Two Funds Fit for Royalty
This manager is off the radar but on the mark.
When Steven Scruggs was in the market to buy a boat engine a few years ago, he found a bargain the way the thrifty value manager uncovers a stock. Scruggs discovered that an engine model called the Evinrude Ficht had a bad reputation; models made in the late 1990s didn't work properly. He also learned that the manufacturer fixed the flaws but continued to market the engine under the same name. Sales slumped, because although improved, the engine had been permanently tainted with bad publicity. Scruggs searched online and found the improved version of the engine for a song.
During our recent visit to his North Carolina office, Scruggs told us he started the small-cap fund first, because he knew that historical studies showed value investing beats other approaches over the long haul, and he learned that the greatest disparities between price and value exist in the small-cap value realm.
John Coumarianos does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.