Editor's note: In the original version of this article, Kinetics Paradigm managers Peter Doyle and Murray Stahl were misidentified. The Fool regrets the error.
Welcome, Fools, to part 40 of our several-thousand-part series, "Better Know a Stock Picker," 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?
|
Kinetics Paradigm (WWNPX) | |
|---|---|
|
Expense ratio |
1.63% |
|
Fund size |
$2.1 bil. |
|
1-year return |
16.41% |
|
5-year return |
20.22% |
|
10-year return |
N/A |
Top 5 holdings
|
Company |
% of Assets |
|---|---|
|
Brookfield Asset Man. (NYSE:BAM) |
3.06% |
|
NYSE Group (NYSE:NYX) |
2.61% |
|
Hong Kong Exchange |
2.51% |
|
Forest City Ent. (NYSE:FCE-A) |
2.26% |
|
Goldman Sachs (NYSE:GS) |
2.21% |
Meet Peter Doyle and Murray Stahl
The fightin' team at Kinetics Paradigm is led by Peter Doyle and Murray Stahl. Together, they've managed 15% annual returns since Paradigm opened its doors on -- get this -- December 31, 1999. That's right, Fool; Kinetics Paradigm was founded at the height of the tech bubble.
But the story gets better. According to Morningstar, Paradigm has outpaced its category peers by more than 7% over the last three- and five-year periods. And it's been a double-digit winner versus the S&P 500 as well. Eat that, Wall Street.
How they invest
Doyle and Stahl deserve at least that much respect. The fast-moving Paradigm -- run from offices in Sleepy Hollow, N.Y., ironically enough -- was tarred when its cousin, the Kinetics Internet Fund (WWWFX), suffered as the bubble burst.
Not surprisingly, the investapo have since been proven wrong. The Internet Fund has returned 18.7% annually, versus 6.7% for the Nasdaq, since opening for business in October 1996. As Doyle told BusinessWeek recently, "We have the reputation of being technology investors, but that is not who we are. We have done so many things right."
I'll say. Consider NYSE Group. Paradigm calls this Motley Fool Rule Breakers pick its second-largest holding, and it remains bullish on its prospects. From the latest quarterly commentary penned by the team:
The world's various financial exchanges ... are still, in our opinion, largely misunderstood. The typical financial analyst discusses market share rather than volume processed, and he/she believes that new trading platforms will lower fees instead of expanding the entire market. The NYSE and NASDAQ are allegedly engaged in a bitter competitive fight; however, both have recently instituted fee increases.
In other words: The NYSE, already a misunderstood multibagger, is as much of a Rule Breaker today as it ever was. Doyle and Stahl seem to relish the opportunity that brings.
Is this fund for you?
Could Doyle and Stahl collectively rival the returns of Peter Lynch? They're at least within spitting distance. Few other investors not named Buffett have ever sustained a record of 20% average returns.
What's more, with Paradigm, Doyle and Stahl have adopted the sort of all-cap flexibility that helped Lynch pummel the S&P during his tenure. Investors should expect them to mirror Lynch in unabashedly investing in their best ideas.
Frankly, there's only one thing keeping me from giving Paradigm a superstantial recommendation: its price tag. Paradigm charges 1.63% annually, a princely sum for a fund with more than $2 billion under management. I'd wait for a better deal before investing.
Don't let that discourage you, Fools. Paradigm is one of dozens of winners available to shrewd investors, many of which inhabit Shannon Zimmerman's Motley Fool Champion Funds portfolio. One, from the May 2004 issue, is up on its benchmark by more than 40%. Want details? Click here to get 30 days of free access to Champion Funds.
And that's today's profile. See you back here next week, fund nation. Good night.
For more Foolish coverage of the growth stock gurus:
- Focus on fast movers with Joe Reiland.
- Harry Lange is leading Lynch's Magellan to new growth.
- Glenn Fogle has a need for speed.
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 35% vs. just 22% for their comparable benchmarks. Ask us for an all-access 30-day pass to get an unfettered look at all of Shannon's picks, manager interviews, and model portfolios.
Fool contributor Tim Beyers, ranked 3,324 out of more than 27,400 in our Motley Fool CAPS investor intelligence database, is a regular viewer of The Colbert Report. (Stay the course.) Tim didn't own shares in any of the companies mentioned in this article at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on mutual funds, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy is always championship caliber.
