TheStreet.com Ratings: Betting On a New Manager

Nineteen funds with TSC Ratings grades in the "D" and "E" ranges -- which equate with "sell" recommendations -- when new managers were installed late in 2005 were tracked through the end of February 2007. The logic used was that a new manager most likely needs some time to devise a strategy, clean out the old holdings and replace them with new investments. We then assumed that a year was a reasonable period for the new leadership to affect TSC Ratings grades.

The results, as summarized in the accompanying table, were not overwhelmingly encouraging. Only five of the 19 funds climbed from "sell" to "hold" territory, which was accomplished by elevating their grades to the "C" range. None jumped to the "A" or "B" ranges, which correspond to a "buy" recommendation.

Still Plenty of Room for Improvement Management changes in late 2005 have yet to boost the scores of these funds
NAME	TICKER	NEW MANAGER START DATE	SEPT. 2005 TSC RATINGS GRADE	FEB. 2007 TSC RATINGS GRADE	12-MO. TOTAL RET'N (%) *
Dreyfus Premier Third Century A	DTCAX	12/1/2005	E	D	7.09
Dreyfus Socially Resp Growth S		12/1/2005	D	D+	7.26
Eaton Vance NY Muni A	ETNYX	11/1/2005	D	C	6.17
Fidelity Adv Biotechnology A	FBTAX	10/12/2005	E+	E-	-6.33
Fidelity Adv Growth & Income A	FGIRX	10/31/2005	D-	D+	9.18
Fidelity Adv Large Cap Fund A	FALAX	10/31/2005	D-	C-	10.51
Fidelity Growth & Income	FGRIX	10/31/2005	D-	E+	8.89
Fidelity Magellan Fund	FMAGX	10/31/2005	E+	E	5.10
Fidelity Select Biotech Port	FBIOX	10/12/2005	E+	E-	-6.13
Hallmark Capital Appreciation R	HCARX	12/31/2005	E-	E+	8.08
Hartford Stock C	HSFCX	11/1/2005	D+	C	9.59
ING Index Plus LargeCap Equity Fd A	NPPAX	12/1/2005	D-	D+	7.23
MFS Growth Opportunities Fund A	MGOFX	12/6/2005	E+	D-	2.85
MFS Mass Investors Gr Stk B	MIGBX	12/6/2005	E+	D	3.16
MFS Strategic Growth Fund 529A	EASGX	12/6/2005	E+	E+	3.27
PIMCO CA Interm Muni Bond A	PCMBX	10/1/2005	D-	D+	4.31
Principal Inv SmCp Gr Fd AdvPfd		11/15/2005	D+	C-	4.08
Seligman Income & Growth A	SINFX	10/1/2005	D+	C	13.98
Sequoia Fund	SEQUX	11/25/2005	E	D-	9.31
INDICES
S&P 500 Composite Total Return					11.97
S&P 400 Midcap Total Return					9.68
Russell 2000 Index (Small Cap)					9.85
Lehman Brothers Municipals					4.97
* Through 2/28/2007. Source: TheStreet.com Ratings

The new managers all had between two and five months to rearrange holdings and implement new strategies before the start of the 12-month period used to measure their performance from February 2006 through February 2007. Yet only one of the 17 equity funds outperformed the total return of the S&P 500 during that time. The two new biotech managers failed to inject enough stimulants into their funds to pull their performance out of negative territory and 12 of the other equity funds managed only single-digit returns for the period.