From Reuters: Active Trader PM
07/23 11:06A (RT) Investor Profile: Ira who? Fund investor quietly crushes rivals
By James Paton
NEW YORK, July 23 (Reuters) - Peter Lynch never suffered a
losing year as skipper of the Fidelity Magellan fund from 1977
to 1990. Legg Mason's Bill Miller is the only one who has
beaten the Standard & Poor's 500 index for 11 straight years.
Their stellar investment records have turned them into
industry legends and media celebrities over the years. But
ignoring the wisdom of the sages, a relative unknown has pulled
off a star-worthy feat of his own in the toughest stock market
in years.
Ira Unschuld, manager of the Schroder Ultra Fund <SMCFX.O>,
has returned more than 90 percent a year, on average, over the
last three years, at a time when nearly everyone in the stock
fund universe has nursed huge losses.
His Schroder Ultra is the top gainer in the fund universe
over that rocky period. What makes it more remarkable is the
fact that no one else is even close and that he's done it by
ignoring all the traditional rules of patient investing.
Unschuld has made bundles of money by shunning the
traditional buy-and-hold mantra that has burned so many
investors recently. He is unabashed about trading often,
quickly locking in profits after a winning stock has risen, and
bailing right away when the losers seem poised for more
bloodshed.
"One of the worst things you can do is not take profits
because you don't want to pay taxes, and wait and wait and wait
and suddenly see your profits go away," Unschuld said in a
telephone interview. "Or the other thing you can do is not cut
your losses fast enough, and hope your stocks come back."
Take farm and ranch store chain Tractor Supply <TSCO.O>.
The fund's biggest holding at the end of April, according to
the latest regulatory filing, the company is no longer among
his top 10 positions, he said. The stock rose 62 percent in the
first four months of the year, hitting $55.15 on April 30. It
kept climbing after April, but then dipped in recent days.
Unschuld, who is based in New York, is "glued to the
screens" when the stock market is open and "trades
frenetically," almost like a day trader, according to Bridget
Hughes, an analyst at research firm Morningstar Inc. As a
result, Schroder Ultra shareholders are hit with hefty tax
bills at the end of the day. Funds must divvy up among
investors their capital gains, or profits from selling stocks.
Investors then are taxed on those gains, even if they don't
unload their shares.
Still, even his after-tax return of 65 percent a year over
the last three years is miles better than his rivals, according
to Morningstar. The next best stock fund that is not confined
to a specific sector, the Turner Micro Cap Growth Fund, is up
28 percent annually in those years.
Investors, though, probably are not familiar with Unschuld.
The 37-year-old manager won't go on television talk shows to
tout himself, his spokeswoman said, and he is reluctant to
reveal his stock-picking secrets, doing few interviews and
providing scant details to analysts who follow the fund.
"Unfortunately he's pretty tight-lipped," said Hughes, the
Morningstar analyst who talks to him regularly.
Investors who want a piece of the action will be
disappointed, though. The fund shut its doors to new investors
in late 1998 to try to stay nimble in the small-cap market.
Remaining small has helped keep returns at lofty levels.
GOING SHORT
In the midst of a miserable market, it is worth taking a
close look at what the skipper of the $240 million portfolio is
up to. Unschuld, who got his feet wet working at Boston mutual
fund giant Fidelity Investments while earning a business degree
at The Wharton School, has quietly racked up returns that have
made him the envy of the mutual fund world.
Trading in the fast lane has helped, but other tactics have
served him well, too. Like a hedge fund, Ultra shelters itself
from market declines by shorting stocks, in effect placing a
bet they will fall. He also has found smaller, more mundane
companies that have been overlooked by Wall Street.
Industrial products maker Actuant <ATU.N>, truckload
carrier P.A.M. Transportation Services <PTSI.O> and fabric
retailer Hancock Fabrics <HKF.N> were among his biggest
holdings and more obscure stocks fueling the fund's performance
so far this year, according to filings.
Unschuld does not advertise the companies he has taken
short positions in. In short selling, fund managers, often
running hedge funds, profit from stock declines by borrowing a
stock from a broker, selling it, and then hoping to buy it back
later at a lower price.
Unschuld does not like to talk about that part of his game,
saying only that most of his returns have come from stock
gains, not losses.
It is, of course, premature to mention Unschuld in the same
breath as Lynch, Miller or Mario Gabelli, the prominent "value"
fund manager who has long impressed investors with his knack
for finding undervalued stocks. Unschuld only has steered the
fund since its October 1997 inception. The others have been
doing it with big funds, and for decades that span bull and
bear markets, not just a few years.
Still, he is making a splash in the industry.
Other funds have posted big gains in the bear market, but
most are gold, country-specific or bear funds, which are
designed to prosper when stocks fall. Often those funds
struggle when the market soars. But Unschuld also thrived in
good times, rising 63 percent in 1998 and 95 percent in 1999.
Hungry investors on Morningstar's online discussion board
have taken notice, posting messages offering to pay others for
shares of the Ultra fund, and even fork over a premium, since
the portfolio will not accept new cash.
They also have clamored for more information about the
largely unknown manager, who also oversees the $48 million
Schroder U.S. Smaller Companies Fund, which has delivered
sizable gains during the bear market, but has lost its step
this year, down 17 percent.
"Even if we did get an interview with him, we probably
wouldn't learn much," one investor, calling himself AWalker,
said in a message in early May.
"If I had such a good thing going like Unschuld does," the
investor said, "I would probably keep it to myself too."
