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   Strategies & Market TrendsKen Heebner and CGM Focus Fund CGMFX


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To: Sam Citron who wrote (13)10/4/2008 1:22:38 PM
From: Condo
   of 37
 
What do you get from CGMRX that CGMFX doesn't provide..?

CGMRx moves more calmly than CGMFx most of the time, so CGMRx will go into the wife's IRA.

The two portfolios do always seem to overlap some.

CGMRx Top Ten Holdings as of 6/30/08:
6.3% Arch Coal, Inc. (ACI)
6.2% PEABODY ENERGY CORPORATION (BTU)
6.0% CONSOL ENERGY, INC. (CNX)
5.9% Cleveland-Cliffs Inc. (CLF)
5.2% FREEPORT-MCMORAN COPPER & GOLD B (FCX)
5.1% Digital Realty Trust, Inc. (DLR)
4.9% Boston Properties, Inc. (BXP)
4.9% Annaly Capital Management, Inc. (NLY)
4.8% Federal Realty Investment Trust (FRT)
4.8% Ventas, Inc. (VTR)

CGMFx Top Ten Holdings as of 6/30/08:
6.5% Weatherford International, Inc. (WFT)
6.3% Schlumberger, Ltd. (SLB)
6.3% United States Steel Corporation (X)
6.3% PEABODY ENERGY CORPORATION (BTU)
6.3% Brazilian Petroleum Corporation ADR (PBR)
6.2% FREEPORT-MCMORAN COPPER & GOLD B (FCX)
6.2% Nabors Industries, Ltd. (NBR)
6.2% CONSOL ENERGY, INC. (CNX)
6.0% Hess Corporation (HES)
5.9% Wachovia Corporation (WB) [short]

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To: Condo who wrote (14)10/6/2008 11:40:43 AM
From: Sam Citron
   of 37
 
Calmness is good most of the time but I wouldn't want to put KH in a straight-jacket. He was able to wrangle out of it in creatively redefining real-estate in order to participate in the commodities boom, but now that commodities AND real estate are in a bust, it might be difficult for CGMRX to perform.

Do you happen to know whether shorting is permitted in CGMRX's charter?

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To: Sam Citron who wrote (15)10/6/2008 11:51:33 PM
From: Condo
   of 37
 
Calmness most of the time...
During the last market uptrend from the summer of 2003 through the end of 2007, CGMRx had a -19% price drop along the way, nearly matching a CGMFx worst of -20%. That means the 2 funds carry the same potential for heartburn (maximum adverse excursion) even if the day-to-day price movement differs (e.g., standard deviation). So FWIW, I was probably wrong to give "calmness" as an argument for CGMRx.

The CGMR charter says KH can invest 20% in anything he pleases (more if he gives notice of adverse conditions) but no short-selling allowed. The 80% in "real estate related" includes areas such as mining, fertilizer, materials of all kinds, international real estate, and companies whose business is 50% not real estate.

Recently the CGMRx and CGMFx portfolios have been about 70% different, so it seems like owning both would add overall diversification as long as the 2 funds deliver similar returns during market uptrends. But I take your point that KH is far more constrained in CGMRx than in CGMFx, and if commodities and real estate remain in a worldwide slump his choices for CGMRx are more limited.

Since Ken Heebner does run both funds, I wonder how much coordination is involved between the two. Obviously he does all his shorting in CGMFx. But does he pursue ideas in CGMRx whenever possible and do the rest in CGMFx? Both funds have done relatively well over the past 10+ years. How can that be, given the vagaries of the real estate market, unless he's been treating the two as one conjoined fund? Even if so, I take it you think that strategy has "run out of real estate". (<g>)
.:.

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To: Condo who wrote (16)10/7/2008 11:39:41 AM
From: Sam Citron
   of 37
 
I assume KH simply tries to maximize returns in each fund subject to the constraints imposed by their charters. I expect CGMFX to continue to outperform CGMRX based mainly on its more liberal charter combined with KH's personality, which needs the freedom to take the bold contrarian initiatives that have been the hallmark of his career.

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From: Sam Citron10/28/2008 1:32:52 PM
1 Recommendation   of 37
 
Out of energy and into financials as he awaits the next theme

Heebner says the fund lost ground when he sold off big holdings in energy, metals, and other commodity-oriented stocks over the summer. Once market favorites, these holdings were losing ground fast. He says those positions, which had dominated the CGM Focus portfolio, are all but gone now. Financial stocks, the market sector that terrifies investors, now rank as the fund's biggest portfolio category today.

