Ken Heebner is a beloved fund manager.
CGM Focus Fund: Year to Date Performance
At this point, his famous CGM Focus Fund (CGMFX) has two types of investors:
- Group One: those who invested with him many years ago praise him as a savvy investor.
- Group Two: those who invested with him in the commodity boom of 2007 are praying that he can pull the fund out of drawdown hell.
Bloomberg reported today that “Heebner Buys Financials, Abandons Top Energy Stakes: The $7.4 billion CGM Focus has dropped 46 percent this year, lagging behind 99 percent of rival funds, according to Bloomberg data. The fund has been hurt by plunging prices of oil and commodities.”
In English, the fund is dumping the energy positions and betting big on specific financial companies and a couple of benefactors of the slowing economy to power future returns.
The Bloomberg article noted that, “Heebner had almost half of the firm’s portfolio in financial companies as of Sept. 30, Bloomberg data show. Wells Fargo is the largest holding owned by Capital Growth, while Citigroup and Bank of America rank third and fourth. . . . Petrobras is the firm’s second-biggest holding. Heebner also purchased shares of Wal-Mart Stores Inc. and McDonald’s Corp. in the quarter, as the companies drew cash- strapped customers looking for cheaper prices. Capital Growth bought 7.95 million shares of Wal-Mart, a new position, and 7.68 million shares of McDonald’s.”
Let’s take a look at the charts of his latest bets.
Citigroup Inc.
