Zeev's Turnips Patch-No Politics (ZEEV)

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GMgr WATCH:Ken Heebner at CGM Says SELL Housing Stocks
(GMgr is the new Gifted Manager Watch -Thanks Zeev...)

CGM Focus Fund: A mutual fund that looks like hedge fund
http://www.fundstreet.org/2005/09/

We have been told time and time again that mutual funds are safe when compared to Hedge funds. We have also been told that mutual funds are unidirectional and make money when the market is on an upswing alone. And we are absolutely sure they cannot sell stocks short. Well all this may well be proved wring by the time you reach the end of this write up.
Introducing - CGM Focus Fund (CGMFX), a no-load mutual fund that invests in a blend of growth and value stocks--mostly mid-caps and the best part of the story is that the fund is also permitted to sell stocks short. The fund comes from the stable of Capital Growth Management. CGM Focus Fund has a glorious history of triumphs with the most recent year-to-date through Sept. 9 returns of 28.5%.

The reporting of returns in case of mutual funds is relative as compared to absolute returns reporting of hedge funds. The fact is still not altered with the fund reporting an effective annual compound rate of return is 21.4% since its inception in 1997. Compare this with the dismal 3.7% compound annual growth rate of the S&P 500 Index over the same period. The success of the fund may be attributed to both the inherent flexible nature of the fund as well as the skill of veteran manager G. Kenneth Heebner.

Mr Heebner also manages at least three other funds from the same group - CGM Capital Development (LOMCX), CGM Mutual (LOMMX) and CGM Realty (CGMRX). He is known for his bold stance on changing portfolios which he thinks will not work, in a blink. He recently unloaded home builders and steel firms and instead picked up energy firms and raked in huge profits.

All this looks too good to be true. There have been some down hill rides for the investors of this fund but overall the funds performance has left them quite pleased. While some bets might pay off, some might not. Therefore it may be wise for the weak hearted to stay away. Forbes.com reports:
“The attraction of putting money into a hedge fund is that you're not betting on the direction of the market, as much as you are the skill of the person who's managing it.”

Posted on Sat, Aug. 06, 2005-The Beacon Journal


10 funds make cut for sterling 5 years

At top is Ken Heebner, who succeeds while making big stock bets

http://www.kentucky.com/mld/ohio/2005/08/06/business/12319133.htm

Each year I honor a few ``Master Mutual Funds.'' These are U.S. stock funds that have delivered outstanding returns for the past year, three years, and five years. To qualify this year, a fund had to have an annualized return of at least 23 percent in each period, through June 30.

Ten funds made the cut.
Four of last year's five honorees -- Bridgeway Ultra-Small Company Fund (BRUSX), Bridgeway Ultra-Small Company Market Fund (BRSIX), RS Partners Fund (RSPFX), and RBB Schneider Small Cap Value Fund (SCMVX) -- made it back.

Ranked by five-year return, the top Master Fund is CGM Focus Fund (CGMFX), run by my friend Ken Heebner at Capital Growth Management. His five-year annualized return was 31.2 percent. The fund started in 1997 and had assets of $841 million on March 31. CGM Focus Fund is a ``nondiversified'' fund. Most mutual funds are diversified, meaning that they will invest no more than 5 percent of their assets in one company's stock, and they will hold no more than 10 percent of a company's shares outstanding. CGM Focus as of March 31 had 5.6 percent of its assets in Murphy Oil Corp., 5.5 percent in Peabody Energy Corp. and 5.4 percent in Amerada Hess Corp. It also had more than 5 percent in six other companies.

Next best, with a 30.8 percent annualized five-year return, was US Global Investors Accolade Funds -- Eastern European Fund (EUROX). Andrew Wiles and Stefan Bottcher run the fund for U.S. Global Investors Inc. The Eastern European Fund was also started in 1997. Its assets totaled $652 million as of April 14. Its investments as of March 31 were 34 percent in Russia, 15 percent in Hungary, 15 percent in Turkey, 14 percent in Poland, 13 percent in the Czech Republic, and 9 percent elsewhere.

The third-best five-year return, 30.8 percent, belongs to the Hotchkis and Wiley Small Cap Value Fund (HWSIX). James Miles and David Green run the fund at Hotchkis and Wiley Capital Management. Their stocks tend to be cheap based on the price-sales ratio. As of March, their holdings averaged 0.48 times revenue. Their stocks are also cheap based on the price-book ratio. Their typical holding sold for only 1.54 times book value, or corporate assets minus liabilities per share.
Their largest holding as of March is MI Developments Inc. (MIM/SV on the Toronto Stock Exchange). The Canadian company owns most of the land on which Magna International Inc., Canada's largest auto-parts maker, operates its plants. It also owns an investment in a horse-racing business.
Another large holding was Warnaco Group Inc. (WRNC), a maker of bras, underwear, jeans and other clothing. Warnaco doesn't look cheap at almost 21 times earnings, yet it does look cheap at 1.9 times book value and 0.76 times sales.

Fourth prize went to Bridgeway Ultra-Small Company Fund, which posted a 28.6 percent return rate. John Montgomery runs the fund for Bridgeway Capital Management in Houston. Founded in 1994, the fund held $121 million in assets on July 29. Its 90 holdings tend to have low price-sales ratios, with an average ratio of 0.66.
Montgomery also runs a sister fund, Bridgeway Ultra-Small Company Market Fund. Launched in 1997, it had $651 million in assets as of July 29. It ranked 10th with an annualized five-year return of 23 percent.

The other funds on the list are n/i numeric investors Small Cap Value Fund (NISVX), run by a team at Numeric Investors LP; American Beacon Small Cap Value Fund (AASVX), run by Nancy Eckl and William Quinn from American Beacon Advisors; and Pacific Capital Small Cap Fund (PSCYX), run by Mark Stuckelman for the Asset Management Group of Bank of Hawaii.

John Dorfman, president of Dorfman Investments, is a Bloomberg News columnist.