Best Fund Managers

[vinod1]

If you could no longer invest and you had to pick 3 fund managers to invest all of your money with for the rest of your life, who would you pick?

 

Given the two constraints (1) all you money and (2) rest of your life, hands down index funds would be the only choice.

 

Any other choice is going to be vastly inferior from a risk/reward perspective.

 

When looking at 30+ years, markets are likely to go through many changes as economy evolves. The managers you are going to select now are all going to have terrific current long term records. As they go through tough times you would be faced with a decision whether to stick with them or change. To evaluate active fund managers you need be as good at picking stocks as them to make that decision. So picking active managers means being active to some extent and it cannot be a pick and forget.

 

I have been tracking 20 mutual fund managers since 2001. It is partly to know my ability to identify superior managers and partly to invest in them as a portion of my portfolio is restricted to mutual funds. My intent is to jump into the underperforming managers from this select set of to get some additional alpha. On the whole it has been a small net positive and that too with benefit from a bit of luck.

 

So many funds have changed their managers, that the stock picking approach changed significantly. Clipper fund manager in 2001 used to be Jim Gipson, who is absolutely first rate stock picker but he retired. Same with T Rowe Price Capital Appreciation.

 

If I had just stuck with my initial subset of those 20, it would have been a significant underperformance.

 

Vinod

 

 

[Spekulatius]

I think I just stick with Fidelity. LOL

 

Can you recommend some Fidelity funds?

 

Thanks

 

I like their health care funds. FSPHX is good.

[learner]

Excellent response!

 

If you could no longer invest and you had to pick 3 fund managers to invest all of your money with for the rest of your life, who would you pick?

 

Given the two constraints (1) all you money and (2) rest of your life, hands down index funds would be the only choice.

 

Any other choice is going to be vastly inferior from a risk/reward perspective.

 

When looking at 30+ years, markets are likely to go through many changes as economy evolves. The managers you are going to select now are all going to have terrific current long term records. As they go through tough times you would be faced with a decision whether to stick with them or change. To evaluate active fund managers you need be as good at picking stocks as them to make that decision. So picking active managers means being active to some extent and it cannot be a pick and forget.

 

I have been tracking 20 mutual fund managers since 2001. It is partly to know my ability to identify superior managers and partly to invest in them as a portion of my portfolio is restricted to mutual funds. My intent is to jump into the underperforming managers from this select set of to get some additional alpha. On the whole it has been a small net positive and that too with benefit from a bit of luck.

 

If I had just stuck with my initial subset of those 20, it would have been a significant underperformance.

 

Vinod

[vinod1]

I use to have a very simple screen to eliminate fund managers: did the fund manager have a positive performance in 1999?

 

The really good fund managers who identified the most undervalued stocks at the beginning of 1999 have lost money. You can retroactively see which stocks are deeply undervalued at beginning of 1999. So if the manager had a positive return in 1999, then he is no good at picking stocks.

 

A similar approach now would be helpful, this time those that picked the right stocks for the right reasons 10-15 years ago.

 

Vinod

[stahleyp]

Agree with index funds. Look at all of the great, smart, hardworking mangers (Longleaf, Sequioa, Fairholme, etc). Literally, like a who's who of awesome performers. Everyone loved them 10 years ago or whatever. Everyone of them has gotten smoked by the S&P 500 over the past 10 years (yeah, yeah bull market, growth has down better). I'm not saying there isn't some truth to that but heck, Longleaf has now underperformed since inception...but perhaps 33 years isn't long term enough.  :P

 

I believe Longleaf (alone with Primecap and Dodge and Cox) were 3 active managers John Bogle actually liked, too! Primecap is the only one that has done well.

[stahleyp]

I think I just stick with Fidelity. LOL

 

Can you recommend some Fidelity funds?

 

Thanks

 

I like their health care funds. FSPHX is good.

 

I don't own it but I do respect Yoon.

[thepupil]

The man who does rich, dies disgraced.

 

I’d therefore put it in Hussman Strategic Growth

[vinod1]

Agree with index funds. Look at all of the great, smart, hardworking mangers (Longleaf, Sequioa, Fairholme, etc). Literally, like a who's who of awesome performers. Everyone loved them 10 years ago or whatever. Everyone of them has gotten smoked by the S&P 500 over the past 10 years (yeah, yeah bull market, growth has down better). I'm not saying there isn't some truth to that but heck, Longleaf has now underperformed since inception...but perhaps 33 years isn't long term enough.  :P

 

I believe Longleaf (alone with Primecap and Dodge and Cox) were 3 active managers John Bogle actually liked, too! Primecap is the only one that has done well.

 

Longleaf, Sequoia, and Dodge and Cox, I understand and can sympathize. But Fairholme is an absolute head scratcher. It is like he has completely lost his mind.

[vinod1]

The man who does rich, dies disgraced.

 

I’d therefore put it in Hussman Strategic Growth

 

I think you mean Hussman Strategic Growth & Capital Depreciation fund.

 

[rb]

I use to have a very simple screen to eliminate fund managers: did the fund manager have a positive performance in 1999?

 

The really good fund managers who identified the most undervalued stocks at the beginning of 1999 have lost money. You can retroactively see which stocks are deeply undervalued at beginning of 1999. So if the manager had a positive return in 1999, then he is no good at picking stocks.

 

A similar approach now would be helpful, this time those that picked the right stocks for the right reasons 10-15 years ago.

 

Vinod

A thing that's not discussed here is that when you move into high net worth (and a lot of these active managers manage high net worth) out-performance is not the be all and end all. Performance is important, that's for sure. But the fit between the client and the IM in terms of temperament and risk taking is important as well. What the money goes into is important.

