Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
To the Prospectus and Statement of Additional Information (the “SAI”) each dated October 30, 2022
On June 23, 2023, Mr. Robert B. Bruce, one of the Portfolio Managers of the Bruce Fund, passed away.
Accordingly, all references to Mr. Robert B. Bruce in the Fund’s Prospectus and SAI are removed effective as of said date. R. Jeffrey Bruce will continue as Portfolio Manager.
You should read this Supplement in conjunction with the Prospectus and Statement of Additional Information, which provide information that you should know before investing in the Fund and should be retained for future reference. These documents are available upon request and without charge by calling Shareholder Services at (800) 872-7823.
Wife's IRA is with Bruce. BRUFX. Sorry to hear the news. This event may make it smart to bird-dog performance, going forward. It's been lagging in 2023.
My concern is what will happen if something should happen to the key man/key person portfolio manager running the fund? Reminds me of Walthausen as he had a couple of co-portfolio managers along the way especially after Walthausen retired. The fund eventually was sold to NorthStar Funds.
The fund has been co-managed by both father and son since its inception.
Sorry to hear about Robert Bruce. Owning BRUFX was a bit of a challenge, given the iconoclastic nature of the company. One cannot, for instance, put a slice of this good fund into an IRA held elsewhere to take advantage of its high distributions.
The same key-person concern appears to have been warranted the case of AKREX. From July 2020, about the time the fund began talking of a planned transition from the management of Chuck Akre, performance has truly flagged. M*'s current *** grade is generous.
Eponymous funds are hard investments. Muhlenkamp was bequeathed to Ron's son, and has been vastly better without him. Akre Focus was the outgrowth of one betrayal of Chuck Akre by his analysts; he intensely prepped their successors. By MFO Premium's and Morningstar's reckoning, they've outperformed their peers by a healthy margin since but have seen huge outflows. Walthausen's team gave up. Bill Miller's successors at Miller Opportunity are top 1% this year, but the fund was also top 1% in 2020 and bottom 1% in 2021 and 2022. Cook & Bynum is five-star after Dowe's passing, but most of that comes from being reclassified by Morningstar, perhaps fairly, as a diversified EM fund.
And Bruce? The Younger Mr. Bruce will persevere, I suspect. His dad was more and more a voice in the background, I suspect. And I'm certainly willing to ask them, if you'd like.
The prudent course for active investors is usually a functional team or a firm (T Rowe Price, Mairs & Power) that has a really good record for manager replacement. The prudent course for skeptics might be a passive strategy that's not purely market-cap or debt weighted.
Few star managers can make the transition to a team much less assume it will be your kid.
Michael Price is another example of a one man show that became problematic after he left.
Another example is Albert Nicholas who ran the Nicholas Fund.
According to Bloomberg Markets in 2015, "The Nicholas Fund, which he has run since 1969, has topped the Standard & Poor's 500 Index by an average of 2 percentage points a year for the past 40 years and [beat] it every year since 2008 [through 2014]."
His son David was in and out of the family company and finally back in, but a quick look shows that he hasn't done nearly as well as Pops.
And Bruce? The Younger Mr. Bruce will persevere, I suspect. His dad was more and more a voice in the background, I suspect. And I'm certainly willing to ask them, if you'd like.
Hello, David. Anything you can find out from the Bruce Fund about whatever at all, is stuff I'd be "all ears" for. Thank you.
Few star managers can make the transition to a team much less assume it will be your kid.
Michael Price is another example of a one man show that became problematic after he left.
Another example is Albert Nicholas who ran the Nicholas Fund.
According to Bloomberg Markets in 2015, "The Nicholas Fund, which he has run since 1969, has topped the Standard & Poor's 500 Index by an average of 2 percentage points a year for the past 40 years and [beat] it every year since 2008 [through 2014]."
His son David was in and out of the family company and finally back in, but a quick look shows that he hasn't done nearly as well as Pops.
Uh. Pretty sure NICSX has beat the 500 since David took over after his father passed. He has been on NICSX since 2011. Their stated thesis hasn't changed:
Growth rate of 10% or better Consistent earnings Return on equity (ROE) of 15% or an improving ROE Debt to total capitalization of less than 50% A price to earnings ratio lower than two times the growth rate An enduring franchise or brand Honest, capable management Significant management ownership of stock Long-term and short-term business momentum
I sold it out of the my IRA after Ab died. And I wish I hadn't. They have added two new managers to the fund. And David is ten years younger than me. So it's back on my watch list for consolidating the IRA.
