Hi, guys.
I'm prepping now for the Morningstar conference; I wanted to give you a heads up and to extend an invitation. I've got a series of manager interviews scheduled, in addition to the regular panel presentations. I thought I'd sketch out the confirmed interviews and ask if folks had questions they'd like me to raise with any of these folks.
Wednesday is mostly panel presentations but we're meeting with Steve Owens, one of Touchstone's managing directors, at 5:00 to talk about their fund lineup and philosophy.
Thursday is long.
7:00 a.m. Breakfast panel with Litman Gregory. Talks by guys from Northern Cross (the late Hakan Castegren's firm, which does and Harbor International) and Water Island (the Arbitrage Fund crew). Some prospect for a question or two there.
8:45 Zac Wydra of Beck, Mack & Oliver Partners (BMPEX)
2:30 Bryan Krug of Artisan High Income, formerly of Ivy High Income (WHIAX). WHIAX is bloated but really solid; Krug substantially outran the comparable funds from Fidelity, T. Rowe and Vanguard during his tenure.
3:30 Josh Alderman, a managing director at Diamond Hill, who wants to do the "firm philosophy" thing.
5:30 Venkatesh Reddy and Kara Paik of Zeo Strategic Income (ZEOIX), folks who describe their philosophy as “short duration meets Benjamin Graham – we invest in short-duration corporate debt, carefully selecting each security in our portfolio of approximately 25 holdings."
Unscheduled but likely is an informal conversation with one of the Columbia Acorn folks (he remembers me from the days that he was a high school debater) and, with luck, a interview with the Whitebox folks to discuss Tactical Income.
If there are questions you'd like me to raise with any of them, let me know and I'll poke on your behalf.
As ever,
David
Comments
For the Arbitrage Fund crew.....don't know how you would ask this....but the fund seems to be 'dead in the water' with respect to performance. Not a happy shareholder. Their 2013 total return: 0.85%. 2012 return: 0.27%. No complaints about 2011. 2010: 1.44%. Not focusing on the category, but on an absolute return basis, can't they do better?
Let me just echo and perhaps give a slightly different slant to Andy's and Ace's questions about ARTFX: what does he see as the outlook for high yield at current prices? Near-term is hard to guess, of course, but are there long term values in the current market? M* indicates the fund is almost half cash. Is that just because the fund is new and cash is pouring in faster than they can invest it, or is he holding out for a correction?
Thanks for this invite and for running this site!
BK did very well vs. the category in 2008 and Q3 '11, and anything David can tease out about how he accomplished that then, and how he is managing the new fund today to limit the downside, would be welcome info.
Also, he has a chunk in bank loans now -- are those what he sees as values in specific issues? Some bond folk are down on loans now. (Object of the question would be to gauge roughly how he incorporates issue value in his process; apparently it's been a significant thing for him.)
The Litman Gregory gathering is crowded, but I can certainly raise the e.r. question and can angle to get to the ARBFX performance slump.
I'll try, as before, to post highlights in the evening. I might, with Chip's help, be able to get stuff out during lulls throughout the day - I often have 15 minutes free there but almost never have 20.
David
As for Whitebox planning, put this in your travel folder:
http://www.bloomberg.com/news/2014-06-10/whitebox-shorting-never-never-stocks-in-graham-reversal.html
Also, OT but FYI. I just pulled the RiverPark semiannual "report" out of the mailbox. Essentially, it is simply a holdings dump, with requisite summaries of significant accounting policies. No commentaries, no reviews of fund performance, nada, zero, zilch. Apparently, the RiverPark PMs do not believe there was anything they did, in any of their 7 funds, worthy of mention. Pathetic.
A number of families - Artisan included - have text-free semi-annual reports. They strike me as a waste of paper. In RiverPark's case, the managers do uniformly solid quarterly letters though with the inevitable (given the tech, nearly inexplicable) lag.
David
One amusing bit from the semi-annual report, which is basically the 3-31-14 listing of holdings: RSIIX-RSIVX lists 5.2% in energy, among which is Checkers Drive-In Restaurants. What of the "burgers, fries, cola, wings, fish, hot dogs, the Big Chicken and more," I wonder, packs the most energy?
I wouldn't expect anything more than low-to-mid single digit returns from Merger Arb funds. May be worse lately from the standpoint of you have traditionally the idea of shorting the company buying and buying the company being bought. In this market, everything is going up. So, while you may get some minor gains from the company being bought, you're losing if the company doing the buying that you're short goes up anyways.
Again though, not going to be something that does more than a single or - in a really good year - a double.
They need to change the reporting requirements so they are more meaningful. If a stock mutual fund manager has 1 Million in his fund, but has $50 million in investment assets, that's not what I call "skin in the game." It's only 2% of his investments.......
I like what Longleaf Partners Funds does. They do not allow employees to have outside investments. So the fund managers have ALL their investment dollars in the funds.
It's what Warren Buffett does with Berkshire Hathaway. It's what Bruce Berkowitz does with the Fairholme Funds. It should be the standard. If the fund manager doesn't have a large percentage of his net worth in his fund.........well, then he shouldn't be running the fund.
Just my opinion
You be The Man, Andy, you be The Man. Here's a cookie for the RSIVX smile.
Under Consumer Discr, you will see Lee Enterprises, 9.5%, 3/15/22. Google this with Cohanzick Investment Management, and in this pile (you've have to do some sifting) you'll find an SEC doc, describing the creation of this debenture by private placement memorandum. It was solely created with some of our money, pooled with monies from 3 private equity firms (secured senior lien loan, no more and probably less worrisome than anything else in the portfolio). So, congratulations; if you were not already, we are now proud owners of private equity debt. Hey, "money good," right?