(PUB) Morningstar FundInvestor

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First Eagle Soars While Columbia Value & Restructuring Takes a Sharp Turn The Contrarian | Russel Kinnel

Marie Eveillard was still at the helm in the 2008 and 2009 bear market, so these mini drops are valu- able tests to see if the new managers have the chops. Matt McLennan, Abhay Deshpande, and Kim- ball Brooker Jr. had the foresight to build cash to 23% in February so that the May-June decline didn’t hurt too much. Part of the fund’s defense is resources stocks such as PotashCorp POT and gold-mining stocks, and those defenses didn’t work as slowing Chinese growth has punished those stocks. The fund has impressed in rallies and in dips since Eveillard retired. Third Avenue did a much better job of explaining its plan for transition at Third Avenue Value TAVFX . Ian Lapey was named comanager in 2009 , and it was clear he would become the lead manager when Marty Whitman retired. So it was no surprise when he took over in 2012 . In addition, Lapey explained in advance that he would dial down the fund’s massive bet on Hong Kong real estate. As it so happened, he did just what he said he would do. The fund has performed well in its first year under Lapey, though I wouldn’t read too much into that. A new question, though, is what to make of the new comanagers named to this fund at the beginning of 2013 . Third Avenue said it wanted a team structure on all of its funds. Victor Cunningham, Yang Lie, and Michael Lehmann are now comanagers. Lehmann is a Third Avenue veteran who has been with the firm since 1998 . Lie has been with Third Avenue since 1996 . Cunningham joined in 2012 . Prior to that he had worked at his own firm, and before that he worked at Olstein Funds. It doesn’t appear that these latest additions have led to a big change in the strategy or portfolio, but it will bear watching. œ

Last year at this time, I looked at three funds in tran- sition, so I thought I’d take a second look now that the transitions are history. Today, we have greater clarity on where these funds are headed. Columbia Value & Restructuring UMBIX was going through the most dramatic change as longtime manager David Williams retired and handed the reins to growth-oriented Guy Pope, who ran Columbia Contrarian Core LCCAX . At first, Columbia said Pope would run the fund in a similar value style to Will- iams. Then the firm said the style would be something of a combination of the two strategies. Today, Co- lumbia has owned up to the fact that Pope has turned the fund into a clone of Contrarian Core. The funds are now more or less the same and, in fact, may merge. Pope has done a pretty good job in his growth strat- egy, but if you bought the fund to serve as your value anchor, it’s time to move on. Columbia has done a poor job of communicating these changes. That said, Pope’s record at Contrarian Core is pretty good. The fund has earned a Bronze rating and has performed well in Pope’s eight years at the helm. He employs a fast-trading contrarian growth strategy that features growth stalwarts like Apple AAPL and Google GOOG alongside slower-growth stocks like Philip Morris PM and Chevron CVX . First Eagle Global SGENX continues to earn inves- tors’ confidence as its enlightened conservatism has held up well amid the market meltdown. Jean-

Our Contrarian Approach I go against the grain to find overlooked funds that may be ready to rally.

Morningstar Analyst Rating

Morningstar Category

Morningstar Rating Overall

Total Ret % Rnk Cat1 Yr

Total Ret % Rank Cat 3 Yr

Total Ret % Rank Cat 5 Yr

Fund Name

P/E Ratio

Managers

First Eagle Global SGENX

World Allocation

14

4

1

16.04

Abhay Deshpande; Matthew B. McLennan; Kimball Brooker, Jr. Ian Lapey; Michael R. Lehmann; Victor Cunningham; Yang Lie Guy W. Pope; J. Nicholas Smith

•

QQQQQ

Third Avenue Value TAVFX

World Stock

30

76

57

9.10

•

QQ

Columbia Value and Restructuring UMBIX

Large Blend

14

68

92

17.34

‰

QQ

Data as of July 31, 2013.