FPA’s Rodriguez Flouts ‘Small Mind’ Investor Rules to Top Funds
Robert Rodriguez ignores most rules of the mutual-fund industry, an approach that’s helped him beat all rival managers over the past 25 years.
Rodriguez, who runs the $1.1 billion FPA Capital Fund, puts most of his money into two or three industries at a time, has stopped taking new investors for 12 of the past 14 years and has held as much as 46 percent of assets in cash. His 15 percent average annual return since 1984 is best among diversified
“His approach is at odds with how the mutual-fund industry runs its money,” Christopher Davis, an analyst with
The 60-year-old says he looks for companies with a market value of $1 billion to $4 billion that sell at what he considers bargain prices, and holds cash if he can’t find enough stocks that meet his criteria. That strategy helped Rodriguez limit losses from the technology stock bubble in 2000 and the credit crisis that started in 2007.
Since 1998, the fund has had an average cash position of about 30 percent. Stock mutual funds hold an average of 4.3 percent.
“People told me, ‘You are not paid to manage cash,’ ” he said in a telephone interview from his home in Zephyr Cove,
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As a student at the
“He called diversification the hobgoblin of small minds with little confidence,” Rodriguez said.
Rodriguez has criticized rival fund managers for selling products based on marketing considerations instead of investment opportunities. Rather than attract more money than he’s comfortable investing, Rodriguez said he keeps the fund closed to new investors.
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Rodriguez says he hasn’t bought a single stock since March, anticipating that equity markets may take as long as a decade to reach the previous highs.
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Rodriguez will begin a one-year sabbatical in January that had been planned since 2003. FPA Capital will be run by Dennis Bryan and Rikard Ekstrand during that period, both of whom are portfolio managers on the fund. Rodriguez said he will keep his money in FPA’s funds.
In his year off, Rodriguez plans to travel and read books, including “Democracy in
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Related previous post: FPA Capital Fund Letter to Shareholders which includes the Final Fund Commentary from Robert Rodriguez
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