Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!

In this Discussion

Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

    Support MFO

  • Donate through PayPal

FAIRX ... Keep or Lose It

The user and all related content has been deleted.


  • Oakmark Select maybe
  • Maurice said:

    New year, new assessment of FAIRX. Makes up a sizable percentage of my mutual fund investments. There would not be any tax implications to selling the fund. Years back FAIRX was just as concentrated. But the majority holdings were in Berkshire Hathaway. Today the make up is far different, and perhaps is too risky for the return.

    Can you suggest one fund that is focused, as an alternative? Maybe I should just buy BRK-A. Well I can't really do that. But I could buy BRK-B. Sorry to long time readers who tire of my asking this every year.

    Some options for your consideration might include Akre Focus fund.........Smead Value fund...........Oakmark Global Select fund..........I'm quite happy with those three

    Or to avoid disappointments from concentrating in one fund like FAIRX, one could go the passive indexed route, with:

    Vanguard Total Stock Market Index fund and Vanguard Total International Stock Market Index fund.

    You certainly won't underperform the market that way, and have those types of disappointments.....
  • Not a bad idea buying BRK.B Maurice. If you can find a list of holdings preceding the last few years of drama and craziness in this fund then you might symbolically recreate the fund as you once knew it. FWIW, We did discuss this about a year ago and I did sell FAIRX for BRK.B
  • The persistent lagging performance in last few years was self-inflicted with poor stock selection I my humble opinion. If you have lost confidence with the management, it is time to move on. There is nothing wrong with cash until better opportunities come along.

  • I swapped FAIRX into FAAFX to avoid the capital gains distribution last year while staying with Berkowitz. I'll give him a couple more years, but if he doesn't recover, I think I'm abandoning active management altogether. If you take a fund which does amazingly for 15 years and has all the ingredients for continued success, then it underperforms and keeps underperforming, then there's just no way to pick a good active fund. SEQUX seems to be proving another example of that. But hey, I haven't lost hope yet!
  • edited January 2016
    Another vote for Akre Focus, or just buying BRK-B. As for Fairholme, the SHLD saga probably ends this year, as I don't think Sears as we know it will be around in 2017. Either Berkowitz and Lampert pull a rabbit out of their financial engineering hat or not.
  • I''ll second that motion !!
    P.S. He wouldn't be the first one to have a long run of success , only to crash & burn!
  • How focused? YAFFX and PRBLX are, rather. I am still happy (so to speak) with DSENX comparative performance, even the last week, though it hardly qualifies as focused, I think.
  • I have added to AKREX and kept DSENX.
  • The user and all related content has been deleted.
  • Check out that row of zeroes in AKREX's report of distributions.
  • What was the name of that deliberately concentrated fund that was brand-new, about 3-4 years ago..... The fund manager's own father was in charge of his OWN fund or funds. At the time, I noticed it was heavily into high-end retail. Dang. Not much help. Maybe others can recall.
  • You know Maurice, if you'd like to stay with something out of the ordinary maybe the Bruce Fund would be worth a peek.
  • beebee
    edited January 2016
    Mark said:

    You know Maurice, if you'd like to stay with something out of the ordinary maybe the Bruce Fund would be worth a peek.

    Yesterday was a good day to have observed downside action of various funds. BRUFX was off .80%. Not bad for a fund classified as a Moderate Allocation fund.

    FAIRX is a concentrated LG fund so not an apples to apples swap with BRUFX. How about considering Primecap Odyssey Fund POGRX?

    M* comparison of FAIRX and POGRX:
  • You know Bee, I think that's the first time I've ever heard anyone accuse FAIRX of being a 'growth' fund. Not to worry however, I don't think much about those growth/value labels anyway.
  • beebee
    edited January 2016
    Mark said:

    You know Bee, I think that's the first time I've ever heard anyone accuse FAIRX of being a 'growth' fund. Not to worry however, I don't think much about those growth/value labels anyway. bad. How about this, FAIRX (and any other fund manager) attempt to buy at a value with hopes of future growth.
  • I wasn't correcting Bee. From what I've seen you know way more than I about this investing business so I defer to you. I like the Primecap folks and hold POAGX mostly for their exposure to biotech/healthcare. (I see POGRX has more but I already own FCNTX). Frankly I'm thinking about pulling a Ted by dumping my large cap anything and just going with SPY and QQQ. Heresy I know but I've actually been thinking about it for a long, long while and I keep waiting for Danoff to screw up or decide to retire.
  • Why would you? Not so much heresy as self-interest. Danoff has beaten it 10y, 5y, 3y, and 1y. Not since New year's:) Is it that you would be less nervous somehow in SPY?
  • edited January 2016
    @david - my issue with OEF's is that I am at the mercy of end-of-the-day pricing. If I held mutual funds in a taxable account I would also be accountable for any distributions they throw off. (FWIW, all of my mutual funds, 6 to be exact, are held in Roth IRA's. Any hurt comes from not being able to make use of losses when/where appropriate).

