Morningstar Advisor - December/January 2012 - (Page 60)

Undiscovered Manager Wedgewood’s Lessons Pay Off By Dan Culloton The St. Louis firm takes ideas from indexers and value investors to craft its solid large-cap growth strategy. Wedgewood Partners is defined by its contradictions. Its founder, Anthony Guerrerio, is a New York native who moved to the Midwest to be a financial entrepreneur. Chief investment officer David Rolfe is an avowed growth investor whose idols include value-investing icons Mason Hawkins and Warren Buffett. Rolfe and his colleagues are active managers who not only agree with the arguments for passive index investing but also use them to justify their philosophy and strategy. And in volatile times that have driven many professional and amateur investors to do something, anything, to improve returns, Wedgewood has succeeded by keeping things simple and trading infrequently. “We haven’t tried to reinvent the wheel here,” Rolfe says. Indeed, Wedgewood hasn’t invented anything. Plenty of stock-pickers profess to abide by the tenets of the firm’s large-cap growth strategy. Morningstar fund analysts’ files are stuffed with presentations touting the virtues of searching for reasonably priced shares of firms with strong competitive advantages, growth, profitability, balance sheets, and management. The pitch is, frankly, a little hackneyed. Self-awareness, humility, and patience set Wedgewood apart. Working from a modest colonial-style office building at the bottom of an I-64 exit ramp in St. Louis, the firm, which has $1.2 billion in assets, knows that it faces stiff competition from thousands of smart investors. “We compete in a very, very efficient space,” Rolfe says. “We know we don’t have an information advantage, and we are humble 60 Morningstar Advisor December/January 2012

Table of Contents for the Digital Edition of Morningstar Advisor - December/January 2012

Morningstar Advisor - December/January 2012
Letter From the Editor
Seduced by Complexity
Is China Exposure Important for a Portfolio?
A Niche Built on Trust
How to Find Your Client’s Investment Style
Taking the Long View
Consensus on Europe Elusive
Four Picks for the Present
Investment Briefs
Is Perception Reality for Active Managers?
Be Alert for Basic-Materials Bargains
Investment Boom Unsustainable
Digging Moats in China
Where China’s Domestic Companies Stand to Benefit
Arising Opportunities
China Strong Long Term
From Currency Manipulation to International Acceptance
The Keys to China’s Fortune
Wedgewood’s Lessons Pay Off
Reading the Evidence on Indexing
Scouting for Investments Abroad
Yield, Please (Hold the Europe)
Mutual Fund Analyst Picks
50 Most Popular ETFs
Undervalued Stocks With Wide Moats
China Fund Managers Eat Elsewhere

Morningstar Advisor - December/January 2012