M*'s Kinnel Sees Berkowitz, Heebner and Friess' Successor Breaking
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Tuesday, July 24, 2012

M*'s Kinnel Sees Berkowitz, Heebner and Friess' Successor Breaking

Morningstar's Russel Kinnel looks into five funds that were once strong but struggled come end of 2011.

Capital Growth Management's [profile] CGM Focus is in the bottom 2 percent of its category, after experiencing 1.6 percent three-year annualized loss as 2011 closed. This fund, Kinnel writes, is the worst large-growth fund in Morningstar's database.

Kinnel thinks that the problem for this fund appears to be "a bet on a stronger economic recovery than has materialized. Manager Ken Heebner's superfast moves and focused portfolio make the fund a tough one to own."

Bruce Berkowitz of Fairholme Capital Management [profile] found has "gone from outhouse to penthouse," writes Kinnel. The fund has rebounded 22.7 percent for the year after its 5.6 percent annualized return at the end of 2011, one of large value category's worst.

Friess Associates' [profile] Brandywine Fund has continued to face problems this year with a 3.4 percent annualized return. Kinnel said this fund follows a strategy that is difficult to execute well. Friess is an affiliate of Affiliated Managers Group [profile].

Artio's [profile] International Equity returned 0.8 percent over the three years until 2011 which placed it at the bottom 3 percent of its category. The fund has not yet recovered with a 2.4 percent return this year.

Schneider Capital's [profile]Value's bets have not helped the fund to rebound. Its year-to-date return is 2.3 percent which makes it at the bottom 2 percent of its peers.

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