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Active stockpicking has come in for a bit of a bad rap (and no less so with high-profile misses...

Active stockpicking has come in for a bit of a bad rap (and no less so with high-profile misses by managers like Bill Miller), but Donald Yacktman is still beating odds - Morningstar looked at him for "manager of the decade" - and his outperforming portfolio now is loaded up on techs like Microsoft (MSFT) and Cisco Systems (CSCO) to go along with standbys like Coke (KO), Pepsico (PEP) and Johnson & Johnson (JNJ): “I can’t remember a time when so many quality companies were selling at low prices compared to alternatives."
Comments (19)
  • dividend_growth
    , contributor
    Comments (2878) | Send Message
     
    Morningstar trashed Bruce Berkowitz with last year's "Manager of the Decade".

     

    Let's see whether Yacktman can escape the curse this time.
    12 Nov 2011, 08:35 AM Reply Like
  • Archman Investor
    , contributor
    Comments (2353) | Send Message
     
    The real problem was Berkowitz started to believe his own press, just like Bill Miller. Tell someone they are "legendary" enough times, let them keep skimming a few hundred million from fund holders, and finally start to believe that you are smarter than the market:

     

    That is a recipe for disaster.

     

    Unlike that fraud Bill Miller, who as it turns out relied solely on a never ending bull market from 1982 to 2000 to convince fund holders that he was smarter than the market, Berkowitz was able to better navigate uncertain markets and for the most part preserve client's money.

     

    Berkowitz began however to believe his own hype and embarked on a crusade of activism and concentrated bets that are really hurting him this year. He stands a better chance than Bill Miller of righting the ship because unlike Bill Miller, Berkowitz i believe will be humbled by his losses whereas Miller still truly believes he is smarter than the stock market.

     

    People do forget however that Yacktman's funds were not really great performers for awhile, but thankfully his average performance from the past never really hurt fund holders.

     

    That is in contrast to that scum Bill Miller (yes I really do not like him) whose fund holders have made nothing since 1998, while Miller tools around on his 250 Ft yacht and jets between his many homes.

     

    The real take away from all this for average Americans:

     

    The majority of mutual fund and money managers can only make money when stocks are in a full blown bull market. They have little or no idea how to preserve wealth during sideways or bear markets. They have no incentive to. They are paid even if your account balance ends up reading zero. Then they just re-invent themselves or get hired by another money management firm.
    12 Nov 2011, 09:01 AM Reply Like
  • Micah
    , contributor
    Comments (462) | Send Message
     
    Looks like this guy is just picking from the top ten holdings of the S&P 500. Yawn...
    12 Nov 2011, 08:59 AM Reply Like
  • Jbjam
    , contributor
    Comments (195) | Send Message
     
    I've held a portion of money in yackx for along time... The proof is in the returns. Not sure why people are slamming him here. Have any of you even looked up fund holdings/record. Hes giving me solid roi.
    12 Nov 2011, 12:06 PM Reply Like
  • The Geoffster
    , contributor
    Comments (4010) | Send Message
     
    I sold CSCO yesterday to raise cash. I still own the others. My guess is they all get cheaper on Euro zone and MF Global fallout before the central planners open the valves full wide.
    12 Nov 2011, 09:16 AM Reply Like
  • avickrey
    , contributor
    Comments (38) | Send Message
     
    I am a 'stock picker', and I have had a very good year myself. I don't know why people give stock pickers such a bad rep. In fact, the world would be a better place if we did make investment in individual companies instead of blindly throwing money buying and selling the overall market because of news events.

     

    While such events should certainly move the market, the recent daily fluctuations are unwarranted and cause real-time judgement on the decisions of policymakers. In some cases, the decisions by policymakers may be right, even if they are adverse to the price of equity markets. However, as long as the market goes down, they will be perceived as wrong.

     

    Being long the overall stock market has recently been a hedge for loose policy that may not fix systemic problems. The issue is the market reacts too much in the short term, that we sacrifice long-term growth to prevent triple digit down days on the Dow. The market has become too reactionary, and that's been a bad thing for our society. We've ignore fundamental analysis which requires work to buy and sell quick trends. I use these opportunities to add and take off, but it does shake confidence which undoubtedly holds markets back.

     

    As far as the article goes, I am a fan of perceived boring, unsexy stocks - like a CSCO and MSFT. There has been mounting pressure for Chambers and Ballmer to start concentrating on improving performance of their stock, and I think both are heading in the right direction. I added a bunch of CSCO in June, and might take some off soon, but a leaner CSCO focusing on high margin IT infrastructure solutions with better financial management has been rewarding shareholders.
    12 Nov 2011, 09:41 AM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    "Being long the overall stock market has recently been a hedge for loose policy that may not fix systemic problems"....

     

    The S&P 500 YTD performance doesn't agree with that....YTD return below rate of inflation....

