Vulcan Fund Closure FYI: (In case you missed the E-Mail)
Regards
Ted
Dear friends,
One of the most frequent requests from readers has been to provide timely notification of events that cannot wait until our normal monthly update. That seems reasonable. Our plan is to provide updates to you folks but only if the information is timely and compelling.
The imminent closure of Vulcan Value Partners (VVPLX) meets those criteria. In April, Vulcan announced the closure of VVPLX and all of their related strategies without advance notice. That’s an entirely prudent and shareholder-friendly decision, so we had no opportunity to warn you in advance of the closure. We reported in our May issue:
Vulcan Value Partners (VVPLX) has closed to new investors. The firm closed its Small Cap strategy, including its small cap fund, in November of 2013, and closed its All Cap Program in early 2014. Vulcan closed, without advance notice, its Large Cap Programs – which include Large Cap, Focus and Focus Plus in late April. All five of Vulcan Value Partners’ investment strategies are ranked in the top 1% of their respective peer groups since inception.
Presumably persons with an interest in the fund objected to the abrupt closure. Vulcan filed an amended statement with the SEC, announcing the fact that the fund would now be closed on June 1, 2015.
Effective as of the close of business on June 1, 2015, the Fund will close to new investors, except as described below. This change will affect new investors seeking to purchase shares of the Fund either directly or through third party intermediaries. Existing shareholders of the Fund may continue to purchase additional shares of the Fund.
Vulcan Value and its sibling Vulcan Value Partners Small Cap (VVPSX, closed) are both very good funds. Morningstar has awarded five stars to each fund. MFO’s rating system, which is considerably more sensitive to risk and rewards consistency, gives both of them our top honor, Great Owl funds, which means their risk-adjusted performance exceeds their peers’ in every applicable trailing period greater than 12 months. Since inception, VVPLX has outperformed its large-growth peer group by about 3% per year with substantially less risk.
Our original 2011 profile of VVPSX quoted manager C.T. Fitzpatrick’s self-assessment: “We buy 900-pound gorillas priced like 98-pound weaklings. We have a five-year time horizon. Usually, our investments are out of favor for short-term reasons but their long-term fundamentals are sound.” During Mr. Fitzpatrick’s 17 year tenure with Southeastern Asset Management and the Longleaf Funds, his team was ranked in top 5% of money managers over five, ten, and twenty year periods according to Callan and Associates. He runs a compact portfolio of about 40 names, a third of which are mid-cap stocks. While they do not always hold their investments for five years (price appreciation sometimes requires them to move on), their standard is straightforward: if they aren’t comfortable with the idea of holding a stake in a firm for five years, they won’t buy it.
Interested parties might want to (quickly) review the Vulcan Value Partners website for details.
A second fund closure is also imminent: effective June 1, 2015, the T. Rowe Price Health Sciences Fund (PRHSX) will be closed to new investors. The $14 billion fund has substantially outperformed its peers under manager Taymour R. Tamaddon, who joined in February 2013: $10,000 entrusted to him on the day he took over the fund has grown to $21,600 while the average health care manager would have grown the investment to $20,000. The problem, of course, is that Mr. Tamaddon follows Kris Jenner’s phenomenal run as manager. With Mr. Jenner’s departure, Morningstar ceased analyst coverage of the fund. Nonetheless, it has had two-plus very solid years under Mr. T. and sports Price’s trademarks: low expenses, risk consciousness and consistently solid performance. As with Vulcan, you might want to do a quick review of the fund’s webpage.
As ever,
David
Hold On To 30-Year Treasuries Or Even Add Some More, Portfolio Manager Says
Biotech Bubble Is Nowhere Near Popping The NASDAQ biotechnology index lost almost two-thirds of its value in the two years ended Sept. 30, 2002, according to data compiled by Bloomberg. The index currently trades at a price-to-earnings multiple of 86 compared with 19 for the S&P 500.
Chuck Jaffe's Money Life Show: Guest: Brian Peery, Co-Manager, Hennessy Funds Hennessey Fund's Concentrated Mid Cap 30 Fund (HFMDX) looks interesting. Wish the ER was lower.
M* Comments about Mr. Peery:
" Brian’s strength as a money manager lies in his commitment to quantitative, formula-based investing. Having done extensive back-testing of various investment formulas, Brian understands the importance of non-emotional investing and adhering to a disciplined, repeatable stock selection process. "Trailing Total returns are amazing for the fund:
HFMDX Concentrated Portfolio
Sign Of The Times? Direxion Shutting Triple Gold Bull ETF
Biotech Bubble Is Nowhere Near Popping I don't think large cap biotech is a bubble; there are smaller companies that I think are excessively valued based on hopes on their pipeline.
That said, as I mentioned in
another thread, Express Scripts and the other PBMs are going to continue to fight (and it may get much more tough) on prices and I have longer-term concerns on the sustainability of the price increases for health care. At the very least, the issue of price isn't going away and is likely something you will continue to hear about.
As for PBMs, look at the purchases of smaller PBMs Catamaran and Omnicare recently. Some discussion that Walgreens buys Express Scripts, but that doesn't seem realistic to me.
As Mark mentioned, SHAK is way more absurdly valued. Also, I think Uber being more valuable than something like 80% of S & P companies is also a bit ridiculous.
