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Learning, Sharing, and Teaching => Investor Alley => Topic started by: AdrianC on May 16, 2017, 11:14:55 AM

Title: Longleaf Partners Fund to Close
Post by: AdrianC on May 16, 2017, 11:14:55 AM
The Longleaf Partners Fund LLPFX will close to new investors 6/9/17. The Longleaf team are having a hard time finding new qualified investments and have 25% in cash.

Longleaf Partners is managed by Southeastern Asset Management, the team described as a sort of ideal in active management by David Swenson in the book Unconventional Success. They invest in their own funds, are shareholder oriented, communicate well and run a concentrated value portfolio. And they have seriously underperformed. They lag the S&P500 over 3, 5, 10 and 15 years, and beat it slightly over 20.

Interesting (to me), the fund has been open since 1/18/2008, when they re-opened “temporarily”, seeing opportunities for $1.5B. The fund had net assets then of $11.2B. Net assets as of last quarter end were $3.4B. That’s a lot of redemptions.

Some comments from Longleaf on today’s conference call:
-   Not yet classify the US market as a bubble. Valuations are stretched. Growing signs of speculation with passive and momentum.
-   Longleaf are confident they will outperform the market over next 3-5 years with lower risk.
-   International more compelling, Asia more so than Europe.

For what it's worth.
Title: Re: Longleaf Partners Fund to Close
Post by: AdrianC on May 16, 2017, 02:49:50 PM
lagged the market is putting it mildly.  In the last 5 years VTSAX (total market index) returned 80% more than this dog of a fund.  That's why they are shrinking and closing.
Just to be clear, they are closing to new investors, i.e. not accepting money from new investors. The fund itself is not shutting down. They don't want your money because they can't find anywhere to invest it in the USA that meets their value investing standards.

They will take your money in their International and Global funds.

Active management is hard.

Title: Re: Longleaf Partners Fund to Close
Post by: AdrianC on May 17, 2017, 01:10:29 PM
Have they tried: Take a dollar, throw a banana away.
I had to look that one up. Nice one! Guess I don't watch enough TV.

"I think you should do that math again".

Longleaf did try that, in a way, in 2015, betting that oil just had to go up...oops. Fund down 19%. That's a major factor in the recent poor performance. Being up 21% in 2016 didn't fix it (vs the index), math and all that.

Quoting from David Swensen’s Unconventional Success (2005):

Southeastern Asset Management (sponsor of the Longleaf Partners mutual-fund family) exemplifies every fundamentally important, investor-friendly characteristic conducive to active-management success. Portfolio managers exhibit the courage to hold concentrated portfolios, to commit substantial funds side by side with shareholders, to limit assets under management, to show sensitivity to tax consequence, to set fees at reasonable levels, and to shut down funds in the face of diminished investment opportunity.

Even though all the signs point in the right direction, investors still face a host of uncertainties regarding Southeastern’s future active-management success.

Wish I'd read that book in 2005...