Street Stories: Managed Futures
John Neff of the Windsor Fund, Wellington Management profiled at StreetStories
Market Wizards Index: +14.3%
Compound annual over 24 years
Fund or affiliation
Windsor Fund, Wellington Management
Methodology
Value investing with a stress on dividend income.
Research Techniques Employed
Neff has access to the analysts in his parent company, Wellington Management.
Although Neff doesnt ordinarily visit companies, he talks to them at length.
Trading/ Valuation Techniques Employed
Only buys when a stock is too cheap and acting badly at that moment in the market. Infallibly sells when it is too expensive and acting strongly in the market.
Tolerates portfolio concentration in industry groups.
Average holding is 1/3 lower than market P/E, and with dividend yield 2% higher.
( Growth Rate + Dividend Yield ) / PER = "What you get for what you pay"
Philosophy and beliefs
Insistence on income: people overpay for growth.
Growth stocks suffer from high mortality.
Often can get better total return from slower growth companies paying high dividend.
History and other facts
Choice of money managers themselves to manage their own money.
Windsor (in 1988) has become one of the largest equity and income fund in USA.
In 1980, U. Penn asked Neff to manage its endowment.
Issues "Report Card" on his transactions.
Part of the pay package of Neff and his team is an incentive fee.
Examples
Went 25% of assets into oil stocks after collapse of OPEC in 1986.
Bought Ford heavily in early 1984 at under $14, 3 years later Ford reached $50.
Performance Record
14.3% over 24 years: "Neff has run the Windsor Fund for 24 years. Through 1988 it had a compound annual return of 14.3% versus S&Ps 9.4% over the same period".
