Tweedy Browne will be closing to new investors. The famous value mutual fund joins a growing list of prominent firms closing their funds to new capital, and in some cases returning money (this is only a partial list).
Below is the press release from Tweedy Browne on the announcement.
Tweedy, Browne Global Value Fund II – Currency Unhedged to Close to New Investors July 29, 2014
Stamford, CT – The Tweedy, Browne Global Value Fund II – Currency Unhedged will close to new investors on August 11, 2014 at 4:00 p.m. Eastern Time.
After serious discussion and consideration, Tweedy, Browne Company LLC, the investment advisor and distributor of the Tweedy, Browne Global Value Fund II, has concluded that the Fund should be closed to new investors for the time being. Will Browne, one of the managers of the Fund, cited the lack of investment opportunities meeting the Fund’s particular value criteria together with high current cash levels as the reason for recommending the closure of the Fund. “With the run-up in global equity prices over the last five years, undervalued securities are currently very difficult to come by. So as not to potentially dilute our existing shareholders’ returns in this difficult environment, we thought it prudent to close to new subscriptions, at least temporarily, until better opportunities present themselves. Current levels of cash provide more than enough ‘dry powder’ to take advantage of buying opportunities when they present themselves,” Mr. Browne stated.
Tweedy, Browne’s investment team seeks investments where their estimate of a company’s intrinsic value, the value they estimate would be received if the company were sold to a knowledgeable corporate buyer, is significantly greater than the share price.
Mr. Browne said, “We expect to reopen the Fund when new idea flow improves and larger amounts of cash can be put to work in cheap stocks. In the meantime, we believe that closing this Fund to new investors is a prudent step to take in an effort to do the best job possible for the Fund’s existing shareholders. Doing this will allow us to protect the integrity of the approach that has served our firm’s investors well for decades.”
The Fund will institute a “soft” close, which means that it will close to new investors but remain open to existing shareholders (up to certain daily limits) as follows:
• Existing shareholders of the Fund may add to their accounts, including through reinvestment of distributions.
• Existing shareholders of other Tweedy, Browne Funds may establish an investment in the Fund.
• Financial Advisors who currently have clients invested in the Fund may open new accounts and add to such accounts where operationally feasible.
• Participants in retirement plans utilizing a Tweedy, Browne Fund as an investment option on August 11, 2014 may also designate the Fund, where operationally feasible.
• Investors may purchase the Fund through certain sponsored fee-based programs, provided that the sponsor has received permission from Tweedy, Browne that shares may continue to be offered through the program.
• Employees of Tweedy, Browne and their family members may open new accounts and add to such accounts.
• Existing separate account clients of Tweedy, Browne may open new accounts in the Fund.
The Fund reserves the right to make additional exceptions or otherwise modify the foregoing closure policy at
any time and to reject any investment for any reason.