Morningstar Advisor - June/July 2011 - (Page 62)

Undiscovered Manager Boutique Within a Bank By Courtney Goethals Dobrow Matt Fahey has created his own culture running Marshall Mid Cap Value for more than 13 years. Matt Fahey’s children inadvertently taught him a valuable lesson about investing. Shortly after he began running Marshall Mid Cap Value MRVEX in June 1997, an idea struck Fahey while looking at his preteens’ school report cards. What if someone came up with progress reports for companies that would help an investor figure out which stocks were worth owning? He became that someone, developing a report card to help him and his team ignore stock market noise and focus on important factors. That focus has helped a humble-sounding investment approach quietly humble larger brand-name funds. “It’s easy to become wrapped up in the concept of a business. The mistake is to ignore things like cash flow, earnings, and industry position,” Fahey says. Progress Reports also serve as analysts), and a dedicated analyst search for overlooked industries and stocks by first screening on valuation. They look for firms that appear cheap relative to their intrinsic worth, are at the low end of their historical valuation ranges on price/earnings and other multiples, have strong cash flow return on investment, and trade well below what a private market buyer might pay for the whole enterprise. The report card also grades management quality, cash flow, capital allocation, Fahey’s report cards start with and put the most weight on valuation. Fahey, comanagers Greg Dirkse and Brian Janowski (all three 62 Morningstar Advisor June/July 2011

Table of Contents for the Digital Edition of Morningstar Advisor - June/July 2011

Morningstar Advisor - June/July 2011
Letter From the Editor
Questions for the Secret Society
Are 529 Plans a Useful Tool for Clients’ College-Savings Goals?
Taking the Lead
How to Sell Covered Calls
The College-Savings Challenge
Time to Play Defense?
Four Picks for the Present
Investment Briefs
Careful What You Wish For
Caution in Utilities After Japan Crisis
Blossoms and Thorns in the 529 Garden
Lower Fees, Competitive Returns Help More 529s Make the Grade
Morningstar Grades 529 Plans
529 Risks Include the Political
Researching 529 Plans Made Easy
How Closed-End Funds Are Born
Boutique Within a Bank
The Inefficient Pricing of Moats
More Steak Than Sizzle
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
The Dangers of Demonizing

Morningstar Advisor - June/July 2011