204 / 772
10
A couple of months ago, I wrote about the predictive
power of manager investment and highlighted some
funds where managers had raised their investment
levels. Today, I’ll look at a few funds where managers
have gone the other way.
I found four managers at six funds who formerly had
more than
$1
million of their own money in their
funds but have sold their positions completely. In
most cases, the fund companies did not provide
an explanation for why. There are some plausible
excuses, such as divorce or home purchases,
to explain why they might have sold their holdings.
Other possible reasons could include managers
moving their money to other funds that they think
focus on a more appealing asset class. Still, it’s
pretty discouraging to see managers selling the
following funds, all of which have something going
for them.
PIMCO Floating Income
PFIAX
and PIMCO Diversified Income
PDVAX
Curtis Mewbourne formerly had more than
$1
million
in both of these funds and now he has nothing.
I don’t know what he did with his money, but it isn’t
in his other funds. He also has zero investment in
PIMCO Fixed Income Shares
FXIMX
and
PIMCO
Emerging Multi-Asset
PEAAX
.
Wells Fargo Advantage Small/Mid Cap Value
SMMVX
and Wells Fargo Advantage Small
Cap Value
SSMVX
Charles Rinaldi sold his entire stake in both of these
funds, which he has managed for years. Wells
Fargo said the longtime lead manager did so for
estate planning purposes. It makes me wonder if he is
nearing retirement; he’s now likely in his
70
s as he
graduated from college in
1965
. I’d feel better if his
comanagers showed more enthusiasm for their funds.
Michael Schneider has investments in both in the
$10
,
001
–
$50
,
000
range, and Eric Astheimer has
nothing in either fund.
LSV Small Cap Value
LSVQX
You can’t say that Josef Lakonishok doesn’t like his
own cooking. He is listed as a manager on
29
multimanager funds, and he has more than
$1
million
invested in four:
LSV Global Managed Volatility
LSVFX
,
LSV Global Value
LSVGX
,
LSV U.S. Man-
aged Volatility
LSVMX
, and
LSV Value Equity
LSVEX
. Still, he appears to have gone from more than
$1
million to nothing in this fund.
Scout Unconstrained Bond
SUBFX
Mark Egan quickly ramped up to more than
$1
million
in the fund after it was launched in
2011
, but then he
sold his shares. The latest filings don’t show Egan
investing any money in any of the six funds he coman-
ages. However, Scout said Egan took the money out for
tax reasons and later invested the bulk back into the
fund. In addition, comanagers Thomas Fink and Todd
Thompson each have more than
$1
million in this fund.
Fund Company Mistakes
In researching this article, I heard from Wells Fargo
that it had erred in its filing for
Wells Fargo Advan-
tage Absolute Return
WARAX
. The firm had incor-
rectly reported that manager Ben Inker had more than
$1
million invested, and then the next filing said he
had nothing. Wells Fargo said he never had anything
in the fund and just had money in the
GMO
fund that
the Wells Fargo fund invests in. It’s a telling story, as
Wells Fargo layers on additional fees, and investors
in the underlying
GMO
fund have enjoyed superior
performance thanks to lower fees.
Also, Hartford owned up to incorrectly saying that Ed
Bousa had no investment in
Hartford Dividend and
Growth
IHGIX
. In fact, the firm said that the manager
still has more than
$1
million invested. At
Forward
High Yield Bond
AHBAX
, Steven S. Michaels was
shown as moving from more than
$1
million invested
to nothing. However, the firm said he has consistently
had about
$500
,
000
in the fund, which would mean
neither of the past two filings was correct. All of this
illustrates the wide disparity of importance that
fund companies place on manager investment.
K
Managers Who Spit Out
Their Own Cooking
The Contrarian
|
Russel Kinnel
Our Contrarian Approach
I go against the grain to
find overlooked funds that may
be ready to rally.