Concentrated Funds Beating the Benchmarks
Fairholme achieved its stellar record by placing outsized bets on a few unloved stocks. The GoodHaven managers are practicing a similar strategy. During the past year, GoodHaven returned 30.9%, topping the S&P 500 by 2 percentage points.
The fund's biggest holding is Hewlett Packard (HPQ). The managers started buying the depressed stock in the summer of 2012. At the time, media reports suggested that declining personal computer sales would make it difficult for the troubled company to revive. But the managers figured that some of Hewlett-Packard's data storage and commercial printer businesses were still solid.
Since then, the stock has soared as prospects have brightened, but the shares still sell for a forward price-earnings ratio of 7. Keith Trauner says that the shares are still cheap.
"If the company can start to grow in the low single digits, we will make a lot of money," he says.At the time of publication, Luxenberg had no positions in securities mentioned. Follow @StanLuxenberg This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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