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Weitz Launches Opportunity Fund to Sell Short

January 04, 2006

Wally Weitz, known as Omaha's other oracle, launched a new fund called Weitz Partners III Opportunity Fund. This new fund has two important differences from his Hickory and the other stock funds. It borrows money to leverage its investment and it regularly sells short. It may also invest in put and call options and commodities contracts and futures transactions such as stock index futures.

This PIII Fund is a successor of Weitz Partners-III Limited Partnership, which was launched in June, 1983. The before tax average annual total return of the limited partnership was 16.27% during the last 20 years. This partnership has been regularly selling short stocks since incepted.

"The use of borrowed money magnifies both gains and losses and so adds an element of risk to the portfolio," claimed Weitz, "PIII Fund is a aggressively managed portfolio -more concentrated in our favorite stocks and likely to be more volatile."

None of his other funds currently use borrowed money. Short sales may be used by money managers defensively as hedges against losses in the "long" portfolio or aggressively to try to profit from a decline in a stock or group of stocks. Short sales add another layer of risk to an investment. Both individual stocks and groups of stocks such as exchange traded index funds (ETF's) may be sold short

This minimum investment for Weitz PIII Opportunity fund is $500,000. Weitz charges 1% of management fee if the asset in this fund is less than $2.5 billion. As of Sept. 30, 2005, the total asset in this fund is $235 million. The fund expense ratio is 1.58%.


Rating: 3.0/5 (3 votes)

Comments

ValueGuy2
ValueGuy2 - 8 years ago
Does anyone have any opinions about this? Weitz is pretty savy, but selling short strategy hasn't really been that great a strategy over time. Do you think "he's jumping the shark"?
gurufocus
Gurufocus premium member - 8 years ago
Weitz has been quite successful in short sells. He has been doing this for many years!

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