(GuruFocus, October 15, 2009) Robert Rodriguez is hoarding cash again. The latest fund on September 30, 2009 disclosure shows that the flagship FPA Capital Fund has $1.105 billion in total asset, $823 million of that is in equity, $25 million is bond, and $256 million is in cash! Cash accounts for about 23.1%.
The reason? He sold a bunch but bought none stocks. Read GuruFocus article.
Market (S&P500) has risen close to 65% for its March 9, 2009 low. Is the Guru trying to tell us something?
Performance
YTD, the flagship fund FPA Capital Fund returned 53.72% through October 14, 2009 compared to S&P500’s 20.97%. For the past 1, 5, 10, 15, and 20 year, the fund returned -13.81, 3.71, 8.77, 12.14, and 13.08% respectively, beating S&P 500’s -18.25, -0.49, -0.79, 7.18, and 7.78% in each of the corresponding period.
You ever wondered why we call him a “Guru”?
Hoarding Cash in the Past
In a number of occasions, Robert Rodriguez kept the cash position high, often to his and his firm’s own disadvantage.
During the 1998-2000 period, while technology stock and growth stock investing hysteria were running wild, Rodriguez and his team chose not to participate in the madness instead they sold most of their tech stocks. Investors did not like it and sent in the redemption orders. The fund shrank from $700 million to less than $300 million, while the fund did not lose any money investing.
Then in 2005 to 2006, another of Rodriguez’s fund, FPA New Income’s assests declined from $2.1 billion to $1.6 billion because they would not buy any long or intermediate Treasury bonds based on their negative view towards the Fed’s action at the time.
The most recent occasion happened in 2007. Rodriguez increased his liquidity to at a peak time of 45%. Investors were not amused and FPA Capital fund saw a total redemption of $770 million on the basis of $2.2 billion.
Today the fund stays a little above $1.1 billion.
Rodriguez was critical to active manager who do not raise cash at times. Back on May 29, 2009, during the Morningstar Investment Conference, Rodriguez gave a key note speech and made the following remark:
To his raising cash at appropriate time is the job of money manager's. Managers should not be afraid to do so just to keep up with the herd.
75% Still in Stock
That being said, 75% of FPA Capital Fund is still in stocks. The top holdings are (percentage are against total equity holding of $823 million):
Arrow Electronics Inc. is the world's largest distributor of electronic components and computer products to industrial and commercial customers. Arrow Electronics Inc. has a market cap of $3.21 billion; its shares were traded at around $27.96 with a P/E ratio of 13.63 and P/S ratio of 0.19. Arrow Electronics Inc. had an annual average earning growth of 0.7% over the past 10 years.
Comments
During 3Q09, Robert Rodriguez did not buy any stock but sold a few. What’s remaining is still heavy on the Oil and Gas companies.
GuruFocus provides real time information and insights of Investment Gurus such as Warren Buffett and Robert Rodriguez for Premium Members. If you are not a premium member, click here to sign up or upgrade. 7-Day Free Trial is available.
The reason? He sold a bunch but bought none stocks. Read GuruFocus article.
Market (S&P500) has risen close to 65% for its March 9, 2009 low. Is the Guru trying to tell us something?
Performance
YTD, the flagship fund FPA Capital Fund returned 53.72% through October 14, 2009 compared to S&P500’s 20.97%. For the past 1, 5, 10, 15, and 20 year, the fund returned -13.81, 3.71, 8.77, 12.14, and 13.08% respectively, beating S&P 500’s -18.25, -0.49, -0.79, 7.18, and 7.78% in each of the corresponding period.
You ever wondered why we call him a “Guru”?
Hoarding Cash in the Past
In a number of occasions, Robert Rodriguez kept the cash position high, often to his and his firm’s own disadvantage.
During the 1998-2000 period, while technology stock and growth stock investing hysteria were running wild, Rodriguez and his team chose not to participate in the madness instead they sold most of their tech stocks. Investors did not like it and sent in the redemption orders. The fund shrank from $700 million to less than $300 million, while the fund did not lose any money investing.
Then in 2005 to 2006, another of Rodriguez’s fund, FPA New Income’s assests declined from $2.1 billion to $1.6 billion because they would not buy any long or intermediate Treasury bonds based on their negative view towards the Fed’s action at the time.
