Monday, May 23, 2011

Cognac, Yogurt, and Gold? PIMCO's stock fund strategy

Pimco, the world's largest bond fund, headed by Bill Gross, is now moving into equities.  According to the May 23rd issue of Fortune (pg 57-58), "Money-management powerhouse Pimco has long been renowned for its experience in bonds.  Equities, not so much.  So when the firm announced in late 2009 that it was moving into stock picking, it scoured the globe for talent.  Its first draft choices were Anne Gudefin, a veteran value investor, and Charles Lahr, partners who jointly ran the $16 billion Mutual Global Discovery mutual fund."

The story also ran on CNN money website and Yahoo Finance.  Anne is now bullish on gold, yogurt, and cognac!  This somewhat unorthodox strategy can be read about in detail here:

I am posting this because from an intellectual standpoint, I can respect "value investing."  However, if Anne had been a silver squirrel over the last five years her annual returns would have been more like 25% than the 7% she made for MGD fund! 

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