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Did ya'll see that Fairholme FAIRX was removed from the Kiplinger 25. They cite asset bloat as the reason, yet in the same breath they state that this is not a recommendation to sell. Interesting ...
Asset bloat has to also be considered in the context of the fact that Berkowitz has opened a new stock-oriented fund which will allow it to pursue opportunities (smaller cap stocks) that FAIRX no longer can.
I suppose, Bruce, you could have just closed FAIRX in the first place, and kept it at just the one fund. Raising the minimum on the fund was not about closing the fund, Bruce, but rather on restricting the types of new clients who were performance chasing.
Color me disappointed.
Shame on me, however: I should have seen this one coming from a mile away. I've owned FAIRX since 2005, and seems that every other article about the fund over the past few years has cited money managers (not just retail schleps) worrying that FAIRX was simply becoming much too big.
Well at least you got decent returns rights? How about the smucks who were in highly touted funds such as TAVFX and MUHLX back then? Have you seen their 3 and 5 year returns? How about those that got into CGMFX 3 years ago? -13% annualized 3-yr returns!
How about those that couldn't wait to get into DODGX before it closed...and those even willing to pay good $$$ just to get 1 share after it closed. How does 0.29% and 0.23% 3 and 5 year returns from DODGX, respectively, appeal to you?
How about those that got into the "rock solid" DODBX years ago? Did you know that FAIRX has bested DODBX the past 3 and 5 years?
Boy, I'm crying that I held FAIRX.
Latest Fairholme purchases include AT&T, Verizon, Banco Santander and Royal Dutch Shell.
I'm hanging on to FAIRX to let Bruce and Charlie do what they do in making unique concentrated contrarian bets and yes I have in the past taken some nice profits off the table. I also have other funds that target Small and Midcap value. I even have International Microcaps.
If you want a smaller value fund that is willing to close for long-periods when the time is right then consider something like the Sequoia fund. But also let the likes of Royce, Heartland, Allianz NFJ, Walthausen, Perkins, etc. focus on the Small-Midcap space and if I keep that in mind then I'm ok with holding FAIRX when looking at this at the Portfolio level.
As one example - I have a large position in the Allianz NFJ Smallcap Value fund in my 401k (YTD: 8.30% | 3-yrs: 8.67% | 10-yrs: 12.85%)
But like I said --- I have other funds that target US/International/Global small and midcaps and can overweight them if I feel really bullish about them and so I'm not as worried.
For the past year or so, when evaluate a fund, I look at a history of fund closings. The number of such managers if few and far between.
Micro cap funds close because they have to. I own one, and will be purchasing another.
Your other points/comparisons are well taken. Yes, I'm holding onto FAIRX, but Fairholme Capital's recent fund launches don't pass the sniff test. The actions on this front bother me moreso than Bruce's controversial stock picks.
(For the record, my thesis is that CGMFX is going nowhere because Heebner is a trend investor and there is no trend in the market right now -- except volatility. So, asset bloat or not, I'd wager that CGMFX will continue to disappoint for some time.)
Your points and worry are also well-taken too. Some new investors have asked should they jump into FAIRX now and I have responded 'maybe not.' It's going to be difficult for FAIRX to get exceptional returns say between now and the next 7 years. It definitely isn't for everyone going forward.
Let's say someone is already holding DODGX, FPACX, MALOX and YACKX --- and this new investor is interested in FAIRX. Look, maybe there isn't a whole lot of value to be added here going forward. If I were this investor, I'd look at adding something else that specifically targets Small-Midcap companies that would be more complementary to this portfolio such as those fund companies I mentioned above that can add more bang for the buck over the next 5 - 10 years.
Heartland Select Value Fund Named by Lipper: “Best Multi-Cap Value Fund” over Five Year Period
April 12, 2011 9:26 AM EDT
MILWAUKEE--(BUSINESS WIRE)-- Heartland Select Value Fund (Investor: HRSVX) was named "Best out of 240 multi-cap value funds for the five-year period" ending December 31, 2010. The awards program honored funds that, “have excelled in delivering consistently strong risk-adjusted performance relative to peers,” according to Lipper.