((--James Paton, U.S. Fund Desk, 646-223-6134--))
REUTERS
Rtr 11:06 07-23-02
Additional Codes ( I/STX, I/NEWS)
07/23 11:06A (RT) Investor Profile: Ira who? Fund investor quietly crushes rivals
By James Paton
NEW YORK, July 23 (Reuters) - Peter Lynch never suffered a
losing year as skipper of the Fidelity Magellan fund from 1977
to 1990. Legg Mason's Bill Miller is the only one who has
beaten the Standard & Poor's 500 index for 11 straight years.
Their stellar investment records have turned them into
industry legends and media celebrities over the years. But
ignoring the wisdom of the sages, a relative unknown has pulled
off a star-worthy feat of his own in the toughest stock market
in years.
Ira Unschuld, manager of the Schroder Ultra Fund <SMCFX.O>,
has returned more than 90 percent a year, on average, over the
last three years, at a time when nearly everyone in the stock
fund universe has nursed huge losses.
His Schroder Ultra is the top gainer in the fund universe
over that rocky period. What makes it more remarkable is the
fact that no one else is even close and that he's done it by
ignoring all the traditional rules of patient investing.
Unschuld has made bundles of money by shunning the
traditional buy-and-hold mantra that has burned so many
investors recently. He is unabashed about trading often,
quickly locking in profits after a winning stock has risen, and
bailing right away when the losers seem poised for more
bloodshed.
"One of the worst things you can do is not take profits
because you don't want to pay taxes, and wait and wait and wait
and suddenly see your profits go away," Unschuld said in a
telephone interview. "Or the other thing you can do is not cut
your losses fast enough, and hope your stocks come back."
Take farm and ranch store chain Tractor Supply <TSCO.O>.
The fund's biggest holding at the end of April, according to
the latest regulatory filing, the company is no longer among
his top 10 positions, he said. The stock rose 62 percent in the
first four months of the year, hitting $55.15 on April 30. It
kept climbing after April, but then dipped in recent days.
Unschuld, who is based in New York, is "glued to the
screens" when the stock market is open and "trades
frenetically," almost like a day trader, according to Bridget
Hughes, an analyst at research firm Morningstar Inc. As a
result, Schroder Ultra shareholders are hit with hefty tax
bills at the end of the day. Funds must divvy up among
investors their capital gains, or profits from selling stocks.
Investors then are taxed on those gains, even if they don't
unload their shares.
Still, even his after-tax return of 65 percent a year over
the last three years is miles better than his rivals, according
to Morningstar. The next best stock fund that is not confined
to a specific sector, the Turner Micro Cap Growth Fund, is up
28 percent annually in those years.
Investors, though, probably are not familiar with Unschuld.
The 37-year-old manager won't go on television talk shows to
tout himself, his spokeswoman said, and he is reluctant to
reveal his stock-picking secrets, doing few interviews and
providing scant details to analysts who follow the fund.
"Unfortunately he's pretty tight-lipped," said Hughes, the
Morningstar analyst who talks to him regularly.
Investors who want a piece of the action will be
disappointed, though. The fund shut its doors to new investors
in late 1998 to try to stay nimble in the small-cap market.
Remaining small has helped keep returns at lofty levels.
GOING SHORT
In the midst of a miserable market, it is worth taking a
close look at what the skipper of the $240 million portfolio is
up to. Unschuld, who got his feet wet working at Boston mutual
fund giant Fidelity Investments while earning a business degree
at The Wharton School, has quietly racked up returns that have
made him the envy of the mutual fund world.
Trading in the fast lane has helped, but other tactics have
served him well, too. Like a hedge fund, Ultra shelters itself
from market declines by shorting stocks, in effect placing a
bet they will fall. He also has found smaller, more mundane
companies that have been overlooked by Wall Street.
Industrial products maker Actuant <ATU.N>, truckload
carrier P.A.M. Transportation Services <PTSI.O> and fabric
retailer Hancock Fabrics <HKF.N> were among his biggest
holdings and more obscure stocks fueling the fund's performance
so far this year, according to filings.
Unschuld does not advertise the companies he has taken
short positions in. In short selling, fund managers, often
running hedge funds, profit from stock declines by borrowing a
stock from a broker, selling it, and then hoping to buy it back
later at a lower price.
Unschuld does not like to talk about that part of his game,
saying only that most of his returns have come from stock
gains, not losses.
It is, of course, premature to mention Unschuld in the same
breath as Lynch, Miller or Mario Gabelli, the prominent "value"
fund manager who has long impressed investors with his knack
for finding undervalued stocks. Unschuld only has steered the
fund since its October 1997 inception. The others have been
doing it with big funds, and for decades that span bull and
bear markets, not just a few years.
Still, he is making a splash in the industry.
Other funds have posted big gains in the bear market, but
most are gold, country-specific or bear funds, which are
designed to prosper when stocks fall. Often those funds
struggle when the market soars. But Unschuld also thrived in
good times, rising 63 percent in 1998 and 95 percent in 1999.
Hungry investors on Morningstar's online discussion board
have taken notice, posting messages offering to pay others for
shares of the Ultra fund, and even fork over a premium, since
the portfolio will not accept new cash.
They also have clamored for more information about the
largely unknown manager, who also oversees the $48 million
Schroder U.S. Smaller Companies Fund, which has delivered
sizable gains during the bear market, but has lost its step
this year, down 17 percent.
"Even if we did get an interview with him, we probably
wouldn't learn much," one investor, calling himself AWalker,
said in a message in early May.
"If I had such a good thing going like Unschuld does," the
investor said, "I would probably keep it to myself too."
((--James Paton, U.S. Fund Desk, 646-223-6134--))
REUTERS
Rtr 11:06 07-23-02
Additional Codes ( I/STX, I/NEWS)