Centerstone funds are managed by Abhay Deshpande. Prior to establishing Centerstone, Mr. Deshpande was a Portfolio Manager at First Eagle Investment Management, advisor to the Global and Overseas strategies that comprised the vast majority of the firm’s billions in assets under management. First Eagle funds are famous for their stability, safety and growth.
The new funds managed by Abhay Deshpande are very young, accessible at Fidelity, Scottrade and TD Ameritrade. These funds are still small, which could suggest that now is the time to invest there. But I do not hear any discussion of these funds on the web. Do you have any opinion about these funds? Any comments? Do these funds deserve to be considered "Most intriguing new funds?"
Comments
Why does this sound a lot like an advertisement puff piece to me?
I think we may have turned the corner here...
If you want exposure in the foreign LCB space, just buy FMIJX and call it a day.
Kevin
The rest of the text is absolutely mine, including the sentence "First Eagle funds are famous for their stability, safety and growth." If you look at the Morningstar figure showing the performance of First Eagle Global since inception, you will understand what I mean. I posted this info because I consider investing in the Centerstone International at Fidelity. Thus I was looking for any additional information that could help me with my decision, or maybe to suggest David Snowball to consider discussing these new funds.
Thanks for you reply. This is the epoch when everyone becomes cynical, some call it "post-truth era". As for these funds, I recall now that there was a discussion of these new funds in June Commentary, in "Launch Alert: Centerstone Investors Fund (CETAX/CENTX)". Here is a part of these comments, much better said than in Morningstar:
"The argument for being excited about Centerstone Investors is pretty straightforward: it’s managed by Abhay Deshpande who worked on the singularly-splendid First Eagle Global (SGENX) fund for 14 years, the last six of them as co-manager.... Deshpande was seen as the driver of SGENX’s success in the years after Mr. Eveillard’s departure, which is reflected in the Morningstar downgrade when he left. So there’s talent on Centerstone’s side."
Then in July Commentary I read:
"The great virtue of the Morningstar conference, and one of the greatest gifts that working with the Observer affords, is the ability to talk with (heck, mostly listen to) remarkable people. That roster most recently included Rupal Bhansali, Abhay Deshpande, Andrew Foster, Teresa Kong and David Marcus. These folks aren’t just bright, they’re scary bright. More importantly, they’re the right kind of bright."
I guess this really helps me to decide:)
@kevindow On the contrary, the manager has been quite clear about his intentions regarding AUM. He's stated that 10B would be an ideal size for his funds and mentions the importance of fund flows as well in keeping returns competitive. He points out that Ben Graham warned years ago about the danger of combining huge fund size with added fees making it difficult to produce superior returns. While it's probably true that the fund(s) will not close anytime soon, AUM will definitely be controlled.
OK, let me be clear. The current AUM is a measly $53M for a fund which began collecting assets 8 months ago in May 2016. Like I said, this fund will not close to new investors anytime soon.
Also, Mr. Deshpande only has a paltry $100K or less invested of his own money in this fund, according to the latest SAI. Why should I have confidence in this fund if the manager doesn't ??
And if the AUM get near $10B, which may take 5 or more years at this pace, I predict that greed will overcome principle -- like it usually does -- and the fund will stay open to ALL investors.
Again, in this space, FMIJX would be my choice and not Mr. Deshpande's fund.
Kevin
"This approach has achieved a superb record with strong downside protection--a hallmark of FMI funds. Since inception, the fund has lost only 43% less than its index in down months. Current tailwinds won't last forever, but this patient approach should deliver for long-term investors."
I believe that by current tailwinds they mean rise of dollar, which they compensate by hedging. This fund has 6.2B AUM, which is a lot. I invest in FMIJX, but perhaps it is good that CSIAX will not become so large and will stay nimble for much longer time. I guess I will invest in both.
That would be a good guess since M* wrote of "currency tailwinds" three paragraphs up. But in the same sentence M* added that the fund also benefited from its dearth of EM relative to its peers. Another tailwind.
The manager has between 50-100K in the domestic fund; he has none in the international fund. I like to see managers have some meaningful stake in their products, but at the same time I don't conclude that they "don't have confidence" in their own ability.
You are very correct in stating that it may take "5 or more years" for the fund to reach 10B at its present pace!
OTOH, I'm unconvinced that if the fund reaches that amount that "greed will overcome principle like it usually does," especially when the manager has stated that he will limit assets. What I have seen in my past investment experience is that managers who have said that they will close the cash windows do follow through, and so I'm making a judgment in the case of Mr. Deshpande that he will do the same. Based on what he has said and written publicly indicates that his goal is to produce superior returns, not accumulate assets, and so I will take him as a man of principle rather than as someone following his own selfish interests.
I have a very favorable opinion of FMIJX but do not own it.
Best.
"Finally, and most importantly the employees of Centerstone have invested eight figures
in total into the Funds. There can be, in my mind, no other greater alignment of interest
than investing alongside one’s client base."
Eight figures means more than $10M. The total AUM of the two funds is approximately $60M. In other words, unless I am mistaken, he says that more than 15% of the AUM of the two funds is due to the investment of the employees of Centerstone.
Kevin
Just checked at Scottrade, neither CETAX or CENTX is available NTF.
The CENTX purchase page and the CINTX purchase page each shows the fund available at "Scottrade TF" as Kevin described.
Regarding CETAX, the M* purchase page shows that you can already get it at TDAmeritrade NTF. TDAmeritrade confirms this; there the standard $5K min is required.
Neither CENTX nor CETAX appears to be available for purchase at E*Trade.
Both their pages here and here report:
I got an intriguing sense of calm from Mr. Deshpande. Very sharp, very attentive but ... hmmm, centered? Appropriately self-confident? Patient? You don't get the sense of a guy who feels pressured to make a splash, much less a name for himself.
I get a sense that Mr. Deshpande will have a substantial investment in the fund and in the firm; often founders underwrite these start-ups to the tunes of hundreds of thousands to millions. I also had a sense that some of his net worth might have been locked-up at First Eagle, but my recollection could be faulty. Firms often have exit clauses that don't let the principals simply walk away with tens of millions in cash; they get their money in installments.
For whatever nuance that might add,
David
@LLJB Thx for the update.