    But back to large cap stuff, it's not a nervous thing, but more related to the makeup of most large cap funds in general. Too, too many are just the S&P 500 with a twist. Mr. Danoff is just that rare individual who just keeps cranking it out year after year after year. Not easy to do and at some point one almost expects that he'll pull a Bill Miller. Averages, statistics, blah, blah, blah, whatever scream that it has to happen. But yet he marches on and I'll stay until he doesn't anymore.

    The only other reason - someday my kids will inherit this mess, assuming I haven't spent it all, and it will be easier for them to process and understand despite all the effort and time I've put in trying to educate them in these matters.
  • Not following your reasoning (etfs easier to day-trade? kids dealing with fifo gains?), but yeah, I would stay w Danoff, and have. It is not as though there is no such thing as market-superior managers, contrary to what you read everywhere.
  • I will add to fairs. Dunno when but if I have not sold I will add.
    Let the market correct.
  • My problem with "rock star" active managers is that they almost invariably stumble at one point or another, I tend to find them near the end of their cycle of outperformance.

    Then, when they begin to underperform, should I bail at the end of one day of underperformance, one week, one month, one year, three years of underperformance?...well you get the idea.

    Mr. Danoff may be one of the active managers who never stumble. Let's hope so. But the consistent outperformers are, in my opinion, nearly impossible to identify.

    Arnott, Berkowitz, Bill Miller, and Yacktman are just a few of the "rock stars" who fooled me.
  • edited January 2016
    Just to throw out a name (NOT A RECOMMENDATION) for discussion purposes:

    Cook & Bynum COBYX:

    So far, its record sucks, and it has a high expense ratio, yet I am strangely attracted to its out-of-left-field bent, as an explore - not core.:

    - 6 names in the portfolio (3 of which are 12-15%)

    (44% domestic/15% foreign/41% cash)

    They sound like they are strongly influenced by and can recite Ben Graham chapter and verse, with a dash of Buffett: ("a concentrated portfolio of companies that meet the following core investment criteria: Circle of Competence, Business, People and Price.")

    Is COBYX attempting to pull off what Buffett did early on, or for that matter, Berkowitz?
  • @Maurice: Based on its 1-10 year percentile ranking, I recommend you sell !
    M* Performance FAIRX:
  • Maurice I'm curious. What if anything did you do with your position in FAIRX? Thank you.
  • The user and all related content has been deleted.
  • edited January 2016
    If you were lucky enough to invest with BB since FAIRX inception, congratulations ... you've received 10.1% per year for the past 16 years! (Through December 2015 anyway.) But the past 5 years, at least, must be testing everyone's patience. FAIRX is now a Three Alarm fund (among lowest absolute return in category the past 1, 3, and 5 year periods) and a below average fund based on Martin across the most recent full cycle (beginning in November 2007). The fund seems to struggle the most during up markets. Anyway, how long do you wait for value? Is it a marathon?

  • edited January 2016
    One thing that always strikes me about FAIRX is the increase in volatility between its first decade and its second. Just look at the standard and downside deviations (STDEV and DSDEV) and Ulcer Indices across the last two full cycles (denoted Cycle 4 and 5 in table above).

    Certainly, part of that can be attributed to value strategies generally getting shellacked during current cycle.

    More about this topic from a while back ...

    Fairholme Fund – What a Difference a Decade Makes
  • FWIW, I sold FAIRX last year before the big cap gains distribution, but added to FAAFX. But I guess that doesn't answer the general question of whether or not to stay with BB. I'm giving him a couple more years, mostly because I think the bull market has a few more years to run, then if FAAFX hasn't knocked it out of the park to make up for its years of underperformance, I"m moving the money to an index fund or a low-priced diversified ETF like VIG or SCHD.

    Because if Berkowitz can't outperform, with so much going for him, then I will no longer believe in my ability to choose great active managers.

    A possible exception would be low-cost team-managed funds like Primecap or D&C.
Sign In or Register to comment.