ARIVX Aston/River Road Independent Value N is my vote for a multi-cap value fund that has low AUM. It's a new fund, but the manager has a great track record with a similar fund (ICMAX Intrepid small cap).
ARIVX can invest in stocks with market caps between 100 million and 5 billion.
The one part of active management investing that is never considered is that the investor does not have to wait for a fund to underperform, they can jump ship the instant the reasons for outperformance no longer apply. Fund bloat is a serious cause for concern. I applaud the magazine for considering it. Too many publications focus on past performance and not on future performance.
Comments
I suppose, Bruce, you could have just closed FAIRX in the first place, and kept it at just the one fund. Raising the minimum on the fund was not about closing the fund, Bruce, but rather on restricting the types of new clients who were performance chasing.
Color me disappointed.
Shame on me, however: I should have seen this one coming from a mile away. I've owned FAIRX since 2005, and seems that every other article about the fund over the past few years has cited money managers (not just retail schleps) worrying that FAIRX was simply becoming much too big.
How about those that couldn't wait to get into DODGX before it closed...and those even willing to pay good $$$ just to get 1 share after it closed. How does 0.29% and 0.23% 3 and 5 year returns from DODGX, respectively, appeal to you?
How about those that got into the "rock solid" DODBX years ago? Did you know that FAIRX has bested DODBX the past 3 and 5 years?
Boy, I'm crying that I held FAIRX.
Latest Fairholme purchases include AT&T, Verizon, Banco Santander and Royal Dutch Shell.
I'm hanging on to FAIRX to let Bruce and Charlie do what they do in making unique concentrated contrarian bets and yes I have in the past taken some nice profits off the table. I also have other funds that target Small and Midcap value. I even have International Microcaps.
If you want a smaller value fund that is willing to close for long-periods when the time is right then consider something like the Sequoia fund. But also let the likes of Royce, Heartland, Allianz NFJ, Walthausen, Perkins, etc. focus on the Small-Midcap space and if I keep that in mind then I'm ok with holding FAIRX when looking at this at the Portfolio level.
As one example - I have a large position in the Allianz NFJ Smallcap Value fund in my 401k (YTD: 8.30% | 3-yrs: 8.67% | 10-yrs: 12.85%)
But like I said --- I have other funds that target US/International/Global small and midcaps and can overweight them if I feel really bullish about them and so I'm not as worried.
Micro cap funds close because they have to. I own one, and will be purchasing another.
Your other points/comparisons are well taken. Yes, I'm holding onto FAIRX, but Fairholme Capital's recent fund launches don't pass the sniff test. The actions on this front bother me moreso than Bruce's controversial stock picks.
(For the record, my thesis is that CGMFX is going nowhere because Heebner is a trend investor and there is no trend in the market right now -- except volatility. So, asset bloat or not, I'd wager that CGMFX will continue to disappoint for some time.)
Let's say someone is already holding DODGX, FPACX, MALOX and YACKX --- and this new investor is interested in FAIRX. Look, maybe there isn't a whole lot of value to be added here going forward. If I were this investor, I'd look at adding something else that specifically targets Small-Midcap companies that would be more complementary to this portfolio such as those fund companies I mentioned above that can add more bang for the buck over the next 5 - 10 years.
http://www.streetinsider.com/Press+Releases/Heartland+Select+Value+Fund+Named+by+Lipper:+“Best+Multi-Cap+Value+Fund”+over+Five+Year+Period/6423623.html
Heartland Select Value Fund Named by Lipper: “Best Multi-Cap Value Fund” over Five Year Period
April 12, 2011 9:26 AM EDT
MILWAUKEE--(BUSINESS WIRE)-- Heartland Select Value Fund (Investor: HRSVX) was named "Best out of 240 multi-cap value funds for the five-year period" ending December 31, 2010. The awards program honored funds that, “have excelled in delivering consistently strong risk-adjusted performance relative to peers,” according to Lipper.
ARIVX can invest in stocks with market caps between 100 million and 5 billion.