     

    Certain stocks have been good picks, but the overall market has been a garbage, just like 3 years ago, 5 years ago and ten years go... The S&P 500 is at the levels of 10years ago....so much for that bet....

     

    I like CRR,PPO,ULTA,COG,AREX.... have been my top selections in the last two years. But, I took profits yesterday on all these positions. And would sell all my holdings before the year ends.
    12 Nov 2011, 07:26 PM Reply Like
  • avickrey
    , contributor
    Comments (38) | Send Message
     
    Joe, I'm talking about short-term pops and declines. Some of our biggest pops occurred after:

     

    EFSF deal
    ECB bond buying to drive yields lower
    QE2 and Operation Twist

     

    and some of the biggest declines?

     

    Referendum on bailout
    Debt ceiling
    13 Nov 2011, 09:35 AM Reply Like
  • Paul Price
    , contributor
    Comments (1502) | Send Message
     
    Don't forget Fortune Magazine's earlier fund manager of the decade Ken Heebner in May 2008.

     

    He's totally imploded since that cover story taking huge amounts of shareholder money with him.
    12 Nov 2011, 09:23 AM Reply Like
  • SlingWing9
    , contributor
    Comments (473) | Send Message
     
    I wrote Ken Heebner an email asking him why he just sat there holding those commodities while they just kept going down and down, why didn't he sell to preserve capital. He never answered me. I don't believe he gives a RA.

     

    Other fund managers I've emailed have taken the time to answer my questions, not Ken Heebner. Never again.
    12 Nov 2011, 09:42 AM Reply Like
  • deercreekvols
    , contributor
    Comments (5151) | Send Message
     
    Manager of the Decade?
    What was Morningstar's criteria for this honor?
    If buying and holding Coke, Pepsi, JNJ, and Microsoft gets you Manager of the Decade,then I could be in the running for Manager of the Next Decade.
    Watch out Mr. Yacktman, your secret has been revealed.
    Please vote: deercreekvols
    Thanks for your support.
    12 Nov 2011, 09:32 AM Reply Like
  • PVizzle
    , contributor
    Comments (741) | Send Message
     
    ROFL I like this post
    12 Nov 2011, 02:47 PM Reply Like
  • Sleestakk
    , contributor
    Comments (121) | Send Message
     
    Holding stocks in this environment in general is foolish. We are in a deleveraging, deflationary, and depressionary environment, don't let all the market CONfidence trick you into losing what you have left. Better to go with good corporate bonds and other dividend/cash paying instruments. I would also hold some precious metals and some cash for when equities do truly become priced right. BTW: 33% real return for me this year with steady approach and a litte shorting of some financials this year. (and this is my first year where I took back control of my portfolio after it did nothing for 10 years in the hands of PROs)
    12 Nov 2011, 09:35 AM Reply Like
  • The Geoffster
    , contributor
    Comments (4010) | Send Message
     
    I can echo your comment. I started my own fund to hedge what my money manager was doing and after three years of beating his socks off I took over my whole portfolio. I would also point out that it's my full time job now.
    12 Nov 2011, 10:47 AM Reply Like
  • market mojo
    , contributor
    Comments (71) | Send Message
     
    The problem with portfolio managers beating an index over a long period of time is that it can be due to randomness (i.e. luck).

     

    Statistically, if every portfolio manager randomly selected their stocks some would be beating the index every year over a ten year period thus looking like champions.
    12 Nov 2011, 12:17 PM Reply Like
  • Jbjam
    , contributor
    Comments (195) | Send Message
     
    Yes, if they all selected once. To do it year after year is a different story.

     

    If the entire US pop got to hit one pitch in baseball, some overweight 40 y/o would look better than pro players.
    12 Nov 2011, 12:26 PM Reply Like
  • market mojo
    , contributor
    Comments (71) | Send Message
     
    No it is not. Even a completely random process would produce some portfolio mangers (or monkeys) beating the index every year over a ten year period. Morningstar would surely rank these as 5 star managers even if they were simply randomly selecting their stocks.

     

    Flip a coin ten times and you'd expect about 5 heads and 5 tails. However, sometimes you'll get 10 heads in a row or 10 tails in a row.

     

    Hope you get my drift.
    12 Nov 2011, 12:38 PM Reply Like
  • PVizzle
    , contributor
    Comments (741) | Send Message
     
    The problem with most portfolio managers is that they don't know what they're doing.

     

    99% of people should just buy a low cost etf or index fund for equity exposure.
    12 Nov 2011, 02:50 PM Reply Like
  • arnie fein
    , contributor
    Comments (221) | Send Message
     
    Manager of the Decade! Of course, it's ridiculous. "Dart throwing chimp of the decade" makes as much sense. Remember the Louis Rukeyser PBS sit com in which he had viewers vote for his broker,(i.e. used car salesman), Hall of Fame? How have they done since the show closed? Anybody know?
    12 Nov 2011, 03:50 PM Reply Like
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