Newspaper article St Louis Post-Dispatch (MO)

Funds of Investor Michael Price Deserve Close Look

Newspaper article St Louis Post-Dispatch (MO)

Funds of Investor Michael Price Deserve Close Look

Article excerpt

On Oct. 31, Franklin Templeton became the official owner of Heine Securities, which Franklin agreed to buy from value investor Michael Price last July.

That means investors must now pay a sales charge of up to 4.5 percent to invest in the Mutual Series funds. Are the funds worth the load? Probably so, at least long term.

One reason: performance. During the last decade, Price, 44, has cemented his reputation as one of the great value investors of his generation. His flagship fund, Mutual Shares (800-448-3863; $1,000 minimum investment; 4.5 percent load), has delivered 14.5 percent annual gains over the past decade. Two similar funds, Mutual Beacon and Mutual Qualified, for tax-deferred retirement accounts, have provided even better returns during that time. The kicker: The funds have been only about half as volatile as the typical equity fund. In 1993, Price launched Mutual Discovery, which buys smaller company stocks. It has gained roughly 19 percent annually in the last three years and has been about 40 percent as volatile as the typical small company stock fund. A new fund, Mutual European, has generated high expectations among fund trackers, who point out that many of Price's best picks in recent years have come from abroad. The funds' records reflect Price's almost-unique investment style, which calls for an eclectic mix of securities. About half of each fund's portfolio is devoted to conventional "value" stocks. They include shares of companies that have delivered disappointing earnings or suffered other setbacks, causing their shares to decline to prices that do not reflect their true long-term potential. Price also invests a slug of the portfolios in "deal" stocks - shares of companies involved in mergers, reorganizations, bankruptcies and other transactions. His mentor, Max Heine, was an early investor in securities of bankrupt companies, fishing out value in corners that didn't interest most analysts. While such securities can be risky, they typically don't move in concert with the overall stock market. Thus, they tend to hold up better than most stocks in a broad market downturn. …

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