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Can the FPA Way Survive Generational Change?

The answer, so far, is yes; cultural constants preserve the firm's uncompromising ethos.

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FPA is an interesting case study of how to handle a closely held firm's transition from a charismatic leader to a succeeding generation. The report, so far, has been positive, but it's a work in progress and worth monitoring.

The firm's history goes back to the early 1950s, but for much of the last three decades, it has been personified by current CEO Bob Rodriguez. A vehement and voluble value investor, Rodriguez is known as much for his censorious opinions on fiscal and monetary policy as for his strong record as manager of  FPA Capital (FPPTX) and  FPA New Income (FPNIX). Indeed, at an investor day earlier this summer, Rodriguez, a three-time Morningstar Manager of the Year award winner, adamantly asserted that government finances, and stock and bond valuations, were living on borrowed time and exhorted investors to shun markets primed for excess by indulgent Fed policy. "Unless you're willing to withhold capital the excesses will continue," he said.

Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.