Morningstar Advisor - April/May 2013 - (Page 56)

Undiscovered Manager Seeing Is Believing By Michael Brennan The team at the small-cap shop SouthernSun relies more on their senses than a computer to understand companies. It was early 2009. Members of the Memphisbased SouthernSun Asset Management team were in Virginia doing a site visit at Smithfield Foods SFD, the meat-products company in which SouthernSun Small Cap Investor SSSFX had been invested for six years. The SouthernSun team was not helicopter-parenting Smithfield; that’s not the firm’s style. The team was simply swinging by to make sure everything was copacetic at a firm accounting for between 4% and 6% of SouthernSun Small Cap’s assets. 56 Morningstar Advisor April/May 2013 SouthernSun founder, CEO, and CIO Michael Cook, 56, had made the trip, as had his son, 31-year-old senior analyst Phillip Cook. Members of Smithfield’s leadership team were escorting the Cooks through the company’s state-of-the art plant and stopped to show off the gleaming, monolithic visage of Smithfield’s heavy investment in high-efficiency, high-volume packing machinery. The Smithfield executive sang the machine’s praises, explained what it would do for his company’s production and distribution economics, and generally sold the SouthernSun managers on the merits of that particular investment. The visit ended with two outcomes. First, Smithfield was, anticlimactically, awarded a thumbs-up from the Cooks. (SouthernSun had already established a strong track record of success, so it was little surprise that one of the firm’s bets was paying off.) Second, the Cooks left wanting to know more about the company making industrial-level foodprocessing machinery so wondrous that its customers went out of their way to tell stories

Table of Contents for the Digital Edition of Morningstar Advisor - April/May 2013

Morningstar Advisor - April/May 2013
Letter From the Editor
The Pursuit of Happiness and Financial Advice
What Strategies Do You Use to Control Risk?
Driven to Succeed for Clients and Family
How to Assess a Portfolio’s Bond Risk
Luck, Skill, and Investing
Investments á la Carte
Investment Briefs
Investing’s No- Brainers Have Costs
A Defensive Ride
Risk On/On Risk
The Risk of Being Overconfident
Year of Living Dangerously
The Risk-Parity Approach
A Guide to Mutual Funds Running Risk-Parity Strategies
What Moats Tell Us About Risk
Risk’s Wake-Up Call
Seeing Is Believing
Why Investors Lag the Returns of Their Funds
Liquidity Signals
Pump Them Up
Golden Oldies Keep on Truckin’
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
Our Social Blind Spot

Morningstar Advisor - April/May 2013