Spreading 'Bread and Butter' Investing

James Potkul wants his fundholders to get back to the "bread and butter" of investing. And judging from the string of conservative new mutual funds being rolled out, he's not alone.

Potkul's contrarian/value Bread and Butter fund is an example of a new fund that isn't looking for a hot trend. The open-end mutual fund currently holds less than $1 million dollars after opening for business last October, but after 10 years of planning, Potkul has high hopes.

His goal? To have the longevity of investment managers like Warren Buffett or FPA's Robert Rodriguez, as opposed to that of a fly-by-night fund manager chasing the latest craze.

"Warren Buffett has been successfully managing investments for decades even as hot hedge fund managers come and go," says Potkul, who also manages $10 million in separate accounts. "And sometimes they leave after losing a lot of people's money."

Potkul says the out-of-the-ordinary name for his fund actually is a reflection of his belief that investors need to get back to simplified investing. His investment philosophy is to use investor overreactions to capture inefficiencies in the market.

"People understand the concept of 'bread and butter.' It's a timeless message," says Potkul, who needs $10 million in assets, or two full years of operation, before the Bread & Butter fund can qualify for a supplemental quotation listing.

In a tip of the cap to the so-called Oracle of Omaha, 3.1% of Potkul's fund is in shares of Buffett's Berkshire Hathaway(BRK.B). The Berkshire position is part of the fund's overall equity allocation of 51%. The rest is in short-term investments until Potkul can find more value names that will compensate investors for the risks he sees building in the economy.

The balance of the equity portion of his portfolio, which he selects using a mix of quantitative and qualitative screens, is in currently unloved names such as Cendant(CD), El Paso(EP), Pfizer(PFE) and IDT(IDT).

The Bread and Butter Diet

By looking at the funds coming off the assembly line so far this year, it seems like fund buyers are eager to jump onto the metaphorical bread and butter investing diet.