15
Morningstar FundInvestor
December
2013
Meantime, Calamos has a doozy. It expects a capital
gains payout of about
25%
at
Calamos Growth
CVGRX
, where big outflows have forced a big payout.
Vanguard’s Auwaerter to Retire
Vanguard’s Bob Auwaerter is retiring from his post as
the head of its fixed-income group in March
2014
.
Auwaerter,
58
, has a long history of directly managing
investor assets to good effect in earlier years, and
he was instrumental in starting and building the firm’s
fixed-income group, according to
CEO
Bill McNabb.
Gregory Davis is slated to take over Auwaerter’s
responsibilities, following what has turned out to be
a relatively brief stint as the firm’s
CIO
for the Asia-
Pacific region. Davis,
43
, has overseen some $
64
billion in that capacity but has also been responsible
for $
240
billion in assets managed by Vanguard’s
bond index group. Davis has been with Vanguard
since
1999
.
St. Joe a Disappointment for Fairholme
It’s been a great year for
Fairholme Fund
FAIRX
,
which is up about
36%
this year. However, there was
disappointing news from one holding.
St. Joe
JOE
announced an asset sale at relatively low prices,
thus vindicating one short-seller and giving Bruce
Berkowitz a little bit of bitter to go with the sweet.
Fairholme Joins Offer for Fannie and Freddie
The government rejected an offer from Fairholme
Capital Management to buy parts of mortgage giants
Fannie Mae and Freddie Mac from the government.
The parts of the two government-sponsored enter-
prises that Fairholme hopes to buy are the portions
that insure mortgage-backed securities from Fannie
and Freddie.
Berkowitz announced that his proposal would answer
“the bipartisan call for significantly more private
capital in the mortgage market.” Under his proposal,
Fairholme would lead a group of investors in bringing
about $
52
billion of private capital to support credit
risk on more than $
1
trillion worth of new mortgages.
The proposal also would allow for the liquidation of
Fannie and Freddie, ending their federal charters and
concluding “the unsustainable federal conservator-
ship” of Fannie and Freddie.
Fairholme would offer $
34
.
6
billion in exchange
for preferred stock in Fannie and Freddie owned by
a group of hedge funds. Another $
17
.
3
billion in
preferred shares would be raised in a rights offering.
Berkowitz has a vested interest in Fannie and Freddie,
as Fairholme currently holds preferred stock with
a face value of about $
3
.
5
billion in the two govern-
ment-sponsored enterprises, which the government
seized control of in
2008
as they were heading
toward bankruptcy. However, those preferred shares
currently are trading at less than
40
cents on the
dollar. Under Berkowitz’s proposal, those preferred
shares would be converted to common stock at
100
cents on the dollar.
Fidelity Targets Interest-Rate-Shy Investors
With the launch of two new short-duration funds
and the repositioning of a third, Fidelity is targeting
investors fearful about the potential for rising
interest rates.
The first fund,
Fidelity Conservative Income Muni-
cipal Bond
FCRDX
, was launched in October with
a focus on the short end of the municipal-bond yield
curve, targeting a weighted average maturity of
less than one year. In addition to its conservative
interest-rate positioning, the fund focuses on in-
vestment-grade bonds and will be limited to
10%
in
BBB
rated fare.
Slightly further out on the yield curve on the taxable
side is
Fidelity Advisor Limited Term Bond
FDIAX
.
In late October, Fidelity repositioned the former
Fidelity Advisor Intermediate-Term Bond with a short-
term mandate and launched a new no-load share
class. According to manager Rob Galusza, the fund
typically will be run with a duration of less than
three years and will focus on a mix of credit sectors
including corporates, commercial mortgage-backed
securities and asset-backed securities, as well as gov-
ernment agency-backed mortgages.
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