Cramer Has His Eye on Brandywine
So now that 1998 is at last looking like every one of the past three years, you can bet that the public will begin to pour in money in a huge way. Managers who have avoided this market or feared it are beginning to feel the excruciating pain of missing the bull boat as it pulls out of the dock.
That's why I'm watching
Brandywine Funds
.
Of course, in the bizarre world that is mutual funds, we never really know what's happening inside the walls of big money. But every year there is some fund that takes a loud and vocal posture against the market. This fund becomes the one to watch, the one to monitor to see how long a manager can stand the stampede of the bulls without throwing in the towel.
Sometimes they never change. After the 1987 crash the
Dreyfus Strategic Investments
fund, which had made a large and incredibly successful bet against the market, stayed negative. As the fund was one of the few that profited from the crash, this stance kept many people out of the market at what turned out to be a historic bottom. Nobody talks much about this fund anymore, and the results show it.
A couple of years ago it was
Magellan
fund taking the negative stance.
Jeff Vinik
had cashed out of stocks. As the bull charged on he grew increasingly more negative. Finally, he, too, was obliterated by the bull, and he left the firm. (I'm told he's doing fabulously now, but I want nothing to do with the guy because he represents pretty much everything I rail against all of the time.)
Last year
Foster Friess
, the widely respected manager of Brandywine, a fund I have recommended for years and years to anybody who would listen, went very negative.
Now I see from the Investor's Daily Index that Brandywine is flat for the year when rabbits like
CGM
are already up in the high single digits. That's a statistic of pain for Brandywine, which prides itself on winning. It's like finding
Michael Jordan
riding the bench and the
Bulls
not making the playoffs. Believe me, even though it is just February, managers think just like professional coaches. They cannot stand being in the second or third division.
Not for a moment.
Certainly not for a quarter.
The pressure to commit capital is now on. The pressure to buy tech is on. The pressure to stay up with the
Januses
and the
American Centurys
is on. The pressure to keep up with the
Dow Joneses
, something that seemed absurd just three weeks ago, is now off the charts.
So I am focusing on Brandywine as a bellwether of capitulation. How long can this fund stay heavily in cash, stay at zero performance, before it can't take the heat of not being in the market? When Brandywine turns and comes in, when it decides it has to play, we will see an explosive rally, one that will leave these trading ranges we have lived with for nine months be labeled history.
I'm betting that we are on the verge of this explosive rally. I see the public pulling money out of the 5% money funds and dousing managers who are playing full tilt. But not all managers are, and they won't get the public's money. Too many Foster Friesses out there.
I think that's about to change.
This upcoming surge will be the focus of both my
Yahoo!
chat
and my "Squawk" appearance Wednesday. (A naked attempt to give subscribers of
TSC
an edge in these other public appearances I make.)
In the meantime I'm praying for a pullback so I can commit more resources to this tape. So is Friess. So are all of the bearish managers.
You know what that means.
No pullback.
*****
Random musings:
Yes, there is a
Trading Goddess
. Many of you keep asking that my wife make an appearance on the site. Believe me, I am trying. But my wife does not work for me. And I can't make her appear. Trying to do so has only made my life tougher at home, so please, take my word for it. She more than exists.
James J. Cramer is manager of a hedge fund and co-chairman of TheStreet.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Mr. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he welcomes your feedback, emailed to
Jjc@thestreet.com.