The most recent occasion happened in 2007. Rodriguez increased his liquidity to at a peak time of 45%. Investors were not amused and FPA Capital fund saw a total redemption of $770 million on the basis of $2.2 billion.
Today the fund stays a little above $1.1 billion.
Rodriguez was critical to active manager who do not raise cash at times. Back on May 29, 2009, during the Morningstar Investment Conference, Rodriguez gave a key note speech and made the following remark:
Did the industry try and prepare for this tsunami of a credit debacle? I don’t think so. Whether in stocks or in bonds, it seems as though the same old strategies were followed--be fully invested for fear of underperforming and don’t diverge from your benchmark too far and risk index tracking error. The industry drove into this credit debacle at full speed. If active managers maintain this course, I fear the long-term outlook for their funds, as well as their employment, will be at high risk. If they do not reflect upon what they have done wrong in this cycle and attempt to correct their errors, why should their investors expect a different outcome the next time?
To his raising cash at appropriate time is the job of money manager's. Managers should not be afraid to do so just to keep up with the herd.
75% Still in Stock
That being said, 75% of FPA Capital Fund is still in stocks. The top holdings are (percentage are against total equity holding of $823 million):
No. 1: ENSCO International Inc. (ESV, Financial), Weightings: 9.66% - 1,870,600 Shares
ENSCO International Incorporated is an international offshore contract drilling company that also provides marine transportation services in the Gulf of Mexico. Ensco International Inc. has a market cap of $5.7 billion; its shares were traded at around $45.06 with a P/E ratio of 5.39 and P/S ratio of 2.33. The dividend yield of Ensco International Inc. stocks is 0.25%. Ensco International Inc. had an annual average earning growth of 12.8% over the past 10 years.No. 2: Avnet Inc. (AVT, Financial), Weightings: 9.45% - 2,995,000 Shares
Avnet Inc. is one of the world's largest industrial distributors of electronic components and computer products. Avnet Inc. has a market cap of $3.71 billion; its shares were traded at around $26.37 with a P/E ratio of 12.78 and P/S ratio of 0.23. Avnet Inc. had an annual average earning growth of 25% over the past 5 years.No. 3: Rosetta Resources Inc. (ROSE, Financial), Weightings: 8.08% - 4,531,500 Shares
Rosetta Resources Inc. is an independent oil and gas company engaged in the acquisition exploration development and production of primarily natural gas properties in North America.. Rosetta Resources Inc. has a market cap of $742.93 million; its shares were traded at around $16.67 with a P/E ratio of 19.71 and P/S ratio of 1.49.No. 4: Arrow Electronics Inc. (ARW, Financial), Weightings: 7.87% - 2,301,800 Shares
Arrow Electronics Inc. is the world's largest distributor of electronic components and computer products to industrial and commercial customers. Arrow Electronics Inc. has a market cap of $3.21 billion; its shares were traded at around $27.96 with a P/E ratio of 13.63 and P/S ratio of 0.19. Arrow Electronics Inc. had an annual average earning growth of 0.7% over the past 10 years.
No. 5: Rowan Companies Inc. (RDC, Financial), Weightings: 7.62% - 2,721,000 Shares
Rowan Companies Inc. is a major provider of international and domestic offshore contract drilling services. The Company also owns and operates a manufacturing division that produces equipment for the drilling mining and timber industries. Rowan Companies Inc. has a market cap of $2.46 billion; its shares were traded at around $24.57 with a P/E ratio of 5.3 and P/S ratio of 1.11. Rowan Companies Inc. had an annual average earning growth of 10.9% over the past 10 years.No. 6: PattersonUTI Energy Inc. (PTEN, Financial), Weightings: 6.58% - 3,591,000 Shares
Patterson is one of the leading providers of domestic land drilling services to major & independent oil & natural gas companies. Pattersonuti Energy Inc. has a market cap of $2.22 billion; its shares were traded at around $16.55 with a P/E ratio of 10.88 and P/S ratio of 1.01. The dividend yield of Pattersonuti Energy Inc. stocks is 1.38%. Pattersonuti Energy Inc. had an annual average earning growth of 26% over the past 10 years. GuruFocus rated Pattersonuti Energy Inc. the business predictability rank of 2-star.Comments
During 3Q09, Robert Rodriguez did not buy any stock but sold a few. What’s remaining is still heavy on the Oil and Gas companies.
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