Dodge & Cox Stock Gets Going on Motorola Mobility Deal

 Dodge & Cox Stock's (DODGX) comeback attempt got a boost this week from  Google's (GOOG) agreement to buy  Motorola Mobility  for $12.5 billion.

Dodge & Cox Stock has owned Motorola since 2003, several years prior to its 2011 split into Motorola Mobility and  Motorola Solutions (MSI). The fund's reasons for holding the stock are consistent with its long-term, contrarian style. The stock experienced a steep decline after 2006, but the management team stuck to the holding because it believed the value of the firm's intellectual capital and existing businesses, as well as its strong balance sheet, were ignored by the marketplace. Other top owners of the stock include  T. Rowe Price Mid-Cap Growth (RPMGX),  Dodge & Cox Balanced (DODBX), and  T. Rowe Price Mid-Cap Value (TRMCX).

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 (NOK), which also gained this week.

Mairs & Power Launches First New Fund in 50 Years
Mairs & Power launched Mairs & Power Small Cap (MSCFX), the firm's first new fund since 1961. The launch comes as asset growth within its existing fund lineup made it increasingly difficult to gain meaningful exposure to small-cap stocks.

 Mairs & Power Growth (MPGFX) was started all the way back in 1958 as an all-cap fund, but the fund's assets had ample opportunity to grow to its current size of $2.2 billion, and the fund's small-cap exposure is now being eclipsed. For instance, the fund owned 16.6% in small-cap stocks in September 1990 compared with 9.5% in December 2010. With the launch of the small-cap fund, Mairs & Power Growth may end up de-emphasizing small caps in its strategy.

The new fund will adopt Mairs & Power's low-turnover approach and unique focus on firms based in the Upper Midwest. Andrew Adams will manage the fund. Adams, who joined Mairs & Power in 2006, previously managed a small-cap fund at Nuveen Asset Management.

Western Asset Hires Three New Portfolio Managers
Western Asset is continuing its efforts to expand beyond its mortgage expertise by boosting its global fixed-income team.

Gordon Brown, who was a senior investment manager specializing in emerging-markets rates and currencies at Baillie Gifford, joins Western Asset's global markets team, with a focus on Eastern Europe. Chia-Lian Liang, who was the head of emerging Asia portfolio management at PIMCO, will be head of investment management for Asia (excluding Japan). Meanwhile, Western Asset is not taking its eye off its core, and Paul Jablansky was hired as co-head of the mortgage investment team. Jablansky was managing director of senior nonagency mortgage-backed securities and the consumer asset-backed securities strategist at RBS Securities.

While these individuals will not be named managers on any of the firm's mutual funds, their work will likely support Western Asset's global and multisector fixed-income strategies, such as Western Asset Non-U.S. Opportunities Bond  and  Western Asset Core Plus Bond (WACPX). The hires will start later in September and October of this year.

Etc.
Patrick Chiu joined the management team of  JPMorgan Asia Equity . Existing managers Joshua Tay and Pauline Ng now manage the fund with Chiu.

Bridgeway filed to launch Bridgeway Omni Small-Cap Value on Aug. 31, 2011. The fund will be managed by John Montgomery, Rasool Shaik, and Christine Liang. The team will use a passive investing approach with small-value stocks. Bridgeway launched Bridgeway Omni Tax-Managed Small-Cap Value , a tax-managed version of this fund, on Dec. 31, 2010. That strategy is in the top quartile of its category for the year to date.

 MFS Core Growth  will merge into  MFS Growth (MFEGX) on Aug. 26, 2011.

Robert Ginsberg joined the management team of Managers Cadence Capital Appreciation, Managers Cadence Focused Growth, Managers Cadence Mid-Cap, and Managers Cadence Emerging Companies on July 31, 2011. Ginsberg will manage the funds with comanagers William Bannick, Robert Fitzpatrick, and Michael Skillman. Before joining Cadence Capital Management, Ginsberg was an analyst at Invesco and a portfolio manager at Putnam.

Effective Sept. 15, 2011,  GMO Global Balanced Asset Allocation Fund (GMWAX) will be renamed GMO Global Asset Allocation Fund. In conjunction with the name change, the fund will no longer be bound by its policy to invest at least 25% of its assets in fixed-income investments and at least 25% of its assets in equity investments. GMO now intends to invest not more than 85% of the fund's assets in U.S.-equity and international-equity investments under normal circumstances.

Mutual fund analyst Kailin Liu contributed to this report along with associate directors Daniel Culloton and Michael Herbst and mutual fund analysts Janet Yang, David Falkof, and Ryan Leggio.