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Objective
Evermore Global Value seeks capital appreciation by investing, primarily, in the stock of companies that are both undervalued and undergoing change and, secondarily, in securities of “distressed” companies or those involved in merger/arbitrage situations. It may invest in any country, any market capitalization, and any industry. It generally invests in mid- and large-capitalization companies. 40-100% of the portfolio will be non-US, with the option buying holding sovereign debt and participations in foreign government debt. It can short.
Adviser
Evermore Global Advisor, LLC. Evermore was founded in 2009 by two alumni of the Mutual Series funds, David Marcus and Eric LeGoff. They have two investment strategies, Global Value and European Value, which are packaged for individual and institutional investors through their two mutual funds, separately managed accounts, at least one hedge fund, and offshore funds for non-U.S. residents.
Manager(s)
David Marcus and Jae Chung. Mr. Marcus is co-founder, chief executive officer, and chief investment officer of Evermore Global and lead portfolio manager of the Funds. He’s had a varied and colorful career. He was a research analyst at Heine, the advisor to the original Mutual Series funds. He joined Franklin when the Mutual Series was acquired, and managed or co-managed Franklin Mutual European, Franklin Mutual Shares, and Franklin Mutual Discovery. He left Franklin in 2000 and managed a couple hedge funds and the family office for the Stenbecks, one of Sweden’s wealthiest families. Mr. Chung served as a research analyst (and, briefly, fund co-manager) during Mr. Marcus’s years at Franklin, then went on to work as a senior research analyst at Davis Advisors, advisers of a very fine group of value-oriented funds including Davis New York Venture Fund, as well as the Davis Global, International, and Opportunity Funds. He also ran several Asia-domiciled funds. Mr. Chung is a graduate of Yale University. They’re supported by one research analyst.
Management’s Stake in the Fund
As of December 11, 2009, Mr. Marcus had less than $50,000 in the fund and Mr. Chung had nothing. Given that the fund hadn’t yet been offered to the public, that’s not terribly surprising.
Opening date
December 30, 2009.
Minimum investment
$5000 for regular accounts $2000 for IRAs
Expense ratio
1.6% on assets of $22 million. The “A” shares carry at 5.0% front load but are available no-load, NTF from Schwab and Scottrade.
Comments
There are a few advisors that get active management consistently right. But they are few indeed. Getting it right requires not only skill and insight (knowing what to buy or sell), but also a fair amount of courage (being willing to act despite the risks). Large firms may have the insight (one imagines that Fidelity probably generates a fair number of intriguing leads) but they lack the courage. Their business model relies on steady inflows from retirement accounts – directly or through pension managers — and those folks are not looking for thrills. In addition to the ubiquitous market risk, such managers face what Jeremy Grantham calls “career risk.” One disastrous, or wildly premature, call leads to a billion in outflows and a quick trip to the unemployment line.
That leaves much of the hope for active management in the realm of smaller funds. Even here, some lack the fortitude. Many lack the skill.
There are a handful of investment families, though, that have made a long tradition of making bold moves and getting them right. The Acorn Fund (ACRNX) under Ralph Wanger was one. The Third Avenue Funds under Marty Whitman are another. But the poster child for aggressive value investing are the folks trained by the legendary Max Heine or Heine’s more legendary protégé Michael Price, jointly designated by Fortune (12/20/99) as two of the “Investors of the Century.” (Mr. Price alone carried, and deeply resented, Fortune’s designation as “The Meanest SOB on Wall Street.”) Mr. Price’s protégés include David Winters, manager of the phenomenally successful Wintergreen Fund (WGRNX) and many of the folks who went on to apply his discipline in running the Mutual Series funds.
Mr. Marcus, lead manager for Evermore Global Value, was another of Price’s students. He left the Mutual Series funds shortly after Mr. Price’s own departure, but in the wake of their firm’s acquisition by Franklin. He spent the next decade in Europe, working with one of Sweden’s wealthiest families and running hedge funds. At some point, he reputedly became nostalgic for the camaraderie he experienced at Mutual Series pre-Franklin, and resolved to work to recreate it.
Evermore’s investment discipline parallels Wintergreen’s and Mutual Series’. They look for deeply undervalued stocks, but they don’t take the “buy dirt cheap and wait to see what happens” approach. Many value managers are essentially passive; they buy, expecting or hoping for a turnaround, and sell quickly if “bad” becomes “worse.” The Price protégés look further afield – into distressed debt, “special situations,” bankruptcies, corporate spin-offs – and actively “assist” recalcitrant corporate managers unlock value. That willingness to pressure poorly run companies earned Mr. Price the “SOB” sobriquet. Mr. Winters puts a far more affable spin on the same strategy; he argues that even ineffective managers want to be effective but sometimes lack the will or insight. He helps provide both. Mr. Marcus seems intent on using the same strategy: “We often buy substantial stakes and, from time to time if necessary, use our influence to foster value creation.”
He imagines a compact (20-40 name) portfolio with low turnover (20% or so), roughly akin to Wintergreen’s. The fund’s asset allocation roughly matches that for Wintergreen and Mutual Global Discovery. From inception through the end of August 2010, the fund has performed in-line with its World Stock peers though it substantially outperformed them over the volatile summer months.
Bottom Line
The Heine/Price/Mutual Discovery lineage is compelling. The fact that they have Mr. Price as an advisor helps more. The Mutual Series managers, past and present, folks tend to embody the best of active management: bold choices, high conviction portfolios, and a willingness to understand and exploit parts of the market that few others approach. Evermore, for those who access the no-load shares, is priced more attractively than either Discovery or Wintergreen. For folks still brave enough to put new money in equities, this is a very attractive option.
Fund website
© Mutual Fund Observer, 2011. All rights reserved. The information here reflects publicly available information current at the time of publication. For reprint/e-rights contact [email protected].
