Morningstar Magazine - February/March 2014 - (Page 66)
Undiscovered Manager
Banking on Performance
By Rob Wherry
Regional banks aren't typically known for their mutual funds.
Don't tell that to this trio of managers.
When it comes to finding good stocks, John
Portwood and David Lundgren, comanagers of
Hancock Horizon Burkenroad Small Cap HHBUX,
don't like to stray far from their offices in
Gulfport, Miss. While some of their peers travel
the country to meet face to face with portfolio
candidates, the pair confines its search to
its proverbial backyard: stocks headquartered in
Georgia and the Gulf states of Florida,
Alabama, Louisiana, Texas, and Mississippi.
Staying close to home isn't a novel concept in
the investing world. For decades, Mairs &
66 Morningstar February/March 2014
Power have posted solid returns investing in
firms headquartered in Minnesota, its home
state. Bill Frels and Mark Henneman, who help
run several of the firm's funds, were named
Morningstar's Domestic-Stock Fund Manager of
the Year in 2012. There are also studies that
look at local biases, including one that showed
investors tended to do better owning stocks
located nearby versus those from out of town.
While the Hancock Horizon fund can't claim as
long a record as Mairs & Power, it nonetheless has posted enviable returns using this
regional approach. The fund's 12.4% annualized
gain the past decade through Jan. 15 lands
it in the top 2% of the small-blend category and
beats the Russell 2000 Index by almost four
percentage points during that time period.
In addition, the fund has held up well in down
markets, limiting losses to less than the peer
group average in difficult years such as 2008.
"They have killed the category," says Lee Smith,
vice president of Cozad Asset Management in
Champaign, Ill., who has invested in the
fund. While robust 2013 asset flows doubled
Table of Contents for the Digital Edition of Morningstar Magazine - February/March 2014
Morningstar Magazine - February/March 2014
Contents
Contributors
Letter From the Editor
Preparing for the Next 50 Years
Morningstar Managers of the Year
Fixing the Trust Deficit
Rethinking the Path to Retirement
Trends
Same Old, Same Old
Global Briefs
The Economic Implications of an Older World
Banking on Performance
Is the Affordable Care Act Healing Health Care’s Woes?70
Baxter Has a Positive Prognosis
Leading Fidelity’s Charge for RIAs
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
Moving the Goal Post
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