduction of guidance for the full year calling for earnings below the previous year.  The earnings disappointment was due to a number of factors: negative growth of dental consumable sales; the short-term impact of realigning the dental sales force; and a major pharmaceutical supplier in the animal health area moving away from using distributors to reach their customers to a direct sales model.  Additionally, Patterson announced that they would not renew their exclusive distribution arrangement with Sirona.  By not being tied to Sirona products, it opens the door for Patterson to distribute other competing brands — most of which they already service through annual contracts with dentists.  While we are disappointed with the results, we believe they should get back on track in 2017 and are watching this holding carefully.
 

The portfolio is actively managed. For the FAM Equity-Income Fund's current Top 10 Holdings to the most recent quarter-end, view its Portfolio Details.

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