|
Value funds find bargains
|
 |
October 22, 2001: 10:16 a.m. ET
Robert Rodriguez, Ralph Wanger and Mason Hawkins buy oversold stocks.
|
NEW YORK (CNNmoney) - In Los Angeles, Robert Rodriguez, who manages the FPA Capital and New Income funds, was poised to buy heavily when the market reopened after the attacks.
As stocks took their daily drubbings, he expanded his buy list from his usual one or two names to a dozen. On Friday, Sept. 21, the Dow shed another 300 points in a few hours of panicky trading. By day's end, Rodriguez had invested nearly all his cash; one of his firm's traders told him it was the busiest trading session of his 30-year career.
In the course of that week, Rodriguez had poured nearly $70 million into the market. Rodriguez sensed a particular weakness in the emerging view that the attacks would annihilate consumer spending.
|
|
|
Robert Rodriguez | |
"The American citizen is very resilient," he says.
In buying retail stocks like Charming Shoppes (CHRS: up $0.02 to $4.82, Research, Estimates) and Big Lots, he's betting that shoppers won't keep their wallets closed for long. Yet Rodriguez felt torn about what he was doing.
"I hate why we're getting these opportunities; it's unconscionable," he says with anger in his voice. "But we are professionals .... and it is our job to take advantage of emotionalism."
Ralph Wanger of the Chicago-based Liberty Acorn funds was also eyeing stocks that jittery investors were ditching.
"Everything to do with travel and leisure and theme parks and hotels and casinos is just getting mashed," says Wanger. "But I think once people get over their shock and sadness, a vacation might seem like a good idea."
So he added to holdings such as Shuffle Master (SHFL: down $0.20 to $11.80, Research, Estimates) , which supplies casinos with equipment for card games and software for slot machines. He also kept his 1.5 million shares in cruise line operator Carnival Corp., even though they lost 40 percent of their value when trading resumed on Sept. 17.
Mason Hawkins of the Longleaf Partners Funds was on vacation in France when he heard of the attacks. That evening, as Hawkins dined solemnly with his family at a sidewalk cafe, the locals at the nearby tables overheard them and spontaneously began raising their wineglasses and toasting the Hawkins family with shouts of "Vive l'Amérique!"
Instead of despairing over his immense stake in travel stocks like Hilton Hotels and Marriott International, which had up to 24 percent of their value blown away as soon as the market reopened, Hawkins became more optimistic than ever.
Hawkins bought again, making hotel stocks his single largest industry bet; they now make up 11 percent of his funds' $6.5 billion in assets. With no one likely to build new hotels for a while, explains Hawkins, "the threat of more supply has been removed."
Hawkins concedes that the fourth quarter will be "horrendous" for companies like Hilton and Marriott International. But, he adds placidly, "if you're potentially a 20-year owner, one quarter isn't material." 
|
|
|
|
|
 |
|
