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Weitz to Yacktman Hold Cash as Managers Find Few Bargains

Kenster1_GlobalValue
edited October 2013 in Fund Discussions
Wally Weitz, the mutual-fund manager who beat 90 percent of rivals in the past five years by buying stocks he deemed cheap, says bargains are so scarce these days that he’s letting his cash holdings swell.

“It’s more fun to be finding great new ideas,” Weitz, whose $1.1 billion Weitz Value Fund (WVALX) had 29 percent of assets in cash and Treasury bills as of Sept. 30, said in a telephone interview from Omaha, Nebraska. “But we take what the market gives us, and right now it is not giving us anything.”

Weitz, whose cash allocation is close to the highest it’s been in his three-decade career, joins peers Donald Yacktman and Charles de Vaulx in calling bargains elusive with stocks near record highs. They’re willing to sacrifice top performance for the safety of cash as stocks rally for a fourth year in five.
Eric Cinnamond beat 99 percent of his rivals at the Intrepid Small Cap Fund (ICMAX) in the almost five years through August 2010 that he ran the fund, Morningstar data show. His current fund, the $696 million Aston/River Road Independent Value Fund (ARIVX), trails 99 percent of its competition this year as cash and equivalents have grown to 64 percent of assets, according to the fund’s website and data compiled by Bloomberg.
“Our performance has been rough,” Intrepid’s Wiggins said in a telephone interview. “But we think small-cap stocks are a dangerous place to invest.”
http://www.bloomberg.com/news/2013-10-25/weitz-to-yacktman-hold-cash-as-managers-find-few-bargains.html

Comments

  • MikeMMikeM
    I invest with 3 of the managers talked about in this article, Romick, Yacktman and Cinnamond. Well, at least until this week I did. I had a good chunk of my portfolio in ARIVX. It was my only small cap holding since it's inception. But earlier this year I took 1/2 the ARIVX money and put it in GPGOX. The GPGOX management is top notch, and I figured the global small cap allocation would do better going forward. This week, I decided to move out of ARIVX completely. That money went to a mid-cap fund, HFCIX. So, for those who still hold ARIVX, you can expect this fund to take off now:)

    I like managers that know when to be conservative using cash when they see fit. But to see all small caps be over-valued as Cinnamond has done for the last 2 years just seems like a really bad call. When your bench mark is 31% better than you over the last 12 months that might be a bit to conservative for me. The only under-valued companies he could find seemed to be miners which continued to loose value. I actually hope this fund works out over a complete market cycle. It just became too hard to hold on to.
  • Kenster1_GlobalValue
    edited October 2013
    I'll piggy-back on my own thread but with respect to stock-oriented funds - who has started the re balancing process in light of the fabulous returns ytd? I am now or very soon will take steps to start re balancing or in other words trimming some profits off the table.

    What a fabulous year so far!!!

    YTD Performance of basket of some popular funds - As of 10/26/2013:

    POAGX: 46.61% (Primecap Aggressive Growth)
    VHCOX: 36.14% (Vanguard Capital Opportunity)
    VCVLX: 36.07% (Vanguard Capital Value)
    VDIGX: 25.05% (Vanguard Dividend Growth)
    VDAIX: 23.38% (Vanguard Dividend Appreciation)
    VPCCX: 30.68% (Vanguard Primecap Core)

    VIMSX: 29.26% (Vanguard Midcap Index)

    YAFFX: 23.73% (Yacktman Focused)
    OAKGX: 30.01% (Oakmark Global)
    OAKWX: 28.70% (Oakmark Global Select)
    ARTGX: 25.81% (Artisan Global Value)
    GPGOX: 32.66% (Grandeur Peak Global Opp)
    OAKIX: 28.67% (Oakmark International)

    FPACX: 17.34% (FPA Crescent)
    PRWCX: 18.43% (TRP Capital Appreciation)
    DODGX: 31.51% (Dodge & Cox Stock)
    FAIRX: 32.95% (Fairholme)

    KBWB: 28.16% (Powershares KBW Bank ETF)

    ARTQX: 30.59% (Artisan Midcap Value)
    ARTKX: 26.20% (Artisan International Value)
    IVWIX: 16.10% (IVA Worldwide)
    TIBIX: 16.10% (Thornburg Income Builder)

    BERIX: 13.88% (Berwyn Income)
    WAMVX: 33.83 (Wasatch Microcap Value)
    RYTRX: 27.46% (Royce Total Return)
    FMIHX: 24.85% (FMI Largecap)
    FMIMX: 25.29% (FMI Common)
    ARTMX: 33.06% (Artisan Midcap)

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