Tyler, Dave, Katie, Bud,Lisa, Abby, Kelle, Sebastian, Gerald, Sophia

Who We Are
Lemley Yarling Management Co was formed in 1986 and offers investment advice and money management services.

Lemley Yarling Management Co, a State of Wisconsin registered investment advisor, provides investment advice to those clients who wish to have a complete financial relationship. Lemley Yarling Management Co provides individualized portfolio management services for investors who want professionals they know, to manage or share the management of their investments. Accounts are managed on a discretionary basis. The minimum initial size for accounts is $200,000. Lemley Yarling Management Co currently manages about $25 million. The normal management arrangement is an annual fee of 1% of assets under management. When transactions are made in the managed accounts the commission rate per transaction is $7.50 plus 2 cents per share.

Lemley Yarling & Co, a FINRA-registered broker-dealer, acting solely as an agent to execute trades, provides execution services for Lemley Yarling Management Co clients at the rate of $7.50 plus 2 cents per share.

Ralph Lemley (Bud) graduated from Georgetown University in 1965 with a degree in economics and began his business career that year in the operations department of Wayne Hummer & Co., a NYSE-member firm located in Chicago. After becoming a registered representative in 1967, he handled individuals' accounts and established the firm's bond department. In 1971, he interrupted his securities career to own and operate a small dairy farm in Wisconsin and publish a weekly newspaper. Upon returning to Wayne Hummer & Co., in 1977, he again handled individuals' accounts, while also reorganizing the firm's stock trading department and creating what is now a $1 billion plus management company/ mutual fund complex. He became a partner of the firm in 1981. In April, 1983, he resigned his partnership to join The Chicago Corporation, as a Senior Vice-President and began formal publication of the Lemley Letter. In 1984, Bud, Kathy, and Don started Ralph J. Lemley Management Co., and in October, 1986, they left Chicago Corp. and established Ralph J. Lemley & Co. In April, 1988, the name of the companies were changed to Lemley Yarling Management Co, and Lemley Yarling & Co.

Kathleen Pinto Cannova (Kathy) began her securities career in April 1974 and worked in all phases of the retail brokerage business. In 1986, Kathy and Bud and Don Yarling founded Lemley Yarling & Co (Kathy didn't want her name on the door!) She was a director of Lemley Yarling Management Co and managed the day to day operations until she died from lung cancer and related treatment side effects, June 29, 2017. For 31 years Kathy ran the back office operations of the firm and will be greatly missed.

Donald Yarling (Don) was a founding owner of Lemley Yarling & Co and an integral part of the firm from 1986 until his death from AIDS in April 1994. Don attended the University of Missouri until 1972 and graduated from the University of Illinois in 1974. He began his securities career at the Chicago firm of Blunt Ellis & Simmons Inc. the following year. After joining Wayne Hummer & Co. in 1977, he worked in the operations department until 1981, when he joined Bud to create the Wayne Hummer Money Fund. As portfolio manager, he was responsible for credit analysis and trading strategy. Under their management, the fund received an AAA rating from the Standard & Poor's Corp. In 1983, Don became manager of Wayne Hummer's bond department. He joined The Chicago Corp. as Vice-President in May, 1984, and established a private investors' fixed income unit. Don joined Bud and Kathy in founding Lemley Yarling & Co. in 1986.

Kathryn Lemley (Katie) graduated from Georgetown University in 1966 and earned a MSN from Loyola University in 1983, and a Ph.D. in Nursing Science from the University of Illinois at Chicago in 1999. She is a consultant for Lemley Yarling Management Co.

Where Accounts Are Maintained

Unless directed otherwise, all managed accounts are maintained at RBC Capital Markets LLC, a New York Stock Exchange - member firm, which is the clearing correspondent for Lemley Yarling & Co (LYC).

RBC Correspondent Services (RBC CS) is a division of RBC Capital Markets, LLC, member NYSE/FINRA/SIPC. RBC Capital Markets, LLC, is a member of the NYSE, AMEX, CHX, CBOE and PSE and has execution capabilities on all principal exchanges. RBC Capital Markets, LLC is owned by Royal Bank of Canada, which trades under the symbol RY on the New York Stock Exchange.

Firm's Relationship with RBC CS
LY&Co has a contractual agreement with RBC Correspondent Services (RBC CS) to serve as our clearing firm. This fully disclosed agreement states the responsibilities of each party. Prior to the agreement becoming effective, RBC CS is responsible for making all disclosures to our firm's designated examining authority as required by NYSE Rule 382. Each client of our firm is notified of the relationship via a disclosure letter. The disclosure letter details the responsibilities that our firm (the introducing broker-dealer) and RBC CS (the clearing firm) have to the client. Although client assets are held by RBC Capital Markets, LLC, neither RBC Capital Markets, LLC, nor RBC CS has responsibility for the financial condition or performance of our firm or our Financial Advisors.

SIPC & Additional Coverage for Client Accounts
Our clearing firm, RBC Correspondent Services, is a division of RBC Capital Markets, LLC. RBC Capital Markets, LLC, is a member of the Securities Investor Protection Corporation (SIPC). SIPC is a nonprofit membership corporation funded by its member security broker-dealers. SIPC protects the securities clients of its members in the event of the failure of a member firm. SIPC reimburses clients the cash value of their securities up to $500,000 per client. Any cash in a client's account would be reimbursed by SIPC up to $250,000 (reducing the $500,000 above). RBC Capital Markets, LLC, has purchased an additional policy that offers coverage in excess of the protection provided by SIPC. This coverage covers additional securities and cash protection up to $99.5 million per client, of which $900,000 may be in cash. A $400 million aggregate limit applies to this additional coverage. RBC Capital Markets, LLC, also offers protection if a client's securities are missing because of theft by an outsider, computer fraud or theft by an employee for personal gain. In such cases, the firm's CAN$310 million Financial Institution Bond coverage would cover the client's losses, subject to that policy's terms, conditions and limits. Note: Neither SIPC protection, nor protection in excess of that offered by SIPC, covers a decline in the value of a client's assets due to market loss. Additional information is available upon request or at www.sipc.org.

