Active Trader Portfolio Manager (lg. msg.)

Discussion in 'Trading' started by brad1970, Jul 23, 2002.

  1. brad1970


    From Reuters: Active Trader PM

    07/23 11:06A (RT) Investor Profile: Ira who? Fund investor quietly crushes rivals
    By James Paton
    NEW YORK, July 23 (Reuters) - Peter Lynch never suffered a
    losing year as skipper of the Fidelity Magellan fund from 1977
    to 1990. Legg Mason's Bill Miller is the only one who has
    beaten the Standard & Poor's 500 index for 11 straight years.
    Their stellar investment records have turned them into
    industry legends and media celebrities over the years. But
    ignoring the wisdom of the sages, a relative unknown has pulled
    off a star-worthy feat of his own in the toughest stock market
    in years.
    Ira Unschuld, manager of the Schroder Ultra Fund <SMCFX.O>,
    has returned more than 90 percent a year, on average, over the
    last three years, at a time when nearly everyone in the stock
    fund universe has nursed huge losses.
    His Schroder Ultra is the top gainer in the fund universe
    over that rocky period. What makes it more remarkable is the
    fact that no one else is even close and that he's done it by
    ignoring all the traditional rules of patient investing.
    Unschuld has made bundles of money by shunning the
    traditional buy-and-hold mantra that has burned so many
    investors recently. He is unabashed about trading often,
    quickly locking in profits after a winning stock has risen, and
    bailing right away when the losers seem poised for more
    "One of the worst things you can do is not take profits
    because you don't want to pay taxes, and wait and wait and wait
    and suddenly see your profits go away," Unschuld said in a
    telephone interview. "Or the other thing you can do is not cut
    your losses fast enough, and hope your stocks come back."
    Take farm and ranch store chain Tractor Supply <TSCO.O>.
    The fund's biggest holding at the end of April, according to
    the latest regulatory filing, the company is no longer among
    his top 10 positions, he said. The stock rose 62 percent in the
    first four months of the year, hitting $55.15 on April 30. It
    kept climbing after April, but then dipped in recent days.
    Unschuld, who is based in New York, is "glued to the
    screens" when the stock market is open and "trades
    frenetically," almost like a day trader, according to Bridget
    Hughes, an analyst at research firm Morningstar Inc. As a
    result, Schroder Ultra shareholders are hit with hefty tax
    bills at the end of the day. Funds must divvy up among
    investors their capital gains, or profits from selling stocks.
    Investors then are taxed on those gains, even if they don't
    unload their shares.
    Still, even his after-tax return of 65 percent a year over
    the last three years is miles better than his rivals, according
    to Morningstar. The next best stock fund that is not confined
    to a specific sector, the Turner Micro Cap Growth Fund, is up
    28 percent annually in those years.
    Investors, though, probably are not familiar with Unschuld.
    The 37-year-old manager won't go on television talk shows to
    tout himself, his spokeswoman said, and he is reluctant to
    reveal his stock-picking secrets, doing few interviews and
    providing scant details to analysts who follow the fund.
    "Unfortunately he's pretty tight-lipped," said Hughes, the
    Morningstar analyst who talks to him regularly.
    Investors who want a piece of the action will be
    disappointed, though. The fund shut its doors to new investors
    in late 1998 to try to stay nimble in the small-cap market.
    Remaining small has helped keep returns at lofty levels.

    In the midst of a miserable market, it is worth taking a
    close look at what the skipper of the $240 million portfolio is
    up to. Unschuld, who got his feet wet working at Boston mutual
    fund giant Fidelity Investments while earning a business degree
    at The Wharton School, has quietly racked up returns that have
    made him the envy of the mutual fund world.
    Trading in the fast lane has helped, but other tactics have
    served him well, too. Like a hedge fund, Ultra shelters itself
    from market declines by shorting stocks, in effect placing a
    bet they will fall. He also has found smaller, more mundane
    companies that have been overlooked by Wall Street.
    Industrial products maker Actuant <ATU.N>, truckload
    carrier P.A.M. Transportation Services <PTSI.O> and fabric
    retailer Hancock Fabrics <HKF.N> were among his biggest
    holdings and more obscure stocks fueling the fund's performance
    so far this year, according to filings.
    Unschuld does not advertise the companies he has taken
    short positions in. In short selling, fund managers, often
    running hedge funds, profit from stock declines by borrowing a
    stock from a broker, selling it, and then hoping to buy it back
    later at a lower price.
    Unschuld does not like to talk about that part of his game,
    saying only that most of his returns have come from stock
    gains, not losses.
    It is, of course, premature to mention Unschuld in the same
    breath as Lynch, Miller or Mario Gabelli, the prominent "value"
    fund manager who has long impressed investors with his knack
    for finding undervalued stocks. Unschuld only has steered the
    fund since its October 1997 inception. The others have been
    doing it with big funds, and for decades that span bull and
    bear markets, not just a few years.
    Still, he is making a splash in the industry.
    Other funds have posted big gains in the bear market, but
    most are gold, country-specific or bear funds, which are
    designed to prosper when stocks fall. Often those funds
    struggle when the market soars. But Unschuld also thrived in
    good times, rising 63 percent in 1998 and 95 percent in 1999.
    Hungry investors on Morningstar's online discussion board
    have taken notice, posting messages offering to pay others for
    shares of the Ultra fund, and even fork over a premium, since
    the portfolio will not accept new cash.
    They also have clamored for more information about the
    largely unknown manager, who also oversees the $48 million
    Schroder U.S. Smaller Companies Fund, which has delivered
    sizable gains during the bear market, but has lost its step
    this year, down 17 percent.
    "Even if we did get an interview with him, we probably
    wouldn't learn much," one investor, calling himself AWalker,
    said in a message in early May.
    "If I had such a good thing going like Unschuld does," the
    investor said, "I would probably keep it to myself too."
    ((--James Paton, U.S. Fund Desk, 646-223-6134--))

    Rtr 11:06 07-23-02
    Additional Codes ( I/STX, I/NEWS)