MEDLEY & COMPANY
An Investment Advisory Firm
December 1999 Investment News
As we have written in the past, meeting with mutual fund managers across the country is an integral part of our due diligence process. Tim Medley and Cecil Brown recently visited mutual fund managers in Memphis and Chicago, and, as usual, came back with a number of observations about their trip.
In interviews over the past ten years, we've often asked money managers, "If you could not manage your own money, whom would you use?" Perhaps more often than any other, we hear the name "Mason Hawkins." Hawkins has run the Memphis-based Southeastern Asset Management Company, parent of the Longleaf family of mutual funds, for more than 20 years and last year, Money magazine called this fund group "The best mutual fund family in America."
Mason is a "value" manager, sticking assiduously to his investment style even when growth, momentum and technology styles are the talk of the popular investment press. As a result of his staff's persistent, careful research, their four funds have consistently performed at the top of their investment categories.
Mason's recent insights on the markets and his funds' holdings are instructive, calling his portfolio values the most exciting since the fall of 1990. (Hawkins' flagship Longleaf Partners Fund returned 39% in 1991.) He and his associates place great reliance on their evaluation of a company's intrinsic value versus the current stock price of the company. A discount of 40% or more makes the stock a candidate for purchase.
Of great importance to Hawkins and his staff are the character and integrity of a company's management. They view investments as partnerships and want to be in business with "honorable people."
Hawkins and his team invest all of their own money alongside that of our clients. It is Southeastern's policy that employees are prohibited from owning any investments other than the Longleaf family of mutual funds. In addition, the company's entire retirement plan is invested in Longleaf funds.
Smart, capable, successful. Mason Hawkins is certainly at the top of his class.
Leah Zell is the manager of Acorn International, the Chicago-based international offspring of Wanger Asset Management. A Harvard Ph.D. in European Studies and more than two decades training under the tutelage of husband Ralph Wanger (manager of the venerable Acorn Fund) have given her the broad-based perspective necessary to achieve rates of return at or near the top of the international category since she began management of the fund in 1992.
Acorn is a theme driven operation with the research team always looking for trends in the world's economies that drive profits and corresponding stock prices. ("Contract manufacturing should do well; we want to be downstream of technology; 401(k) retirement plans will be terrific for the money management industry.") As Leah says, "We want horses with legs." Investing in more than 120 companies around the world, Leah Zell's Acorn International reflects her clear goal of maintaining a diversified portfolio "while assuring that we put weight behind the ideas in which we have the most conviction."
Not one to shy from success, Leah proudly proclaims that "Our advantage is in stock picking." An annualized rate of return in excess of 17% since inception testifies to her abilities.
Bill Nygren runs the Chicago-based Oakmark Select Fund. This fund is categorized as a "focused" fund because its stock positions are concentrated in a relatively small number of companies.
"The best mutual fund family in America. [Southeastern Asset Management Company]"
Money Magazine
