When it comes to pouring investments into a company, there really is no right or wrong way to do it, at least as long as you know the rules. Here are two examples of successful fund managers and their differing but nonetheless equally successful investment tactics.
William Danoff is a portfolio manager for Fidelity Contrafund (MUTF:FCNTX). His job requires meetings with about 1,000 company executives a year. He writes down tickers to monitor companies he’s interested in and evenly distributes his investments over several different industries which includes tech companies.
Einhorn’s FOF Re-positions Portfolio, Makes New Seed Investment In Year Marked By “Speculative Exuberance”
It has not just been rough year for David Einhorn's own fund. Einhorn's Greenlight Masters fund of hedge funds was down 3% net for the first half of 2020, matching the S&P 500's return for those six months. In his August letter to investors, which was reviewed by ValueWalk, the Greenlight Masters team noted that Read More
Ever since Danoff took over the fund twenty-two years ago, his mutual fund has beaten rivals and Standard & Poor’s 500-stock index. The fund was originally started by legendary investor, Peter Lynch. Danoff’s secret to success can probably be attributed to his intensive research. Unlike some investors, Danoff takes his time searching for signs the might warrant a red flag that they’re falling behind or taking their market shares away.
Contrafund also takes risks by investing in companies that aren’t traditionally chosen by investors yet are still strong and fast-growing. He likes companies where he trusts the management and has faith in their execution. He invested in Facebook Inc (NASDAQ:FB) before the infamous IPO. Danoff met with CEO Mark Zuckerberg and was impressed with his skill. He also is a long term investor in McDonald’s Corporation (NYSE:MCD), PepsiCo, Inc. (NYSE:PEP), Apple Inc. (NASDAQ:AAPL), noting the same quality management which the companies have.
Ken Heebner works for CGM Focus Fund (MUTF:CGMFX) is a self-proclaimed “trend spotter”. His company trumped all diversified stock mutual funds in the United States throughout a decade and ended in 2007. Unfortunately, the fund also lost 6.3 percent(annual average) over the last five years through June 26 which trailed 96 percent of the same group. Many big value investors have suffered over the past few years. The first blow was in 2007/2008, when many investors bought bank stocks thinking they were undervalued. They under-estimated the severity of the upcoming recession. Lately, value investing has been difficult due to the increasing correlation among assets. Every word that a Government minister in Europe makes, can make the Dow swing by triple digits.
As for Heebner’s key to success? He’s an investor who likes to take big risks. Back in 2o00 and 2001, he made big profits when he made bets against tech stocks when the NASDAQ-100 crashed. He also purchased homebuilders prior to the multiyear runup of home prices, which subsequently allowed him to sell the homes and move on to other commodity and energy companies.
Back in 2008, William Danoff was interviewed by Kiplinger’s Personal Finance where he admitted his admiration for Heebner.