Joel Tillinghast Finds Big Returns in Small Stocks

[Ballinvarosig Investors]

http://www.barrons.com/articles/joel-tillinghast-finds-big-returns-in-small-stocks-1502511285?mod=bol-social-tw

 

If you're a traditional value guy, then you'll really enjoy this article. For once, one of the good guys is knocking it out of the park!

[JayGatsby]

Thanks for sharing. The twitter link here should work for those without Barron's:

[Guest]

Knocking it out the park is beating the S&P 500 by about half a percent over the past 10 years? Though most value managers have gotten killed the past ten years so actually beating it is good. Yes, I realize he has a large international allocation but that was still his choice to do so.  For a mutual fund manager, he is quite solid though.

 

I do wonder how Regulation FD affected Fidelity. Back in the day, they were the largest fund manager. They were the biggest and had a ton of access to companies (they still have a lot of access). But with Regulation FD, they don't have that early window disappeared. Now they're third (Vanguard is taking market share away all the time).

 

[Jurgis]

Good article. I liked that his answers were more nuanced than index-and-FANG-bashing common by some. He gave a non answer about his selling discipline though (or perhaps there were pieces cut out).

 

Some of his ideas might be attractive for people with access to the markets he mentioned and willing to do DD there.

 

I'll put his book into my Amazon list and might buy it at some point.

[Foreign Tuffett]

Quote from the article: "The fund currently owns 889 stocks, and Tillinghast could tell you about every one of them."

 

How much could he possibly know about each company with that many positions? Just think about trying to follow just the quarterly or biannual regulatory filings for that many positions.

 

He is either a Walter Schloss-type value investor (aka mostly quantitative), or has a small army of analysts and portfolio managers doing most of the heavy lifting. Probably both. 

[KCLarkin]

has a small army of analysts and portfolio managers doing most of the heavy lifting. Probably both.

 

Too lazy too look it up but I'm pretty sure he explicitly mentions his small army of analysts as the reason he didn't jump to a hedge fund.

[Scuttlebutt Plunger]

Excited to read his book

[Guest longinvestor]

Knocking it out the park is beating the S&P 500 by about half a percent over the past 10 years? Though most value managers have gotten killed the past ten years so actually beating it is good. Yes, I realize he has a large international allocation but that was still his choice to do so.  For a mutual fund manager, he is quite solid though.

 

I do wonder how Regulation FD affected Fidelity. Back in the day, they were the largest fund manager. They were the biggest and had a ton of access to companies (they still have a lot of access). But with Regulation FD, they don't have that early window disappeared. Now they're third (Vanguard is taking market share away all the time).

 

..For a mutual fund manager, he's good.

 

+1

 

I don't have any money now but FLPSX was in my 401K portfolio across three jobs over 15 years. What I remember about him was that he shunned all publicity, never gave interviews etc.

 

Now, that said, I've often scratched the head over the Morningstar reported performance of FLPSX. Best I remember, they were reporting 12 to 15% ish during my holding period, 1990 - 2010. If that were the case, my 401k balance at the end of it should 've been far, far larger. I always held giant positions in FLPSX, so it didn't add up. So much for Morningstar reports. Or my deductions must have bought at the worst possible prices for over 15 years ;) Could have been the weight of fees as well, reported performance notwithstanding. I've shunned mutual funds with fees >0.2% mainly because of funds like FLPSX. It would have been far worse with the other 10,000 mutual funds out there. This is a lesson tattooed on me. Just a giant shame that trillions of retirement savings since the dawn of the 401k type vehicles have been so weighed down. The role played by Morningstar in this obfuscation is very large and insidious. I have one simple conclusion, they work for them, not me.

 

 

 

[Scudbucket]

...For a mutual fund manager, he is quite solid though.

 

I hear/read this sentiment about mutual funds a lot.  What are you comparing MFs to in order to have this opinion - hedge funds, SMAs?  Where's the evidence that MFs have done worse than their active counterparts?  Everything I've seen suggests MFs have crushed HF returns in recent years.

