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By Rosemary Pollock
Mormon Mutual Fund Manager Rides Fund From Boom to Bust
CHICAGO, ILLINOIS -- Don Yacktman's downtown Chicago office sports a
large reproduction of a Frederic Remington sculpture of a cowboy
astride a galloping horse. The sculpture represents rugged
individualism and the freedom to follow a solitary but often rocky
trail. The work reflects the trails that Yacktman has blazed in the
financial world. Born a Westerner and raised and educated in Utah
before graduating from Harvard Business School, Yacktman's
money-management style is a combination of value investing and
extreme patience.
However, his personal life is a straight line. Yacktman is an
honorable, accomplished member of The Church of Jesus Christ of
Latter-day Saints. He converted to the Mormon faith as a teenager and
later became a bishop. He and his wife, Carolyn, have seven children.
Their son Stephen, 30, is an analyst for his father's funds.
Yacktman, now 59, was named portfolio manager of the year by
Morningstar in 1991. He was a favorite of no-load investors along
with independent financial advisers and the press. In the 1980's he
honed his skills for picking stocks that were cheap, tripling
shareholders' money in eight years and was manager of Selected
American Shares in the 80's. At his peak in 1997, he had $1.1 billion
under management, but by September, 2000 his assets plunged to a mere
$69 million. But Yacktman, like the cowboy on the horse, will not
apologize or bend to trends.
"I'm the same Don Yacktman yesterday, today and tomorrow," he says.
"I'll take the good business over the size factor any day," he adds.
"You need to adapt to the environment if you want to succeed. And in
the past few years it's changed. The clear-cut choices among large
companies got overpriced."
Downsizing was awkward and complicated matters as the Yacktman fund
prospectus explicitly stated the fund would invest primarily in
larger companies. As performance deteriorated, the funds independent
directors decided they needed to defend the interests of the
shareholders. One director who challenged Yacktman was Stanislaw
Maliszewski. "We weren't trying to trying to out-Yacktman Yacktman or
second-guess him," he said. "It's not illegal to invest in smaller
companies, but you have to tell the shareholders you're doing it and
change the prospectus," Maliszewski said.
Yacktman disagreed and what insued was a nasty dog fight. "Investors
know my strategy," says Yacktman. "They know we may be concentrated
in different sectors and stocks than everyone else, depending on what
we see." Russell Wilkins, a fund analyst for Yacktman defended his
boss. "Our investors are people who've watched Don Yacktman invest
for a long period of time and are more interested in buying his style
than any style box," he said.
It is hard to imagine that give his investment discipline Don
Yacktman could have avoided such a crisis. "In a theoretical sense,
it's noble of Yacktman to have stuck with his style throughout it
all," says Morningstar's Phillips. "When your style goes out of
favor, that's the time you've got to believe the most. Yacktman has
continued to be a true believer."
Today, Yacktman sees few bargains among larger stocks and no good
buys among tech stocks. "Someone always comes up with a better
mousetrap." Instead, he remains confident. "We have confidence that
we're doing it right," says Yacktman. "Then and now."
Source:
Don Yacktman's Wild Ride
Kiplinger's Personal Finance 1Feb01 B2
By Brian P. Knestout
A manager once hailed as a genius made some wrong turns and refused to budge. He remains unrepentant.
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