David has been running small cap funds at Nicholas since 1993. They don't look so good. But few small caps do these days.
These things do change depending on where the starting line is.
The difference in daily returns from June 21, 2016 (mid-summer) is 8.58%.
The difference in daily returns from August 4, 2016 (the day Albert died) is a little over 4%.
Monthly return from the end of August 2016 is 1.35 in favor of SPY.
From the end of September the advantage to SPY was down to .61
Monthly from 10/31/2016 to 7/7/2023 it's NICSX 135.13 to 132.39 for SPY.
Looking at MFO premium (July through June) I see:
7years SPY 16.26 David 16.13 6years SPY 12.55 David 13.55 5years SPY 12.22 David 13.82 4years SPY 12.69 David 13.24 3years SPY 13.48 David 15.29 2years SPY 3.28 David 5.69 1years SPY 19.39 David 26.57
That's good enough for me for an IRA watch list where I would be considering risk factors, in addition to total return.
I suspect you are correct, but never know. Some guys want to die with their boots on. I know several world renowned MDs who either died in the office or on rounds at the hospital. Kinda hard on the patients, however.
We ended our 2020 profile of the Bruce Fund with this note: "Bruce is an enigmatic fund because its managers choose for it to be so. They don’t explain themselves to the public, though do answer calls from their investors." Talked to Jeff Bruce for about 20 minutes today, and nothing has changed. He's very pleasant and agreeable but has spent 38 years with the mantra: we talk to our shareholders, not the outsiders." No interviews with Morningstar since the early 80s when Mr. Mansueto has a two person operation and a newsletter. (The younger Mr Bruce went to high school with Mr Mansueto but they seemed not to be in the same social circle.)
The takeaway is that Jeff anticipates no change. He and his dad worked together for 38 years. They talked about each idea. If one of them liked it, they bought a little. If both of them liked it, they bought a lot. And vice versa with sells. The support team remains in place and confidence is unshaken.
He does know that we've commented favorably on the fund's high cash stake. (Currently 25% with substantial overweights in defensive stocks.) He seems to appreciate the understanding. The fund is underwater today, mostly because they had anticipated a hard market. It is, he reports, their fifth-worst performance since launch. He admits that's there's somewhat limited comfort in the observation, "well, we have done worse four other times and always bounced back by striking with the plan."
It's entirely cool that the manager, in their 450 square foot world headquarters, answers the phone himself on the second ring and enjoys talking with shareholders.
@David_Snowball. I appreciate what you did, likewise. Still holding BRUFX in wife's IRA.
The elder Bruce DIED and it was reported here in late July, '23. In August, the ridiculous automated M* rating on BRUFX asserted: "The main contributor to the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average ten-year Morningstar Rating of 4.0 stars. The rating also gains because a manager has at least$ 1 million invested in the strategy. Lastly, the rating is limited by the instability of its management team. The fund last saw a manager change two months ago, which suggests that it could do more to retain its portfolio managers."
Pathetic.
*This is another thought about BRUFX: it's having a suck-ass year in 2023. @bee likes the fund, too. It had occurred to me to maybe switch out of it? Granted, I'm writing these words at the end of this year's WORST month.
Eponymous funds are hard investments. Muhlenkamp was bequeathed to Ron's son, and has been vastly better without him. Akre Focus was the outgrowth of one betrayal of Chuck Akre by his analysts; he intensely prepped their successors. By MFO Premium's and Morningstar's reckoning, they've outperformed their peers by a healthy margin since but have seen huge outflows. Walthausen's team gave up. Bill Miller's successors at Miller Opportunity are top 1% this year, but the fund was also top 1% in 2020 and bottom 1% in 2021 and 2022. Cook & Bynum is five-star after Dowe's passing, but most of that comes from being reclassified by Morningstar, perhaps fairly, as a diversified EM fund.
And Bruce? The Younger Mr. Bruce will persevere, I suspect. His dad was more and more a voice in the background, I suspect. And I'm certainly willing to ask them, if you'd like.
The prudent course for active investors is usually a functional team or a firm (T Rowe Price, Mairs & Power) that has a really good record for manager replacement. The prudent course for skeptics might be a passive strategy that's not purely market-cap or debt weighted.
