Heebner's 18% First-Half Loss Is Worst Among U.S. Stock-Pickers

Ted

FYI: Kenneth Heebner, once America’s top stock-picker, has found the going tougher these days.

Heebner’s $768 million CGM Focus Fund fell 18 percent in the first half of 2018, the biggest drop among more than 900 diversified domestic equity mutual funds with at least $500 million in assets, according to data compiled by Bloomberg. The S&P 500 Index returned 2.7 percent, including reinvested dividends.
Regards,
Ted
https://www.bloomberg.com/news/articles/2018-07-02/heebner-s-18-first-half-loss-is-worst-among-u-s-stock-pickers

M* Snapshot CGMFX:
https://www.morningstar.com/funds/XNAS/CGMFX/quote.html

Mark

Given his portfolio I'm surprised he's not down 98%. I wonder if he and Berkowitz over at Fairholme are exchanging notes.

LewisBraham

Heebner also has a big short portfolio now of Treasury bonds, REIT stocks and Snap.

Sven

Only guarantee you get is the poor house with portfolio like that. Total market index is at least positive for he year. The whole point of successful investing is NOT to rack up sizable loss of this magnitude time and time again.

BrianW

I've always wondered what type of investor has the stones to stick with Heebner (or Berkowitz).

Sven

Could be the same type of investors who like to take big bets regardless to their potential downside risk.

BTW, Sears is not able to turn around. Another round of store closing was announced several week ago.

VintageFreak

@BrianW - The kind that is playing with the house's money. I have mentioned before the ONLY way to invest with CGMFX and FAIRX is to buy at right time, take your money out, and then "let it run".

I'm in both CGMFX and FAIRX.

And oh, remember...NEVER reinvest distributions especially in such funds.

LewisBraham

I think FAIRX may be easier to time than CGMFX because Berkowitz is a buy and hold investor so out of favor sectors he buys may come back. But Heebner trades a lot, so the portfolio of the fund you're buying now may not be remotely the same a few month hence.

VintageFreak

@LewisBraham. I used distributions from CGMFX and FAIRX to buy COBYX. Frankly, I've thought of selling CGMFX a few times but for different reason. Heebner is Old, and there is no succession plan in place. Also his bond short - I thought that was a good thing to have in rising rate environment. Bond rates went up, his fund goes down - WTF?!

Now I'm wondering if he has lost it and/or is even managing the fund.

davidrmoran

I always reinvested with him, and was insanely lucky to get out when I did, turning $5k into x30 or thereabouts, the luckiest event of my investing life. He is a milgrade nerd, not surprisingly, say friends who have seen him research.

http://archive.fortune.com/2008/05/23/magazines/fortune/birger_americas_hottest_investor.fortune/index.htm

Those were the days.

VintageFreak

Okay but what made you sell?

LewisBraham

I suspect Heebner got burned this year most by his retail long short bets and his mining ones. I'm looking at the reports and in December of 2017, he was long Walmart, Skechers and Best Buy and short Netflix and Amazon:
https://sec.gov/Archives/edgar/data/60335/000006033518000005/cgmncsr12312017doc.htm
Those specific retail bets have disappeared in the March 2018 report:
https://sec.gov/Archives/edgar/data/60335/000006033518000023/nq033118doc.htm
Heebner wouldn't be the first one to die on the Netflix/Amazon short sword. Meanwhile, mining continues to do poorly this year. My advice to you if you want to continue to hold onto it is to watch it like a hawk and see if you agree with the sector bets he's making.
To give you an idea Netflix is up an insane 107% this year, while Skechers is down about 18%.

davidrmoran

@VF, approaching retirement, iirc. I should check when I bailed out. I think the graph shows that what I wrote cannot be true (x30). Maybe I started w/ LOMMX somewhere near 1982 and then switched to CGMFX when it began, '97 or so.