Biotech Bubble Is Nowhere Near Popping @Mark: Culver's, Steak & Shake, Red Robin, even White Castle make a better burger than
5 Guys or Shake Shack.
Regards,
Ted
Biotech Bubble Is Nowhere Near Popping Certain stocks might be stretching it but I don't think the sector as a whole has gone goofy. Now Shake Shack, that's a bubble and lala goofy to boot. It's a freakin' burger people and 5 Guys does it better anyway.
Biotech Bubble Is Nowhere Near Popping
Josh Brown: Can Your Portfolio Survive Rising Interest Rates?
Super Mario: A Shareholder Advocate In Word, But Not In Practice FYI: (Just ask the late Liz Bramwell about Mario. He once locked her out of her office over a dispute.)
Mario J. Gabelli’s investment firm, Gamco Investors, is another shareholder warrior telling companies to create value through good corporate governance. Yet, what about Gamco’s own governance?
Regards,
Ted
http://www.nytimes.com/2015/05/27/business/dealbook/a-shareholder-advocate-in-word-but-not-in-practice.html?ref=business&_r=0Source: Reference For Business.Com:
Founded in 1987, Gabelli Growth Fund was first managed by Elizabeth Bramwell, an analyst Gabelli met at Columbia during their student days. Gabelli Growth Fund achieved an annualized return of about 40 percent in 1988 and 1989, better than her boss's own performance. She resigned in 1994 after finding herself locked out of her office for refusing to move from Manhattan to suburban Rye, New York, where corporate headquarters had been established two years earlier. Bramwell said the performance of her fund had slipped vis-à-vis Gabelli's own results partly because she was not being allotted the staff she needed as the fund grew in size. She won $8
50,000 from Gabelli in an arbitration award regarding compensation allegedly due her.
Bruce Fund BRUFX had a pretty good day today, only down -0.09% when the S&P 500 was down 1%. Their Treasury bond holdings were helpful today. I think BRUFX is a better choice than the long/short equity funds or other alternative investment funds with much higher expense ratios. The expense ratio for BRUFX is only 0.70%
Are Stocks Overpriced ? I'm sure FMIJX is a fine fund, but it has definitely benefited from their significant currency hedging as detailed in the semiannual report of 3/31/1
5. Here is a
CHART of FMIJX vs. DBEF.
Kevin
2015 Market Forecasts from Several Perspectives Thanks for the post. I think there are two related factors in this market - the economy and the FED.
If the econ slows down & the FED does nothing - stocks flat for the year
If the econ slows down & the FED raises rated - stocks take a hit and ultimately down 5-10% for the year.
If the econ some growth & FED raises - stocks up 5-10%
2015 Market Forecasts from Several Perspectives Hi Guys,
The 201
5 edition of the Las Vegas MoneyShow ended a few days ago. I attended only some of their many presentations. I wasn’t motivated to mention my planned attendance because in past years, the MFO membership responded with a deep yawn. That’s okay; I learn.
One novel aspect to the 201
5 general format was the introduction of a Cannabis section that preceded the conventional MoneyShow agenda. The Cannabis sessions were paid events so I did not attend any of these presentations.
I did not take many notes, but I do have a general takeaway feeling that the professional market wiz-kids expressed relative to the market direction for the remainder of the year. A majority fraction of the experts are guardedly projecting positive returns from a narrowing market.
They observe that the current narrowing market is typically representative of aging Bull market runs. The present Bull market is third longest in history and will become the second longest if it extends into next year. One reason they are sanguine about the market has to do with the Presidential election cycle.
Presidential candidates will paint ultra-rosy pictures for their special programs. Louie Navellier jokingly advised that we should vote for the happiest candidate to best extend the likelihood of positive returns. On the negative signal side, Jim Stack cautioned that only 17% of the forecasters see near-term approaching dark clouds. That’s a contrarians warning sign. As usual, we get to choose our own poison.
For informational purposes, you might be interested in a Bull and Bear market summary paper assembled by Ed Yardeni. Here is a Link to that 10-page summary:
http://www.yardeni.com/pub/sp500corrbear.pdfI did make a note of one interesting observation made by one of the MoneyShow exhibitors (I didn’t record his name). He noticed that the S&P
500 dividend exceeded the 10-year Treasury bond yield for a brief period in mid-January. Apparently that’s an extremely rare happening. He reported that whenever that did occur, the stock market rewarded investors with high payoffs.
Here is a Link to a January MarketWatch article that examined this occurrence:
http://www.marketwatch.com/story/stock-dividend-yields-are-above-treasury-yields----and-thats-bullish-2015-01-20If the article has been posted earlier, I apologize. I completely missed it. Sorry Ted.
The three earlier occurrences are really insufficient to make grand statistical inferences, but the next year outsized rewards for these events were eye-popping. More fuel for the fire. Good luck guys integrating these data into your decision making.
Best Regards.
Art Cashin - Watch the US 10 year (he didn't say it-I did)
Are Stocks Overpriced ? OAKIX was still available at Fidelity 5-6 months ago. HAINX, ICEIX are still open, although availability on some platforms is spotty. SGOVX, IVVYX are available on some platforms NTF, but often only via Registered Investment Advisers. QFVIX is another strong contender, although fees are pretty high. We use Ivy as a core international hold for many clients, along with First Eagle for low volatility.
