Better Know a Fund Manager

Welcome, Fools, to part seven of our several-thousand-part series, "Better Know a Fund Manager," which is loosely, but not too loosely, based on Stephen Colbert's "Better Know a District" from The Colbert Report.

Like Stephen and his thorough investigations into America's congressional districts, each week I take a look at a fund you may want to own. What's on tap this week?

Weitz Value (WVALX)

Expense ratio

1.12%

Fund size

$2.79 billion in assets

1-year return

4.7%

5-year return

3.8%

10-year return

13.4%

Sources: Weitz Funds

Meet Wally Weitz
The fightin' team at Weitz Value is led by the firm's namesake, Wally Weitz, who is also sometimes known as the "other Oracle of Omaha" for his geographic proximity to legendary investor Warren Buffett. Both men operate out of Omaha, Neb.

But does he deserve to be mentioned in the same breath as Buffett? Well, why not? Over the past 10 years, Weitz Value has trounced the S&P by more than 5% on average. And its sister fund, Weitz Partners Value (FUND: WPVLX  ) , which is also managed by Weitz, is up on the S&P 500 by even more.

Still, neither fund measures up to Weitz's personal investment in Berkshire Hathaway (NYSE: BRKa  ) (NYSE: BRKb  ) . He purchased A-class shares for $270 a stub in 1979. Today, they trade for -- wait for it -- $90,450 a share. That's a 335-bagger, and a 24% annual return over 27 years. Take that, Wall Street.

How he invests
Of course, growth huggers are likely to point out that Weitz has had it rough lately. From January of 2005 through May, Weitz Value had lost 0.5% versus a 10.8% return for the S&P 500. And that's led to huge redemptions. Impatient investors have withdrawn $1.5 billion from Weitz Value, according to a recent article in Forbes.

That's the price of being a value investor. As Weitz told Forbes, "It is impossible to earn above-average returns without being willing to be out of step with the market from time to time." As if Wall Street's stockinistas care. While they're loading up on speculative positions in Google and Sirius Satellite Radio, Weitz has been buying CBS (NYSE: CBS  ) and disgraced insurer American International Group (NYSE: AIG  ) .

But he, too, is capable of delivering the zazz. Weitz Value had at least one options position as of March 31 -- a covered call of its 3 million shares of Expedia (Nasdaq: EXPE  ) at $25 per stub. The options paid a premium of $515,000, which, since the contracts expired in April, is pure income.

Is this fund for you?
Should you become a part of Wally's world? I think so. After all, he's a bridge player. All great investors are bridge players, right? Plus, like Peter Lynch before him, Weitz has played bridge with Buffett. (Indeed, that's how the two met.)

But there's more to Weitz than bridge, of course. He sticks it to the market by purchasing shares in companies that are trading at a discount to their intrinsic value. What's more, Weitz has a policy of investing all profit-sharing and pension-plan assets in the firm's funds. And all of the firm's managers have a majority of their liquid net worth -- that is, cash and securities -- invested in the Weitz portfolio.

Still, there's plenty of risk involved when you zig while others zag, as Weitz does. He's much more likely to buy when times are really bad than really good. And he does; his significant position in troubled theme-park operator Six Flags (NYSE: SIX  ) could drop all the way into bankruptcy, leading to more subpar returns. You've been warned.

And that's this week's profile. See you back here next Thursday, fund nation. Good night.

Think you can't beat the market with funds? Think again! The selections in Shannon Zimmerman's Motley Fool Champion Funds portfolio are up an average of 17% versus just 7% for their comparable benchmarks. Ask us for an all-access pass to get an unfettered look at all of Shannon's picks, manager interviews, and model portfolios. Go ahead; it's free for 30 days, and there's no obligation to buy.

Fool contributor Tim Beyers is a regular viewer of The Colbert Report. (Stay the course.) Tim owns shares of Berkshire Hathaway. You can find out what else is in Tim's portfolio by checking his Fool profile. The Motley Fool has an ironclad disclosure policy.


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