Stock Market Strategy

Our portfolio management follows an investment philosophy that buys good quality stocks when they are out of favor. This investment philosophy infers that all companies, no matter how smart the people in charge, eventually suffer corrections in price. The reasons for these corrections vary but the price drops are real. After a period of time investors seek out these issues. Just because a stock is down is not a reason to buy. Rather, it is a reason to begin looking at the company's fundamentals. We stress book value, cash flow, low debt, insider ownership and previous market performance.

Because of the now normal volatility of the stock markets that we have experienced over the years, we usually dedicate at very large percentage of a portfolio to cash equivalents.

Since 2015 we have altered our investment strategy because of the extreme volatility in stock prices that resulted from creation of ETFs and Bitcoin and the rapid increase of the use of computer trading by many hedge funds and investment banks. As a result, we are very quick to take profits and losses and turnover in the accounts has increased greatly. We maintain an unusually large cash position at times when we believe there is above average market uncertainty and risk. Stock and bond markets have become more of a casino than a place to invest for the long haul. Since the day to day controllers in the markets are computers, hedge funds and option traders, we have adjusted our style. We generate mostly short term profits- and losses. This fact has no effect on tax free accounts but it does affect taxable accounts. Our philosophy is that any net yearly gain is better than a loss.

And so that is why the portfolios - when we are invested - contain mostly large cap companies or ETFs. We are neither prescient nor brave enough to catch trendy stocks nor do we usually want to trade stocks making or backing off new highs.

This market approach with out of favor value stocks has worked well over the years and especially the last several years as we have refined our trading actions.

All this doesn't mean that stocks and portfolio values won't go down. But having survived 1974, 1982, 1987, 1990, 2000, 2008-2009 , the Flash Crash of 2010 and the Covid correction of 2020 it's obvious (or maybe "we are confident") that we can absorb, survive and profit from whatever the markets choose to do.

Managing a portfolio requires a balancing act between client hopes and market risk. In down markets our portfolios usually much better than the popular averages. But sometimes, most often when the markets are in a speculative phase, our managed portfolios under-perform the popular averages. That is because since the 1987 crash we have always maintained a large cash/short term Treasury position in accounts. Portfolios that we construct for clients are meant to: participate in stock market rallies (stock portion); survive stock market collapses (cash, stock and bond portion); and allow the client and us to sleep nights.

Our investing method differs from money managers who are given funds and told to seek the highest return by being fully invested in common stocks at all times. Those managers have a different objective than we, for they are trying to outperform the markets, period. Thus, if the markets are up 30% and the mutual fund is up 35%, that manager is a success. Correspondingly, if the markets are down 30%, and the mutual fund is down 25%, that manager is also successful. We, on the other hand, manage client funds with the intention of earning a satisfactory return on a risk-reward basis while hopefully mitigating the pitfalls of serious market declines.

It's important to understand that the spectacular returns of hedge funds that are mentioned in the media may have been derived by taking spectacular risks, and/or because the time period shown encompasses a market low to market high. For example, the advertised 30% + annualized returns on "hedge funds" are obtained by being highly leveraged (investing with borrowed money). Leverage in these funds sometimes exceeds 10 to 1 ($10 borrowed for every $1 invested).

In our managed accounts an annualized return over 10% for any long period of time is a goal to hope for rather than a result to be expected. High reported yearly returns are attained by being fully invested in common stocks in a roaring bull market-or using margin or options, or beginning an investment at a market low. We take a much more conservative approach for accounts. The money in our managed accounts is treated as all the investment money that a client has to invest. We do not attempt to match the performance of aggressive funds/ETFs during speculative market phases, since we would have to be fully invested in common stocks that do not meet the requirements of our investment criteria. We take a risk avoidance approach to investing rather than trying to "beat the market."

Investing involves assuming risk. We tend to be cautious traders. In reviewing our conduct and willingness to assume exposure to market risk it is obvious that we raise cash whenever we perceive excess volatility and speculation entering the markets.

We have not accepted new accounts for many years and our current clients have been with us for thirty years or more. All their accounts -as our ours- are being managed for their heirs or charitable beneficiaries. Thus, we tend to manage them all the same.

Bond Market Strategy

We have not invested in bonds for the past ten years because interest rates were too low. When we do buy bonds, we only invest in U.S. Treasuries.


Turnover, Fees and Commissions

No fees, charges, or mistakes are hidden when a client deals with us. Our clients see all our fees and transaction costs, and the prices at which we purchase and sell securities, and all our winners, and losers. That makes us much more accountable to our clients, and much more careful in our management of our clients funds.


309 W Johnson Street Apt 544 Madison, WI 53703 312-925-5248
The factual statements herein have been taken from sources we believe to be reliable but such statements are made without any representation as to accuracy or completeness or otherwise. From time to time the Lemley Letter, or one or more of its officers or employees, may buy and sell as agent the securities referred to herein or options relating thereto, and may have a long or short position in such securities or options. This report should not be construed as a solicitation or offer of the purchase or sale of securities. Prices shown are approximate. Past performance is no indication of future performance.