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FPA Crescent fund‘s - Steve Romick on M*

Level5
in Fund Discussions
“ The stock market’s wild fluctuations should provide plenty of opportunities for investors. However, Steve Romick, co-manager of the Bronze-rated FPA Crescent fund, says he isn’t “leaning in hard” yet.”

Norton: What lessons from previous declines are you remembering now?

Romick: This too shall pass, and if things get cheap enough where you can assume the worst, prepare for the worst and then hope for the best. Make investments with that in mind, and you’ll be fine. If you can get the bad news plugged into the valuations and kind of assume the worst, then you should be in a good position.

Me: I started a toe hold position here last week and looking for an opportunity to continue investing here.

Comments

  • larryB
    Romick is a smart manager but I find his fund too expensive for holding 26% cash.
  • Level5
    @larryB - I get it. I used to ignore active funds; then funds with er’s over .5%. Now in retirement I find I want an active fund manager(s) to conservatively manage a part of my investment. FPACX’s data is compelling:

    - ~60% in equity (Domestic & International) even though our portfolio only holds 35% in equity
    - all 3 managers eating their cooking to the tune of $1m+
    - 5-yr upside/downside capture ratio 116/81 (pretty good blood pressure)
    - top ranked returns 3 of last 4 years.
    - and cash right now paying over 4%, I like that they’re looking to invest in their best ideas.

    So for now, I’m looking to continue investing here.



  • larryB
    Agree with all your points except the 4% cash return cause the high ER. 1% Is a lot in an era of subdued returns. I keep looking at Wellesley but the long duration scares me.
  • davidrmorandavidrmoran
    larryB said:

    Romick is a smart manager but I find his fund too expensive for holding 26% cash.

    Standing complaint for decades

    Absolutely best to stay the hell away if you don’t trust the manager’s judgment
  • larryB
    At David. I have lots of respect for Romick and I hold lots of Cash too. . I don’t need to pay 1% to hold my cash.
  • Level5
    @larryB - We’ve held Wellesley for over 10-yrs and did well until the Fed raised rates. Prior to retirement we simply continued DCAing into investments like VWIAX. But I didn’t have a mindset allowing me to move our Wellesley investment elsewhere. So your concern about those long duration bonds is valid.
  • davidrmorandavidrmoran
    larryB said:

    At David. I have lots of respect for Romick and I hold lots of Cash too. . I don’t need to pay 1% to hold my cash.

    To repeat myself, either you trust a manager or you don’t trust a manager. Let him do his thing and leave him alone, or get out. Why post about it? You obviously don’t have a lot of respect for him. So go do it yourself, if you don’t think his decisions and judgment will be helpful in the long run.. The end.
  • FD1000
    The expense ratio is something that many have complained about for decades. You can't argue too much about it until you find the exceptions, and that's the problem.
    Funds like PRWCX,PIMIX proved it for years within their categories. I never cared how the manager invests; I only care about results.

    I used to treat my portfolio as an NBA team, the best 5 players play. I don't care if one used to be a star; if he isn't now, I replace him. This process makes sure my team goes to the playoffs almost every year.

    But, looking at 5 years shows that FPACX made 3+ times as much as VWIAX. See chart (https://schrts.co/dshhyMyg) and that includes the expense ratio. Sure, FPACX has more stocks but VWIAX can't hide behind these numbers with about 20% less in stocks. This is where flexible manager earns his fees.
  • Sven
    That is not an accurate comparison. VWINX focuses on income (bonds) as the primary objective, and capital appreciation (stocks) as the secondary objective. Holding more long bonds is Wellington choice. FPACX is the other way around, and cash is treated as their tactical position.

    I agree with @davidmoran that one must have confidence on the manager who have shareholder’s best interest at heart. This is not the same as following the mantra with blind faith. It may not too long when buying opportunities arrive and you will appreciate the fund has ample dry powder.
  • CrashCrash
    edited April 16
    I trust some people I disagree with. They're not univocal. I would not entrust them with my money, or in other situations, with very personal info. But I recognize their integrity--- a thing which is getting harder and harder to find, especially on The Hill.
  • FD1000
    Sven said:

    That is not an accurate comparison. VWINX focuses on income (bonds) as the primary objective, and capital appreciation (stocks) as the secondary objective. Holding more long bonds is Wellington choice. FPACX is the other way around, and cash is treated as their tactical position.

    When LC tilting growth beat value for 15 years, many claimed it's not an accurate comparison instead of admitting their selection did that.
    FPACX beat VWELX (similar % in stocks) by over 60% in the last 5 years: 90+% vs 56+%.

    If you invested in VGIT=treasuries in the last 10 years, you made just over 1% per year.

    My point about VWIAX is the fact that even with 20% less in equities, PFACX did a much better job in general because performance was 3+ times better.

    See chart of all 3 funds (https://schrts.co/KjQvIJBP).

  • Level5
    @Sven - “It may not too long when buying opportunities arrive and you will appreciate the fund has ample dry powder.”

    Exactly my thoughts about owning this fund at this point in time.
  • JD_co
    MRFOX has about 25% in cash and has performed well, though not a fair comparison as FPACX tends to hold bonds and other assets. If all goes poorly this year for the markets (as I expect), I might go back to MRFOX.
  • davidrmorandavidrmoran
    I and perhaps (I believe, iirc) some others have posted in the past that FPACX was ntf at ML. Wrong, my bad. Costs $20.
  • MrRufflesMrRuffles
    davidrmoran said:

    I and perhaps (I believe, iirc) some others have posted in the past that FPACX was ntf at ML. Wrong, my bad. Costs $20.

    FYI, it is NTF at E-Trade.

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