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Meet the new bosses of three influential mutual funds
Chicago, June 21 |
Chicago, June 21 (Reuters) - Ian Lapey likes safe and cheap investments and holds a big bet in Hong Kong real estate.
Matthew McLennan jokes that his fund is shorting social acceptance and says every stock he owns has something wrong with it.
Guy Pope has a radar for pessimism and searches for companies in a crisis.
The three portfolio managers aren't household names, but they oversee billions of dollars of assets at influential funds that have undergone leadership changes.
The men got together on Thursday at Morningstar Inc's annual investment conference in Chicago to discuss what they are changing and what fundamental principles they continue to hold dear.
In March, Lapey became solo manager of the Third Avenue Value Fund after longtime chief Marty Whitman relinquished his role. He will continue to take concentrated bets, but he is making moves to reduce volatility by holding more cash and downsizing some of his largest positions.
For example, Lapey said he is reducing the fund's heavy concentration in Hong Kong real estate, which consumed about 40 percent of assets at the end of January, according to Morningstar analysts. Henderson Land Development Co Ltd , at that time, accounted for about 14 percent of the $2.7 billion fund's net assets.
After trimming positions in the fund's top holdings, Lapey said he initiated some new positions, such as White Mountains Insurance Group Inc, KeyCorp and Comerica Inc .
McLennan, portfolio manager and head of the global value team for First Eagle Funds, said, "We tend to be where enthusiasm is not."
Cisco Systems Inc, which has fallen out of favor with many tech investors, is one of the $33 billion First Eagle Global A Fund's top stock holdings.
"We will build up cash if we can't find good businesses for good prices," McLennan said. "We will also hold gold as a hedge."
At the end of February, gold bullion accounted for about 6 percent of the fund's assets, on the low end of the fund's historical range, according to Morningstar analysts.
Pope, who began managing the $3 billion Columbia Value & Restructuring Z Fund in May, said he looks for stocks that have a high degree of pessimism.
"That's my starting point," Pope said.
The fund's longtime manager, David Williams, retired at the end of April, leaving Pope and Nick Smith in charge.
In a recent research note, Morningstar analyst David Kathman said Pope and Smith are continuing changes started by Williams, such as moving toward higher quality companies.
Williams also was known for being fearless when it came to holding companies with a lot of debt, as long as they generated good cash flows, Kathman said.
Pope said he is sure to continue Williams' contrarian approach. He said eBay Inc is an example of a company he bet on during a turnaround situation. The online site changed its pricing model and moved away from auctions that made people wait to see if their bids were accepted. The site now uses a buy-it-now approach, which Pope said is the right move.
One of the investment approaches that Pope said he does not like is putting money into themes.
"Theme investing is an excuse to buy a bunch of stocks without doing the work," he said.
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