2
would seem to be a niche fund, yet Mark Sommer
has invested more than $
1
million. This isn’t a turn-
around. It’s a fairly new fund designed to mature
similarly to a bond. Sommer has done excellent work
at other Fidelity muni funds.
Old Manager, New Fund
Next are three of the most intriguing cases. In each,
we have managers with past records of success
and funds created specifically for them rather than
turnarounds that had previous management.
GoodHaven
GOODX
is run by Larry Pitkowsky and
Keith Trauner, formerly of
Fairholme
FAIRX
fame.
We recently raised this fund to Bronze because we
like the strategy they’ve executed and have gotten
to know them and the firm they’ve built. They run a
focused, value-oriented fund just like Fairholme,
though they appear to be more wary of financials than
is Bruce Berkowitz. Both managers have invested
more than $
1
million, and expenses are a decent
1
.
10%
.
But do they really have a good prior track record? This
is the trickiest part in assessing the fund. Trauner and
Pitkowsky worked at Fairholme for nine years and
were listed as comanagers for part of that time. They
were consultants to the fund from
2008
to
2010
before
they set out to launch GoodHaven. Clearly, Bruce
Berkowitz was responsible for most of Fairholme’s
success, so it’s tough to say exactly how much
Trauner and Pitkowsky contributed. If the answer is a
fair amount, then this is a pretty appealing fund.
David Maley has more than $
1
million invested in
Ariel Discovery
ARDFX
, and comanager Kenneth
Kuhrt has between $
50
,
000
and $
100
,
000
invested.
Maley doesn’t have another fund record, but he does
have a strong separate-account record going back
10
years. However, this fund doesn’t check one of the
boxes. Its expense ratio is
1
.
50%
because the fund
has a mere $
15
million in assets. With a
1%
manage-
ment fee and a
0
.
25%
12
b-
1
fee, this fund can
get less costly, but it won’t be cheap. Maley looks for
companies with low debt and shares priced at low
multiples, and he’s done a fine job of it over the years.
Royce Special Equity Multi-Cap
RSEMX
earned a
Bronze rating because we’re big fans of Charlie Dreifus.
He’s produced decades of strong returns at other
funds, and we’re encouraged by this attempt to branch
out from small caps into multi-caps here. The fund
isn’t cheap, but at
1
.
39%
, it is a fair amount better than
Ariel Discovery. Dreifus has historically had funds
that lose less in down markets but lag a bit in rallies
because he places an emphasis on clean balance
sheets and modest valuations. Seeing that he has
topped $
1
million in the fund reinforces the case here.
A Mixed Bag
Janus Venture
JAVTX
is one of only two Silver-rated
funds to make it into this piece. Chad Meade and
Brian Schaub both ponied up more than $
1
million soon
after taking the helm. Judging by inflows, many inves-
tors are following their lead. The reason is that they
are on quite a hot streak at
Janus Triton
JATTX
,
where they have produced a cumulative return of
110%
from July
2006
through February
2013
compared with
62%
for their benchmark. I love that this fund charges
only
0
.
96%
. One minor negative is the fund’s inflows
(see Red Flags for more), but there’s still a lot to like.
DoubleLine Total Return Bond
DBLTX
managers
Philip Barach and Jeffrey Gundlach quickly topped
the $
1
million investment range in their fund. The
fund’s N shares charge
0
.
74%
, which is average for a
no-load intermediate-bond fund. Gundlach has
an excellent track record at former charge
TCW Total
Return Bond
TGLMX
. However, this fund has
at times had such a big yield that we are concerned
about the lack of details on what risks were taken
to produce that income.
PIMCO EqS Pathfinder
PTHDX
has an interesting
split on manager investment. Charles Lahr has
more than $
1
million, but Anne Gudefin has nothing
in the fund. There’s a lot to like here, though. The
pair produced strong risk-adjusted returns at
Mutual
Quest
TEQIX
and
Mutual Global Discovery
TEDIX
.
The funds really stood out for their limited losses
in
2008
. As at their prior funds, Lahr and Gudefin look
for companies trading at big discounts to their
estimates of intrinsic value. The fund charges
1
.
26%
,
which is par for the course among world-stock funds.
New Fund Managers Who Are Enthusiastic Buyers of Their Own Funds
Continued From Cover
