Cash Is Trash? Not To These Value Fund Managers – Bloomberg 07-26-13

Salient to Investors:

The Weitz Value and Weitz Partners Value funds each have cash stakes close to 30 percent. The Yacktman Focused fund has 19 percent in cash. The Westwood Income Opportunity fund has 16 percent in cash,  The IVA Worldwide Fund has 28 percent in cash, the GoodHaven fund has 33 percent in cash.

Morninstar says the average diversified US stock fund has less than 5 percent in cash, while the the average world allocation fund has less than 15 percent in cash.

The Leuthold Group reports that the median PE ratio for large-cap value stocks is 13 percent to 25 percent above its long-term historic norm; large-cap growth stocks trade at an 8 percent to 10 percent discount to their historic norm.

Charles de Vaulx at IVA Worldwide is not finding enough mis-priced securities to buy.

Tom Forester at Forester Value fund said central banks are driving the markets higher, not fundamentals.

Dowe Bynum at the Cook & Bynum fund is more than 40 percent in cash and says it would take a 10 percent to 15 percent drop in any of their existing holdings to consider putting cash to work.

Mark Freeman at the Westwood Income Opportunity fund says bonds are too expensive and expects a transitional market to higher bond yields to last 6 months to a year.

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Searching for Profits in Scandal Stocks – Bloomberg 09-14-12

Salient to Investors:

Stephen Dodson at the Bretton Fund said one of the best ways to make money is to be able to look past a bad headline -ask if there is something fundamental that permanently impairs the future earnings ability or is it just a short-term hit. More serous is accounting irregularities.

James Potkul at the Bread & Butter Fund looks past accounting issues if they are temporary hiccups or honest mistakes, especially if the company has a reasonably strong balance sheet.

Investors leery of the headline risk can instead buy the company’s bonds or preferred stock.

Value funds tend to be more volatile and are not suitable for short-term investors.

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Danoff’s Contrafund Is Best of Biggest: Riskless Return – Bloomberg 06-12-12

Salient to Investors:

Investment style of Fidelity Investments’ William Danoff.

  • Meets as many as 1,000 companies a year, looks for best of breed.
  • Looks for stocks to hold for five years, in companies taking market share, with a durable advantage.
  • Tries to keep up with the return of the S&P 500 index in rising stock markets and outperform in falling markets by sticking to quality companies.

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