This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

PIMCO Hires Veteran Managers to Run Stock Fund

NEW YORK ( TheStreet) - When bond giant PIMCO recently started its first stock fund -- PIMCO Equity Series Pathfinder Fund (PTHDX) -- the company hired portfolio managers who had run Mutual Series funds, Anne Gudefin and Charles Lahr. Recruiting the veteran managers seemed like a logical move.

Mutual Series has long ranked as a top performer, and several of its veterans have gone on to manage funds at other companies. Mutual Series alumni include David Winters, now portfolio manager of Wintergreen (WGRNX), and David Marcus and Jae Chung of Evermore Global Value (EVGBX). Can the alumni match the record of their former employer? Perhaps. All the managers practice a similar brand of deep-value investing, and they all hold some of the same stocks.

The strategy was developed by Max Heine who started Mutual Shares (TESIX) in 1949. Heine made his first big scores by buying distressed railroads. The stocks intrigued him because he figured that the land and equipment were worth more than the value of the depressed shares. In 1988, Heine died and passed control to his protégé Michael Price.

Price refined the company's approach, seeking to build broadly diversified portfolios that could protect shareholders in downturns. To accomplish the goal, Mutual Series included elements few mutual funds had ever tried. Besides buying undervalued stocks, Price bought distressed debt, bonds that were close to collapse. He also invested in merger arbitrage, buying stocks of companies that were about to be taken over. When the fund manager couldn't find undervalued investments, he held cash and waited for better times.

Several of Price's strategies had an important characteristic in common: They did not necessarily track each other or the stock market. Consider the investments in distressed companies. If a troubled company emerged from bankruptcy, the prices of its stocks and bonds could skyrocket, even when the S&P 500 was falling. By holding such uncorrelated investments, Mutual Series hoped to build portfolios that could be resilient.

In 1996, Price sold Mutual Series to Franklin Templeton, and he later left the business. But disciples of Price and Heine continue to the run the funds, and they follow the same strategy. Most often the approach has worked.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $109.27 -1.00%
FB $88.26 0.12%
GOOG $600.70 -0.92%
TSLA $241.93 -1.48%
YHOO $31.58 -2.95%

Markets

Chart of I:DJI
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASDAQ 4,683.9190 -49.5780 -1.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs