Another famed value investor closing his fund. David Winters.

Discussion in 'Professional Trading' started by helpme_please, Apr 24, 2019.

  1. There have been a lot of talk about value investing and trend following being dead in recent years. I would like to ask the professionals on this forum. What advice would you give to these has-been money managers whose method used to work but no longer work today (at least for the time being and nobody knows when it'll make a comeback)?

    This question is even more relevant for those who manage their own money. Professional money managers earn a fee despite negative performance. The rest do not have this luxury when their method stops working.

    The once-lauded value investor David J. Winters is shutting down his fund.

    It’s no doubt a difficult result for a fund manager whose star shone brightly early in the new century.

    Winters launched New Jersey-based Wintergreen Advisors, of which he is still CEO, and the Wintergreen Fund (ticker: WGRNX), in October 2005. It’s been a tough decade for value investors overall: The Russell 1000 Value Index has a 10-year annual return of 10.9%, compared with 15.1% for the corresponding growth index. Winters’ deep-value style of investing did not fare well in the past decade, and his fund landed at the absolute bottom of its Morningstar category over one-, three-, five- and 10-year periods.

    About four years ago, we noticed that value investing had stopped working the way it had always worked,” Winters told Barron’s a year ago, when assets were $300 million. More recently assets were $100 million, according to Morningstar.
    murray t turtle likes this.
  2. ETJ


    Performance is always an issue. Regulatory scrutiny is also an issue and makes everyone want to quit at one time or another and this is a big topic at industry discussions. If I'm worth a billion dollars - he's rumored to be worth about $3 billions - wouldn't I rather retire and start enjoying my life without a constant concern of regulators up my ass.
    Many of the "legendary" managers are not really hands-on work six days a week guys anymore.
    nooby_mcnoob and Stockolio like this.
  3. David Winters fund was only about $100m recently according to the barrons article. So, I doubt he is worth $3 billion. It is hard for a fund manager to earn that much to be worth $3b if his fund size is hundreds of millions even if he charges ridiculous fees. Not to mention his performance was embarrassingly bad compared to cheaper benchmark stock index.
    Last edited: Apr 24, 2019
    murray t turtle likes this.
  4. As investors/traders our primary objective is to be "in tune" with the market... whatever it's doing. That includes the necessity of changing your thinking/behavior as the market changes.
    trader99 and Snuskpelle like this.
  5. I agree
  6. Specterx


    I don't know about trend following - doesn't seem dead to me, but any simple edge which can be applied mechanically is going to get smoothed down over time.

    The problem for many value investors is that they anchored to pre-2007 valuation metrics. Look at the historical range, buy the bottom and sell the top, right? Well, it's not that easy. These days CBs have risk-free rates pinned to the floor which has pumped up valuations, investors in general are more systematic and mechanical, while anybody can pull up a screener and look for cheap companies.

    Value investment still works fine, but you need to apply the skills of a trader/speculator: predict future conditions, understand how and why the market is mispricing those conditions, and look for relative value.
    helpme_please likes this.
  7. trader99


    While that may be true for individual retail trader, it's much different for institutional investors. Funds have to stick to their investment style else they are accused of "style drift." Pension funds allocate funds according to styles. So fund managers have to stick to their style. They don't have the same freedom as individual retail traders and investors.
  8. Which is why they might "fall out of favor". "Sticking to your guns" when things not going your way is often not a plus.
  9. trader99


    Yes, but there's not much the fund managers can do...
    #10     Apr 24, 2019