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Ken Heebner's CGM Focus Fund

September 12, 2009 | About:

DJIA ...................... + 9.45% YTD

S & P 500 .............. + 15.44% YTD

NDAQ Comp............ +31.95% YTD

CGM Focus Fund ...... + 3.2% YTD

CGM 3-Yr ................ + 3.8% cumulative return [not annualized]



What has happened to Fortune magazine's hero?



Rating: 2.7/5 (10 votes)

Comments

commodity
Commodity - 4 years ago
Momentum investors get killed in a market crash.
buffetteer17
Buffetteer17 premium member - 4 years ago
Ken did well for me in 2004-2006 with his CGM Real Estate fund. But I had a sudden chill in early 2006 and sold out. Too soon as it turned out, but still a 40% profit. Seems there was this little real estate bubble forming, which I was sure would burst. Didn't think it would spill into the entire market though. Who would have thought that $250B of losses in subprime mortgages in 2007 could lead to $26,400B of world market cap losses?
DaveinHackensack
DaveinHackensack - 4 years ago
Last year this time, Heebner ditched commodities and piled into financials, before the bottom fell out of them. He's had difficulty recovering from that.

I never understood why he did that. I asked this question of former GuruFocus commenter DanielW a few months ago on his blog The Guru Five (Heebner was one of those five gurus). This was Daniel's response:

I disagree with those who say his strategy has changed. His investments in commodities were based on a large pool of data as were those he made on financials. He knows a lot about both sectors and followed the conclusions of his own mind irrespective of what everyone else was doing.

Though the outcome has definitely been different (and I was with him on the commodities and not on the financials) I think Heebner's strategy is sound and investors can learn a lot from it.


To which I replied,

Heebner may not have changed his strategy, but if he didn't change it, I'm not sure what it was to begin with. Based on reports of him reading things like "China Metals Weekly", meeting with Matt Simmons, etc., I assumed he was long commodity plays because, after doing a lot of primary research, he was a secular bull on the sector, like Jim Rogers is. If that were the case, though, he would have averaged down on his commodity stocks last fall, instead of jumping from them into financials. I'm not sure what to make of that.

In hindsight, doubling down on commodity stocks last year this time -- particularly miners with strong balance sheets -- would have been the much better tack. Had I had more cash available (or been willing to buy on margin) I could have averaged down on my Hudbay Minerals shares at ~$2 per share.

As the manager of an open-end mutual fund, Heebner still would have gotten hammered with withdrawals last year (as most managers were), but he probably would have had less outflow if he hadn't had the double whammy of getting hammered on commodities and then financials in rapid succession.

Odds are, he'll be back though. It wouldn't be the first time he recovered from a period of poor performance.

Alex Garcia
Alex Garcia premium member - 4 years ago
Why are we revisiting this again? There are several topics (started by the same person) on Heebner short term record
Dr. Paul Price
Dr. Paul Price premium member - 4 years ago
Alex,

If you don't wnat to read any particular postings...

Don't click on them.
Alex Garcia
Alex Garcia premium member - 4 years ago
Doc,

I click on them because of the title, then I leave once I find out its the same ol' same ol"

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