I agree and have generally avoided father-and-son / family firms. I think Yacktman however was one of the better ones. I believe Donald brought Steven in very early and they worked together for a very long time. I considered it numerous times but never owned it. I admired their consistent (value) approach, and I believe they put up good returns, especially when the S&P floundered. They did better than many of the other “value stalwarts” like Clipper, Oakmark Select, Muhkenkamp, Oak Value, Torray, Longleaf, etc. of the same era.
@chang, I concur. Look like we travelled similar path with most of the funds you mentioned above. We have invested with Yacktman for many years. Consistency I performance over time has been its hallmark, especially during drawdowns. Yes, it is true that Steven Yacktman started working with Don early in his college years before he learned their investment process. It is a rare sight to see that happens in today fast changing world.
Comments
The fund has been co-managed by both father and son since its inception.
The same key-person concern appears to have been warranted the case of AKREX. From July 2020, about the time the fund began talking of a planned transition from the management of Chuck Akre, performance has truly flagged. M*'s current *** grade is generous.
And Bruce? The Younger Mr. Bruce will persevere, I suspect. His dad was more and more a voice in the background, I suspect. And I'm certainly willing to ask them, if you'd like.
The prudent course for active investors is usually a functional team or a firm (T Rowe Price, Mairs & Power) that has a really good record for manager replacement. The prudent course for skeptics might be a passive strategy that's not purely market-cap or debt weighted.
Michael Price is another example of a one man show that became problematic after he left.
Another example is Albert Nicholas who ran the Nicholas Fund.
According to Bloomberg Markets in 2015, "The Nicholas Fund, which he has run since 1969, has topped the Standard & Poor's 500 Index by an average of 2 percentage points a year for the past 40 years and [beat] it every year since 2008 [through 2014]."
His son David was in and out of the family company and finally back in, but a quick look shows that he hasn't done nearly as well as Pops.
David has been running small cap funds at Nicholas since 1993. They don't look so good. But few small caps do these days.
>> Pretty sure NICSX has beat the 500 since David took over after his father passed.
I don't know when that was exactly, but this is not at all the case since midsummer 2016 (AN died that August): SP500 up 7% over Nicholas.
The difference in daily returns from June 21, 2016 (mid-summer) is 8.58%.
The difference in daily returns from August 4, 2016 (the day Albert died) is a little over 4%.
Monthly return from the end of August 2016 is 1.35 in favor of SPY.
From the end of September the advantage to SPY was down to .61
Monthly from 10/31/2016 to 7/7/2023 it's NICSX 135.13 to 132.39 for SPY.
Looking at MFO premium (July through June) I see:
7years SPY 16.26 David 16.13
6years SPY 12.55 David 13.55
5years SPY 12.22 David 13.82
4years SPY 12.69 David 13.24
3years SPY 13.48 David 15.29
2years SPY 3.28 David 5.69
1years SPY 19.39 David 26.57
That's good enough for me for an IRA watch list where I would be considering risk factors, in addition to total return.
I suspect you are correct, but never know. Some guys want to die with their boots on. I know several world renowned MDs who either died in the office or on rounds at the hospital. Kinda hard on the patients, however.
The takeaway is that Jeff anticipates no change. He and his dad worked together for 38 years. They talked about each idea. If one of them liked it, they bought a little. If both of them liked it, they bought a lot. And vice versa with sells. The support team remains in place and confidence is unshaken.
He does know that we've commented favorably on the fund's high cash stake. (Currently 25% with substantial overweights in defensive stocks.) He seems to appreciate the understanding. The fund is underwater today, mostly because they had anticipated a hard market. It is, he reports, their fifth-worst performance since launch. He admits that's there's somewhat limited comfort in the observation, "well, we have done worse four other times and always bounced back by striking with the plan."
It's entirely cool that the manager, in their 450 square foot world headquarters, answers the phone himself on the second ring and enjoys talking with shareholders.
For what that's worth,
David
My condolences to the Bruce family.
The elder Bruce DIED and it was reported here in late July, '23. In August, the ridiculous automated M* rating on BRUFX asserted:
"The main contributor to the rating is its parent firm's impressive long-term risk-adjusted performance, as shown by the firm's average ten-year Morningstar Rating of 4.0 stars. The rating also gains because a manager has at least$ 1 million invested in the strategy. Lastly, the rating is limited by the instability of its management team. The fund last saw a manager change two months ago, which suggests that it could do more to retain its portfolio managers."
Pathetic.
*This is another thought about BRUFX: it's having a suck-ass year in 2023. @bee likes the fund, too. It had occurred to me to maybe switch out of it? Granted, I'm writing these words at the end of this year's WORST month.