Mairs & Power launches first new fund in 50 years, and more.
Dodge & Cox Stock's
Dodge & Cox Stock has owned Motorola since 2003, several years prior to its 2011 split into Motorola Mobility and Motorola Solutions
Google's acquisition of Motorola Mobility verifies some of the management team's ideas. Google paid a 63% per-share premium compared with the stock's closing price on Aug. 12, suggesting that it also recognized the firm's value beyond what the share price reflected.
Dodge & Cox Stock held 5.4% of shares outstanding as of June 30 portfolio data, so, based on that figure, the sale would bring the fund around $635 million in cash once the acquisition is complete. The influx of cash would be only approximately 1.5% of the fund's nearly $42 billion asset base. Nonetheless, it should be welcome to the fund; the managers see attractive investing opportunities, but it has been in net outflows for the past few years. The acquisition should have no tax impact on shareholders because the fund still has tax-loss carryforwards from previous years to offset the capital gains.
The deal is a feather in the fund's cap after some up-and-down years that caused many shareholders who flocked to the fund earlier this decade to jump ship. The fund, a top performer from 2001 through 2005, hit a rough patch in the 2007 to 2009 bear market. Since the market's bottom in March 2009, however, it's gained 31% on an annualized basis through Aug. 16, 2011, compared with 27% for its category average.
While the planned acquisition of Motorola Mobility helps the fund, the managers don't purchase stocks purely on the hope that they'll be acquired. In fact, while the fund was a significant owner of Motorola Mobility's shares, it was not a particularly high-conviction name in the portfolio; the stock held less than 1 percentage point of the portfolio as of June 30, 2011. The fund's continued comeback will depend on the steady execution of its long-term, value-oriented strategy rather than sudden events like this acquisition. For example, the fund still owns similarly out-of-favor mobile-device maker Nokia
Mairs & Power Launches First New Fund in 50 Years
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