AFTER the market plummeted last September, Edwin Walczak, like many other value managers, jumped on the opportunity to buy many stocks that he’d had his eye on – and were finally within his price range.
But since the markets have rallied 20 percent since their lows of Sept. 21, Walczak isn’t buying anymore.
“We got Disney at $15 and sold half our position when it got to $22,” he said. “We bought Interpublic Group in September but sold it in December because the stock ran up so much.”
Now, even as other Wall Street insiders insist the markets are entering a new bull market, Walczak, a strict value manager in the style of Warren Buffett, remains cautious.
He’s sticking with the stocks that are already in his no-load portfolio, the Vontobel U.S. Value fund, and monitoring them closely with the intent to sell as they near his predetermined price targets.
Some of his top holdings are in the financial services sector. He likes stocks like Berkshire Hathaway, Fannie Mae and Freddie Mac.
The fund has a huge position – almost two-thirds of the $120 million in assets under management – in insurance stocks.
“I see a positive for the major players, with strong performance after the initial World Trade Center shock, as weaker ones go out of business, followed by tremendously increased pricing. The market has already started moving up.”
Some of Walczak’s favorite insurance holdings include Chubb, American International Group, Ace, IPC Holdings and UNUM.
“Because of our value orientation and our bottom-up stock-picking approach, the fund has always had a bias towards insurance and financials and consumer non-durables,” Walczak said. “We’ve never had much tech or telecom or energy.”
Like another famed value manager, Mario Gabelli, Walczak does like the media stocks, insisting that they are not properly valued by the market.
Some of his top media holdings are Gannett, Knight Ridder and Disney. He believes Disney is approaching fair value, and has been trimming back on the fund’s position in that stock.
Walczak’s approach is clearly working. Last year, as the markets tumbled, he put up a gain of 2.98 percent. In 2000, another bad year for the markets, Vontobel U.S. Value gained 35.18 percent.
Fund at a glance
Name Vontobel U.S. Value
Portfolio manager Edwin Walczak
Top holdings
Berkshire Hathaway
Fannie Mae
Freddie Mac
Gains
2001: 2.98
2000: 35.18
Fees
Load: None
Expense: 1.46%
Minimum investment
$1,000
Phone 800-527-9500
Web site http://www.vontobelfunds.com