Famous Value Investor Closing Up Shop as Value-Funds Struggle

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David J. Winters

Value investors such as Warren Buffet have had a long-lasting track record going back for decades, something that few others can boast. But despite his success, not all value investors have had the same success.

The once highly regarded value investor David J. Winters is shutting down his fund, an unfortunate case of a manager who had great success earlier in the 2000s before struggling to surpass the market in recent years.



Winters started up his New Jersey-based Wintergreen Advisors and its signature Wintergreen Fund back in October 2005. Unfortunately, the value investing approach didn’t do well over the past ten years, with the Wintergreen Fund falling at the bottom of a ranking of other major funds over a one, three, five and 10-year period.

About four years ago, we noticed that value investing had stopped working the way it had always worked,” said Winters according to an earlier interview with Barrons when the fund’s assets were at $300 million. Current valuations put total assets at $100 million, according to Morningstar.

The fund’s board of directors approved liquidation on April 15 and was finalized after markets closed on April 17. Wintergreen’s website updated visitors with a statement that it had “suspended most sales of its shares pending the completion of the liquidation and the payment of liquidating distributions to its shareholders.”

Winters was a well-known figure in the value investing world. Having begun in the 1980s at a prestigious value fund Mutual Series, he eventually started his own firm in 2005. A well-known speaker at investing conferences and someone who traveled around the work looking for investment opportunities. He also would take an activist approach for certain investments, pushing changes that he thought would improve shareholder value.

Despite this, Winters decline goes to prove that having there isn’t a perfect investment philosophy out there that will guarantee success, as some might argue. Top holdings of his fund before the closure was tobacco giant Altria Group , Nestle (SWX: NESN), and rail freight operator Union Pacific .

At the same time, value-based funds overall have been struggling for the past decade. The Russell 10000 value index has seen a 10-year annual return of 10.9 percent, a significant reduction from the 15.1 percent seen for the corresponding growth index.

While value investing has seemed to be a strong strategy for the past several decades, recent years has seen value-based approaches struggle to find good deals. With the U.S. seeing one of the longest bull markets in recent history, institutional investors have been willing to pay high premiums for investment opportunities, leaving value-investors in a tricky position as good deals are harder to find.

Even Warren Buffet has drawn some criticism from his supporters, as Berkshire Hathaway reported in its financial statements that it’s has been sitting on more cash than it ever has before. The Oracle of Omaha admitted that good deals were difficult to find, which while not surprising for a company the size of Berkshire, even smaller, nimbler funds have been struggling with this same issue.

If a market recession comes around in the next year or two, value investors could find themselves with tons of new investment opportunities. Until then, they’re going to have to make do with what they can find on the markets today.

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