I enjoyed interviewing Don and Craig Hodges for tonight's "Of Mutual Interest" report because they are a welcome change from the high strung Wall Street crowd. Maybe it has something to do with the fact the duo are from Dallas, where the culture is less intense. Don and Craig came in relaxed, talking about Broadway shows and good steaks. Not a trace of anxiety about the interview. No obvious Blackberry addictions, either.
I like the fact that the Hodges Fund is fairly concentrated. To me, that shows conviction. I also like the willingness of the Hodges to take risks on contrarian sectors.
However, as Morningstar points out, these characteristics can also mean volatility. Last year the fund lost nearly 50%, and saw heavy redemptions. But this year, the fund is up an impressive 19.52%--soundly beating the S&P 500. The fund has also done well over the long-term, beating the S&P 500 "in every rolling annual 10 year period since 1994," according to Morningstar.
In addition to volatility, another potential drawback investors should consider is the fund's expense ratio, which is higher than its peers.
When I asked Craig why his ratio is higher, here was his response:
Most of that is because of our smaller size. We've got pretty low overhead. We've got about 40 total employees. We're not a big organization with a lot of expenses that sort of thing. But when you're on a 300 million dollar fund-- as opposed to a 300 billion dollar fund-- expenses proportionally are a little big higher...As we get larger, you're going to see that ratio shrink quite a bit.
If you are interested in learning more about the fund, read Morningstar analyst Ryan Leggio's full review. (Please note that you must subscribe to Morningstar to access this premium content.)
On the Hodges Fund website, you'll find also find a link to the latest Standard & Poor's report on the fund.
I also invite viewers to suggest other portfolio managers you'd like to see interviewed and profiled for our "Of Mutual Interest" segment.
Comments
why is this article being written. " i enjoyed interviewing them" ok-so, what??
i am at a loss why this article was written.
Ken Heebner of CGM Focus - also runs a conentrated portfolio that can be volatile, but mostly is in the favorable direction.
Mario J. Gabelli of Gabelli ABC - or any other fund manager who went to mostly cash at the early part of the market downturn.
PS: I share Roy's sentiment over the use of LIBOR ever since I learned from an earlier NBR program that most mortgages during the housing boom years were actually pegged to it.
Can you explain to your viewers and to me about the significance of "LIBOR" London Interbank Offered Rate and how it relates to or is separated from the U.S. Prime Rate? My Credit Card Company is no longer basing the interest charged on their credit cards by using the Prime Rate plus a premium. Does this mean the in reality basing the credit card interest rate on this “LIBOR” in effect results in a higher effective rate, or in other words a slick way to charge more for less? My underlying fear is that this is an additional indication that pressure is being put on the Dollar which in turn will cause the dollar to be devalued. Does this mean the "LIBOR" is beginning to divest itself of using the dollar as a basis for evaluating other currencies? Is this an early indication that we are being pushed further toward a depression? Has everyone lost confidence in the U.S. Dollar? Can we expect a domino effect toward the Dollar? Is the Dollar in the process of being usurped by the Yen or the Euro? Does anyone have confidence in the US Dollar besides us? Is the Almighty dollar dying or dead?