Monthly Archives: February 2010

By Sam Mamudi (WSJ)

One of the leading value-stock investors of the late 1990s is returning to mutual funds.

David Marcus, who co-managed many of Franklin Resources Inc’s Mutual Series funds, has launched his own funds, which will use a go-anywhere approach, mixing bonds and stocks and using short-selling strategies when appropriate.

Mr. Marcus, 44 years old, said that with the fund industry moving toward narrower offerings, his funds should have a broad appeal.

“I really believe you can take care of the man in the street and the pension fund and everyone in-between,” he said, adding that he wanted to “offer investors something they’re not getting.”

Mr. Marcus’s new firm, Evermore Global Advisors, has launched two mutual funds, Evermore Global Value Fund (ticker symbol: EVGBX) and Evermore European Value Fund (EVEAX). Each fund will hold about 40 securities, he said, and hold onto them for a number of years. The typical holding period will be two to four years, and sometimes longer.

Mr. Marcus’s former boss at Mutual Series, Michael Price, is on Evermore’s advisory board, along with former Securities and Exchange Commission Chairman Harvey Pitt and Michael Lipper, founder of the Lipper fund-research firm.

“They’re not involved in managing the funds, but believe me, we seek their advice on many issues,” Mr. Marcus said.

Mr. Marcus was at Mutual Series from 1987 to early 2000, and was schooled in value investing by Mr. Price. By the time he left he was manager or co-manger of three Mutual Series funds, and oversaw more than $14 billion in assets.

In the following decade, Mr. Marcus founded and ran two hedge funds, and also started a family office to oversee the affairs of Sweden’s Stenbeck family.

His return to mutual funds comes at a time that several hedge-fund operators are also opening mutual funds. AQR Capital Management LLC debuted its seventh mutual fund in January. Last year, Legg Mason Inc.’s Permal Group, which provides funds-of-hedge-funds, set up a mutual fund.

Mutual Series, founded in 1949 by Max Heine, has grown to an eight-mutual-fund roster with more than $50 billion under management. Franklin bought it in 1996. The Mutual Series funds have been pivotal in establishing the strategy known as deep value investing. Managers using this approach often buy stocks that are facing peril and so are priced cheaply.

In keeping with his Mutual Series roots, Mr. Marcus said he’ll invest in securities that are priced cheaply but which have a catalyst—a reason for believing their stock price will soon rise. As an example he pointed to his investment in Bollore, led by French financier Vincent Bollore. Among its holdings, the firm has stakes in ports, railways and media companies across the globe. Mr. Marcus estimates its stock is trading at 45% discount to the value of its assets.