Our Four New Ultimate Stock-Pickers
We've added managers from four very successful mutual funds to our roster.
Investing Specialists
Many stock investors are feeling the pain from the housing bust, the weak consumer, volatile commodity prices, and, of course, the financial crisis, not to mention the collapse of Bear Stearns, the federal takeovers of Freddie Mac and Fannie Mae, the bankruptcy of Lehman Brothers, the government bailout of American International Group, and the demise of Washington Mutual. The global economy also appears to be on the verge of a nasty recession. Amid this turmoil, the S&P 500 has plummeted about 43% from its peak in October 2007, while the Dow Jones Industrial Average has dropped around 40% from its high about a year ago.
In our view, this is the type of market that really separates the wheat from the chaff among investment managers. We've been particularly impressed with the managers' performance of four mutual funds: Vanguard PRIMECAP (VPMCX), Oakmark Equity & Income (OAKBX), WHG LargeCap Value (WHGLX), and Sound Shore (SSHFX). These managers have not only outperformed their peers during this downturn, but they also boast very impressive long-term track records. They also tend to hold concentrated portfolios and buy stocks for the long term, keeping turnover relatively low. We believe that closely following their holdings and investment themes could lead to fruitful stock recommendations. So, we're adding these managers to our Ultimate Stock-Picker's roster. Read below for more details on each of their funds.
Vanguard PRIMECAP
Vanguard PRIMECAP has compiled one of the fund world's most impressive long-term track records since its 1984 inception. The fund employs six managers, including Howard Schow, Theo Kolokotrones, and Joel Fried, who manage the lion's share of the fund's assets and have considerable experience. Mitchell Milias, Alfred Mordecai, and Dave Van Slooten oversee smaller portions. These managers favor swiftly growing large-cap firms, but they like to buy them on the cheap--usually when they're out of favor. Morningstar fund analyst David Kathman is a longtime fan of this closed fund. Click here to read his Analyst Report.
WHG LargeCap Value
According to fund analyst Karin Anderson, manager Susan Byrne has successfully plied a value investing approach to large-cap stocks since 1987. For WHG LargeCap Value, Byrne's strategy is to identify sectors she thinks can benefit from long-term trends. Byrne then seeks companies she believes are undervalued relative to their growth prospects. Click here to read Anderson's Analyst Report.
Oakmark Equity & Income
Over the trailing one-, three-, five-, and 10-year periods through Sept. 30, 2008, Oakmark Equity & Income beat 99% of its peers. The fund's longtime managers Clyde McGregor and Ed Studzinski target value stocks, with an emphasis on cash-rich companies. Our fund analyst team believes the fund has done a great job at protecting shareholder's capital and standing out from the crowd with superior returns. Click here to read his Analyst Report.
Sound Shore
Sound Shore's managers Harry Burn, Gibbs Kane, and John DeGulis have outperformed the S&P 500 in seven of the past eight years and appear well on track to beat the index once again in 2008. The management team seeks beaten-down stocks with solid fundamentals. Sound Shore is one of fund analyst's Gregg Wolper's favorite large-value funds. Click here to read his Analyst Report.
Some Bullish Signs
Ultimate Stock-Pickers Mason Hawkins and Staley Cates of Longleaf Partners (LLPFX) believe the market is close to a bottom and see great opportunities for investment. For more details, read Gregg Wolper's recent Fund Spy article, "Longleaf Leaders See Sunny Days after the Storm".
Another Ultimate-Stock Picker, Warren Buffett, also sees compelling opportunities in the current market. If you'd like to follow Buffett's lead, I'd encourage you to read our recent Stock Analyst Update, "Ready to Buy Like Buffett?".
This and That
To make room for our new managers, we'll be removing Bill Miller of Legg Mason Value (LMVTX), Robert Torray of Torray (TORYX), and Bill Nygren of Oakmark (OAKMX) from our Ultimate Stock-Picker's roster. We'd note that the performance of these managers' funds have fallen well behind their benchmark as well as majority of their peers over the trailing five-year period.
In the coming weeks, we'll be poring over all of our Ultimate Stock-Picker's Portfolio holdings and comparing them to Morningstar's list of 5-star stocks to look for new buys in this beaten-up market. We'll also be updating our watch list as well as the performance of the Ultimate Stock-Picker's Portfolio. To keep up to date on the portfolio, please sign up for our free e-mail alerts.
| Updated Manager List | |
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| Alleghany Corporation | Weston Hicks |
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| Ariel Appreciation (CAAPX) | John Rogers, Matthew Sauer |
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| Berkshire Hathaway I (BRK.B) | Warren Buffett |
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| Davis NY Venture A (NYVTX) | Chris Davis, Ken Feinberg |
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| Dodge & Cox Stock (DODGX) | John Gunn et al. |
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| Fairholme (FAIRX) | Bruce Berkowitz et al. |
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| Jensen (JENSX) | Robert Zagunis, Robert Millen, et al. |
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| Longleaf Partners (LLPFX) | Mason Hawkins, Staley Cates |
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| Markel Corporation (MKL) | Tom Gayner |
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| Matrix Advisors Value (MAVFX) | David Katz |
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| Mutual Shares A (TESIX) | Peter Langerman et al. |
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| Oak Value | David Carr, Larry Coats |
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| Oakmark Equity & Inc I (OAKBX) | Clyde McGegor, Edward Studzinksi |
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| Sequoia (SEQUX) | Robert Goldfarb, David Poppe |
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| Sound Shore (SSHFX) | Harry Burn, Gibbs Kane, John DeGulis |
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| Third Avenue Value (TAVFX) | Martin Whitman |
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| Tweedy, Browne Value (TWEBX) | William Brown, Chris Brown, John Spears, et al. |
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| Vanguard PRIMECAP (VPMCX) | Howard Schow, Theo Kolokotrones, Joel Fried, et al. |
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| Weitz Value (WVALX) | Wally Weitz, Bradley Hinton |
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| WHG LargeCap Value (WHGLX) | Susan Byrne |
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| Wintergreen | David Winters |