 

Also, what he has done with the amount of assets he manages is nothing short of incredible.  Managing a personal portfolio of a couple hundred thousand doesn't even begin to compare with a 40 Act, let alone a multi-billion 40 Act.

[Guest]

...For a mutual fund manager, he is quite solid though.

 

I hear/read this sentiment about mutual funds a lot.  What are you comparing MFs to in order to have this opinion - hedge funds, SMAs?  Where's the evidence that MFs have done worse than their active counterparts?  Everything I've seen suggests MFs have crushed HF returns in recent years.

 

Also, what he has done with the amount of assets he manages is nothing short of incredible.  Managing a personal portfolio of a couple hundred thousand doesn't even begin to compare with a 40 Act, let alone a multi-billion 40 Act.

 

Well, for one you almost never see a mutual fund (non sector specific) manager out perform by more than 1-2% over a decade vs the market (the elites, like SEQUX) have done about 4% annually but even that has trailed over the past decade).

 

You do see that in hedge funds. There are quite a few hedge funds that have done better than 4% annually.

 

For others interested in Tillinghast:

 

https://www.youtube.com/watch?v=uAINC-3dcig

 

[DooDiligence]

"Buy & hold an ETF & you're taking a slice of ignorance." (paraphrased)

 

(Holy crap, what a concept.)

 

 

For others interested in Tillinghast:

 

https://www.youtube.com/watch?v=uAINC-3dcig

 

"Tried to stick to philosophy but wound up creating index funds because..." (paraphrased)

(Looked like he wanted to cry & rightfully so. Seems like a great guy.)

 

---

 

"Fidelity needs to produce research at a lower cost" (again, paraphrased)

"Strategy on this is above my pay grade"

 

(Distribution costs should be negligible so where do you cut after you cut your revs with $4.95 trades?)

(Lower pay for non-2nd level thinkers?)

[eclecticvalue]

Yeah, I noticed he was sad but I don't think on the verge of crying. I think he feeling what other value investors are feeling that there aren't many opportunities today and the markets are changing.

[wescobrk]

I don't understand the part that he has to buy stocks that are less than $35 a share. Seems very arbitrary. I guess that means he can't buy Berkshire if it falls below book like in 2000. Maybe he could outperform more if he didn't have so many restrictions.

That being said, I read his book and I enjoyed it. Nothing groundbreaking in it. I thought it was a good read, though.

[cubsfan]

...For a mutual fund manager, he is quite solid though.

 

I hear/read this sentiment about mutual funds a lot.  What are you comparing MFs to in order to have this opinion - hedge funds, SMAs?  Where's the evidence that MFs have done worse than their active counterparts?  Everything I've seen suggests MFs have crushed HF returns in recent years.

 

Also, what he has done with the amount of assets he manages is nothing short of incredible.  Managing a personal portfolio of a couple hundred thousand doesn't even begin to compare with a 40 Act, let alone a multi-billion 40 Act.

 

Well, for one you almost never see a mutual fund (non sector specific) manager out perform by more than 1-2% over a decade vs the market (the elites, like SEQUX) have done about 4% annually but even that has trailed over the past decade).

 

You do see that in hedge funds. There are quite a few hedge funds that have done better than 4% annually.

 

For others interested in Tillinghast:

 

https://www.youtube.com/watch?v=uAINC-3dcig

 

Thanks for posting the interview. He's brilliant.

 

 

[Guest]

One of the few big stars left is now retiring in 2023:

 

https://www.wsj.com/articles/fidelity-star-stock-picker-joel-tillinghast-to-retire-from-investing-in-2023-11637074800#:~:text=Joel Tillinghast%2C one of Fidelity,from investing in two years.&text=In late 2023%2C the 63,Sam Chamovitz and Morgen Peck.