Morningstar Advisor - October/November 2011 - (Page 46)
Morningstar Conversation
Finding Refuge in Value
By Ryan Leggio
Don Yacktman and Pat Dorsey look for undervalued firms with margins of safety, and they see a lot to like in today’s market.
“Don Yacktman’s Wild Ride—Fall of a Fund Manager” That was the headline of an article in Kiplinger’s about fund manager Don Yacktman in 2001. While not as famous as Businessweek’s cover story on “The Death of Equities” in 1979, it proved just as accurate as a contrary indicator. (To be fair, Morningstar’s track record analyzing Yacktman at the time is mixed.) From 2001 through Aug. 15, 2011, the Yacktman Fund YACKX appreciated by an annualized 11.4%, versus a 1% annual gain for
the S&P 500. That showing earned Yacktman one of the five nominations for Morningstar’s Manager of the Decade award in 2010. As the 2001 headline suggests, Yacktman’s performance the past decade has been a turnaround of sorts. In the late 1990s, he loaded up on small-cap companies he thought were cheap as the market rewarded large-cap stocks year after year. In 1999, for example, his fund fell 17% as the S&P climbed 21%. Investors, having endured two previous years of underperformance, left in droves, and the
fund’s asset base fell from $1.1 billion in assets in 1997 to just $70 million in 2000. Despite a current asset base of $5.4 billion, one thing seems clear: Yacktman’s disciplined, concentrated approach to uncovering the market’s cheapest stocks—along with the manager’s willingness to sit on cash when bargains are scarce—hasn’t changed much through the years. The same can be said for Pat Dorsey, Sanibel Captiva Trust Co.’s vice chairman and
46 Morningstar Advisor October/November 2011
Table of Contents for the Digital Edition of Morningstar Advisor - October/November 2011
Morningstar Advisor - October/November 2011
Contents
Contributors
Letter From the Editor
The Emotional Burden
Where Are You Going for Yield?
Ahead of the Curve
How to Use a ‘Collar’
Why Dividends
Is Bond Investing All Uphill From Here?
Four Picks for the Present
Investment Briefs
The Risks of Stretching for Yield
For Banks, Uncertainty Reigns
The Virtues of Dividends
How Well Do You Know Templeton Global Bond?
The Case for Dividends in Emerging Markets
Finding Refuge in Value
Swift, Smooth, and Silent
Crack Open Closed- End Funds to Avoid the Relevance Paradox
Getting Beyond Labels in the ‘To vs. Through’ Debate
Handling the Headwinds
Bonds, Short-Term Bonds
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
A Prisoner of Pricing
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