 

I don't know for how long has underperformed but I don't think that Gates is about to fire him and go all index.

[CorpRaider]

Man if you think about the requirements for these 40 act mutual funds, combined with the tax inefficiency, and the negative institutional factors (such as the need to report activity and talk about your "ideas" and demonstrate your intelligence and worth so often and related costs), I don't see how any of them beat the market.  I would much rather just buy like VTV or VIG if I'm going to stray from the cap weighted index but do something so diversified.

[vinod1]

I use to have a very simple screen to eliminate fund managers: did the fund manager have a positive performance in 1999?

 

The really good fund managers who identified the most undervalued stocks at the beginning of 1999 have lost money. You can retroactively see which stocks are deeply undervalued at beginning of 1999. So if the manager had a positive return in 1999, then he is no good at picking stocks.

 

A similar approach now would be helpful, this time those that picked the right stocks for the right reasons 10-15 years ago.

 

Vinod

A thing that's not discussed here is that when you move into high net worth (and a lot of these active managers manage high net worth) out-performance is not the be all and end all. Performance is important, that's for sure. But the fit between the client and the IM in terms of temperament and risk taking is important as well. What the money goes into is important.

 

I don't know for how long has underperformed but I don't think that Gates is about to fire him and go all index.

 

I agree completely with you. There is a lot of value that an advisor/IM can bring to a client. Very few people would be just able to hold on to anything for any sustained period of time. Just being able to stick to indexing without constantly tweaking or jumping in and out, is something I think the majority of the people cannot do.

 

Vinod

[AzCactus]

I would go with AKREX.  My wife and I have a good % of net worth with them and think that they have a solid and scalable process.  I guess only time will tell.

[Jurgis]

I would go with AKREX.  My wife and I have a good % of net worth with them and think that they have a solid and scalable process.  I guess only time will tell.

 

I hold some AKREX, but ~20% in AMT/SBAC is a bit out there ( https://www.dataroma.com/m/holdings.php?m=AC ).

OTOH at this time it's easy to complain about most stocks being held by anyone. So we'll see.

[stahleyp]

Akre is good but he's pretty up there in age. Heebner had an even better record and started his decline in his late 60s/early 70s.

 

Speaking of Heebner, he too has now trailed the S&P 500 since inception. Which is insane considering a $10,000 investment in 1997 when he started CGMFX would have been almost $112,000 in the middle of 2008 and the S&P 500 would have been about $16,500.

[thowed]

~20% in AMT/SBAC is a bit out there

 

It's not quite that bad, according to the mutual fund factsheet for June - I don't know why the discrepancy (he also has the offshore hedge fund and SMAs).

[MarioP]

Givenry Capital

Lol, speaking of "the incident" eh. I didn't know he started another shop.

 

Why do you say that? I think you make reference to Valeant but Giverny got out not so bad because they sold a lot at high valuation. I'm a client of Giverny since 2004.

 

They had some worst positions in the past like irish banks and WP Stewart but had enough big winners to have a great record over time.

 

http://www.givernycapital.com/en/doc/105/Rendements-Rochon-global-english.pdf

 

And they underperformed in 1999  ;)

[thowed]

Some confusion here - 'the incident' was mentioned on page 1 with reference to Sequoia - one of the most respected names to suffer notably from the Valeant debacle.

[rb]

It looks like David Poppe took over or is at least heavily involved in Giverny now. Not sure which one it is. Didn't do too much digging.

 

Edit: The we got out of the fraud before it popped as opposed to the other guys isn't very confidence inspiring. Though I don't know what weight Giverny had in VRX.

[Jurgis]

So I took a look today at Brown Capital funds. I have some money in BCSVX. https://browncapital.com/sites/default/files/sheet/200630_international_small_investor.pdf

 

BCSIX has 2B assets, great performance, soft closed. https://browncapital.com/sites/default/files/sheet/200630_small_investor.pdf

Corresponding SMAs have another 10B assets (kudos for telling).

OK, how about mid cap fund? 10M (!) assets, so so performance. https://browncapital.com/sites/default/files/sheet/200630_mid_investor.pdf

Hmm, I think I know where all the best ideas are going...

 

And then there's also BCIIX. 2.6M (!) of assets. Inception date 1999. I guess kudos for not closing it, but damn...

https://browncapital.com/sites/default/files/sheet/200630_international_investor.pdf

To be fair, they have >1B in corresponding SMAs, so likely they keep this for public performance. Still damn.

 

And what are overall guarantees that SMAs don't get best research/ideas? I guess that's an issue with any fund that has both fund and SMAs?

 

Conclusion: I might add to BCSVX, but USA equity funds are no go IMO.

[MarioP]

It looks like David Poppe took over or is at least heavily involved in Giverny now. Not sure which one it is. Didn't do too much digging.

 

Edit: The we got out of the fraud before it popped as opposed to the other guys isn't very confidence inspiring. Though I don't know what weight Giverny had in VRX.

 

François Rochon is still in charge there. He introduced David Poppe as a new partner at the last annuel meeting.

 

With Valeant he just managed the portfolio prudently, selling shares to not let it become a too big part of the portfolio contrarly to Sequoia. The more debt they took the more he reduced it.

[Jurgis]

Yeah, Giverny is pretty impressive.

[Voodooking]

1. RA Capital - Peter Kolchinsky

 

2. Baker Bros

 

3. Himalaya Capital - Li Lu

[UK]

https://www.rvcapital.ch/

[Spekulatius]

Bronte is also Open. Looks like it is open for US investors as well. It is one of the few long short funds worth considering (imo) and John Hampton always makes a lot of sense to me.

https://www.brontecapital.com/partners-letters