ROGEX), researches mutual funds, limited partnerships and companies based on several characteristics, such as improving profitability, competent management and consumers' loyalty to brand-name products. Bohemia, N.Y.-based R.W. Roge & Co. has about $200 million in assets under management. The Roge Partners Fund, which invests in value and growth stocks and alternative assets, is small, with about $12.5 million in assets. The fund has risen 8.4% this year, beating 72% of world-stock funds followed by Morningstar. By comparison, the benchmark S&P 500 is up 6.1%. "The overwhelming theme of the fund is that we look for great allocators of capital, whether it be a mutual fund manager generating returns or a CEO of a company that does a great job of adding value," Roge says. The values of the companies Roge targets can be rich compared to the broader stock market. But their intangible assets are worth the price, he says. In doing so, Roge avoids companies with razor-thin margins. "The great thing about the strategy is that it doesn't depend on macro themes," Roge says. "With great brand recognition,
companies in the fund have the ability to pass on the costs to their customers." Roge divides his stock holdings in two baskets. The smaller basket includes companies that he calls "valuation anomalies." "For whatever reason, it may be a temporary setback in earnings or a macro theme that's temporarily weighing down the company," Roge says. "Maybe they don't have the best brands or widest competitive moat, but in those cases we believe we're buying $1 for 60 cents. For these companies with mediocre businesses that are extraordinarily cheap, we'll hold them for six months."
The other basket, which gets a bigger focus, includes what Roge calls great companies run by great management with great brands. Among those, the turnover is relatively modest -- Roge says they can be held for a decade. Renowned value fund manager Bruce Berkowitz of Fairholme Capital used to sit on the board of directors of one of Roge's picks. Berkowitz resigned from the board only so he could buy more shares of the company. Read on to see this pick as well as others with the type of brand loyalty that Roge is betting on.