Starting next year, I won't be forced into buying Raytheon stock every two weeks. And since I'm way over-exposed to Raytheon and I don't think it's a particularly good buy, I won't. That means I need to find other things to invest. Also, I still want to diversify away from the S&P 500. My screen didn't show enough funds, so I started playing around with relaxed criteria. As it turns out, when I eliminated the manager tenure requirement I found this fund:
Non-Load Adjusted Returns Investment Name 1 Yr 3 Yr 5 Yr 10 Yr LOF --------------- ------ ------ ------ ------ ------ Excelsior Value & Restructuring 19.56% 11.48% 8.83% 15.89% 17.22%
Fidelity doesn't know that David J. Williams, the fund's manager, has been either manager or co-manager since the fund started in 1992. I decided that this is good enough to meet my requirements even if Fidelity doesn't agree.
When looking at companies, there is normally too much information. I don't think I could ever bring myself to buy McDonald's no matter how great an investment it might be, because I don't like their product. The opposite is true of Oracle -- I'll probably hang on too long because I like their database. It's irrational and puts me at a disadvantage.
Mutual funds have nearly the opposite problem. The only thing it produces are investment returns and all you know about how a fund gets them is reading some generic phrases in the prospectus. Just about everything can (and often is) manipulated by the fund management. For instance, the top holdings are sometimes changed at the last minute to give the appearance that the manager picked hot stocks (like Taser this year). (There's even a term for this: "window dressing".)
One of the things I like about the Value & Restructuring fund is the handful of presentations and essays found on it's website. Value investing is interesting to me since I buy individual stocks. The "restructuring" aspect of the fund should also be fun to watch. For instance, the fund bought Black & Decker during a restructuring in 2002. The tool maker needed to reduce costs by shifting production to places like Mexico and the Czech Republic. It also needed to control inventories -- especially of seasonal products. In Peter Lynch's parlance, it's been a two-bagger since then.
The fund commentary also talks about disappointments, such as AOL Time Warner. I don't know if the fund will do better than it's benchmarks over the next few years, but I appreciate the honesty. It feels less like throwing darts and more like investing.
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