Haven't followed Windsor, but Capital Value has been a dog for quite a while, so I'd consider it dead and buried until some new manager pulls it out of the grave. At least Vanguard has recognized it as a failing fund, well before Morningstar I might add, which has continued to sing its praises in analyst reports to this day.

I got the feeling Fassnacht might not know what he was doing when M* reported that his position in a salmon farming company was a great idea because of the movement toward healthy eating. Of course anyone who knows anything about salmon farms knows that they create the most unhealthy fish you could possibly eat, loaded with dyes and pesticides and antibiotics.  

I bought Capital Value in 2002, in the depths of a bear market. In early June of this year I finally gave up and took a small loss.  In fairness to Fassnacht, I have seen some other value funds also fail badly over the past year or so.

I will be the first to admit that I have not covered myself in glory in my analysis of this fund. I underestimated it feast or famine nature. Up until the middle of last year it was ahead of the category with a more than 9% gain. A $10,000 investment made in Capital Value on Jan. 1, 2002, would have grown to $16,217, while a the same investment in the S&P 500 would have grown to $14,443, and the same deposit in the typical large value fund would have grown to $15,749. Most of the poor performance has come since June of last year when the credit crisis hit. I think you can still make a case for Fassnacht's aggressive value style for risk-tolerant long-term investors, though.

I'd point out also that Fassnacht's thesis for Marine Harvest, the Norwegian Salmon fishery, had less to do with healthy eating habits than with rising prices for grain fed sources of protein, such as beef, that would increase demand for seafood. Fassnacht argued that Marine Harvest's had a dominant position in the global seafood industry that positioned well to take advantage of a supply/demand imbalance for seafood. It hasn't been a great pick so far and I'd be surprised if Higgins keeps it in the portfolio, but the argument for it wasn't based on fickle eating habits alone. 

Dan Culloton 

 

Windsor has lagged the S&P by 10% (approx -22% vs -12%) over past year and has only outperformed S&P over past ten years by 1+%, so I can see why they got rid of portfolio manager.  Wellington is good firm, but with new, experienced portfolio manager you should put it on watch list and look for other active large value alternatives if you can find one your comfortable with from a risk/return standpoint or just index it.

The big problem for Capital Value is some genius in it decided that Airlines are a value stock and bought Northwest Air as their 8th largest holding.

 I bought in in 2006, still planning on giving them some time, but frankly I think the management here needed a kick to the tail for not anticipating how increased energy prices trickle down to everything else.
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Dan, thanks for your reply about Marine Harvest. I looked back in the archive of fund analyst reports and saw that the 8-15-07 report for VCVLX referred to "healthier" alternatives to grain-fed meat; maybe I read too much into that single word in the report. All the same, salmon farms have been getting bad press for several years for producing crummy food, wasting fish protein on feed, and hitting wild fish stocks hard with diseases incubated in the feed-lot conditions of the typical fish farm. So, I still have to say stock picking at VCVLX was far below par for some time, especially considering the airline bets; UAL was also a top holding for a while. (That said, I'll be watching the fund under new management because I like the general investment thesis, that is, if there's somebody who can make it work.)

Yikes. Just looked at the Hartford fund that new VCVLX honcho Higgins co-manages now, and am not impressed. Predictable industry-giant-heavy portfolio, very high expenses, two stars for performance. Let's hope Higgins is better and more creative than his current fund.

I have small positions in both funds and will stay with them to see how the new managers play out. Re: Capital Value, since I owned DMCVX when Higgins ran it and was happy with performance then, I'm happy to give him a chance at Capital Value. My memory was you had to be prepared to ride out volatility, but the long term ride was fine.

Stan Cox