If you want to learn about investing, you don't need to fork over bucks at
Barnes & Noble
for a book you'll probably find unsatisfying within 24 hours.
Instead, you can start by reading some of the fabulous free reports written by a smattering of fund managers.
Be forewarned; most of the quarterly and semiannual reports out there are pure drivel. A
column last week pointed out a few that are not, including missives from the managers at
T. Rowe Price
Because of space constraints, I was unable to mention all of the commendable fund reports. But since readers wrote in to tell me some managers who should've been on the list, I wanted to give credit where credit is due.
also puts out a terrific report each quarter with lots of crisply written, easy-to-read discussion (that's frank when necessary). Plus at the back is the most detailed description of the funds' holdings I've seen from anyone," writes
seconds that thought. "Ron Baron is a big believer in
. But this year his faith has been put to the test and he isn't afraid to lay it out on paper what he likes and what he doesn't like about what's going on at the company."
Baron Asset fund's quarterly report from March 31, Ron Baron discusses why he bought Sotheby's stock in the first place and, more importantly, addresses the
price-fixing allegations against the auction house.
Baron has criticized how the company's board has handled the scandal. And he lets readers hear those complaints firsthand in the most recent shareholder report.
"Baron Funds had expected that an outstanding, independent Sotheby's board would be assembled to oversee the continuing government investigation. We were clearly surprised and upset when a proxy was issued naming Robert Taubman,
former Chairman Alfred Taubman's son, to the board in Alfred's place," Baron writes. "If the father resigned to allow the investigation to proceed without interference from the company's controlling shareholder, how could it be OK for his son to take his place?"
He goes on, but you get the picture.
This kind of frank talk goes a long to way to build shareholder loyalty. Hiring
to play at the annual shareholder meeting doesn't hurt either.
Now the firm just needs to put these reports on its
"Add Ralph Wanger of
Acorn funds as an exceptional mutual-fund read comparable to Tweedy, Third Avenue and Oakmark," says
In the March 31 quarterly
report, Wanger gives investors a history lesson going back to England during the early 1700s. "The South Sea Bubble was the first impressive stock-market fiddle. The markets at that time were primitive by today's standards but were driven by several very modern features: political clout, media hype and the power of stock options."
Investors get a great explanation of how history does indeed repeat itself.
Wanger, of course, doesn't overlook the individual stocks in the portfolio.
"As we all know, gasoline prices skyrocketed in the first quarter. While this was bad for drivers, it was good for the oil and gas industry. Our energy analyst Jason Selch hit pay dirt as Acorn pumped profits from higher energy prices. Electric and gas distribution and trading company
surged and was Acorn's largest dollar winner in the quarter."
And yes, he does discuss the losers with the same aplomb. "Bad news was punished severely," Wanger says. "
won a bidding war for a San Francisco TV station but promptly lost that station's network affiliation, resulting in a cancellation of more than 60% of Young's stock price."
"Jim Gipson of the
Clipper funds always has nice quarterly reports on the
Internet to read. They're not too long but usually insightful," writes reader
Gipson's reports are easy to find and easy to read.
"We have not tried to jump on the bandwagon of speculation in technology stocks," Gipson wrote in early April. "The current stock market certainly tests our patience (and almost as certainly tests yours), but we believe that adhering to our valuation discipline is the best long-term way to preserve and increase the capital you have entrusted to us."
Good communication is certainly one way for a manager to get shareholders to stay through good times and bad.
A few other firms made the list for exceptional fund reports, including
But for an industry that manages $7 trillion, it's downright pathetic how short the list is.