Heebner declined to name any financials stocks purchased for the fund. He said most were bought when selling pressure made the shares irresistibly cheap, not because they fit into any new economic theme.


boston.com

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From: JakeStraw11/11/2008 3:48:04 PM
   of 37
 
What's Next for Ken Heebner and CGM?
biz.yahoo.com

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To: Sam Citron who wrote (18)11/15/2008 1:30:39 AM
From: Condo
   of 37
 
"Bigfoot" steps in.

bloomberg.com

Heebner Buys Financials, Abandons Top Energy Stakes (Update2)

By Sree Vidya Bhaktavatsalam

Nov. 14 (Bloomberg) -- Kenneth Heebner, the fund manager who beat all peers last year by buying energy stocks and selling financials, reversed course in the third quarter, snapping up Citigroup Inc., Wells Fargo & Co. and Bank of America Corp.

Heebner's Capital Growth Management LP, based in Boston, bought 15.4 million shares of Wells Fargo, 27 million shares of Citigroup and 15.6 million shares of Bank of America in the three months ended Sept. 30, according to a regulatory filing today. The combined stakes equal about 15 percent of the U.S.- listed stocks reported in the filing.

The firm sold all its shares of Schlumberger Ltd., along with those of Freeport-McMoran Copper & Gold Inc., Peabody Energy Corp., and Consol Energy Inc. The four companies were four of the money manager's top five holdings as of June 30, Bloomberg data show.

Heebner, 68, known for his rapid movements in and out of stocks, exited banks in the second quarter of 2007 after saying that the credit crisis would hobble earnings. He put more than three-fourths of the fund into natural resources and energy, helping his CGM Focus Fund to an 80 percent gain in 2007, the best performance by a U.S. stock fund.

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. Crude oil prices have tumbled 62 percent since reaching a record $147.27 on July 11, as a global economic slowdown cut demand.

Heebner wasn't available for comment on the filing with the U.S. Securities an Exchange Commission, spokeswoman Martha McGuire said.

`Bigfoot'

Nicknamed ``Bigfoot' by industry professionals for his large and sudden trades, 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.

Energy and materials companies accounted for 13 percent of Capital Growth's assets, the data show. The firm held 13 million shares of Petroleo Brasileiro SA, the Brazilian oil company. 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.

Wal-Mart shares have risen 13 percent this year, while those of McDonald's have fallen 5.1 percent. The Standard & Poor's 500 Index has declined 40 percent.

Heebner is the co-founder of Capital Growth, which manages more than $10 billion in assets. Besides CGM Focus, Heebner manages the $2.3 billion CGM Realty Fund and the $674 million CGM Mutual Fund.

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To: Sam Citron who wrote (17)12/1/2008 8:55:49 PM
From: Condo
   of 37
 
I expect CGMFX to continue to outperform CGMRX based mainly on its more liberal charter...

Today being a case in point, I suppose:
cgmFx -10.68%
cgmRx -19.14% <==

REITs -19.33%
.:.

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To: Condo who wrote (21)12/2/2008 12:48:37 PM
From: Sam Citron
   of 37
 
Seems a bit odd that KH isn't shorting more aggressively in CGMFX. As for CGMRX, a fund that is so sector specific really should have a charter that allows its manager to sell short. Otherwise it might as well be a long only real-estate ETF.

Sam

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From: Condo1/16/2009 12:51:45 PM
   of 37
 
KH was late getting out of commodities and energy - hey, so was I - and he was early getting into financials. So what?
I'm looking forward to riding with CGM again when the market starts trending upward.


Heebner and CGM Close Out a Harrowing Year
Thursday January 8, 9:26 am ET
By the tickerspy.com Staff

2008 is a year that once high-flying hedge fund manager Ken Heebner will likely want to forget. Though he is one of the most admired investors on Wall Street, Ken Heebner's primary fund, CGM Focus (Nasdaq: CGMFX - News), continued to struggle through Q4.

As the S&P 500 dipped by about -38% during 2008, CGM Focus slid about -49%. And during Q4, the S&P 500 fell about -23%, while CGM Focus dropped -38%. One of CGM's other funds, CGM Mutual (Nasdaq: LOMMX - News), fared better in Q4, down -18%.

At the end of Q2, Heebner's firm Capital Growth Management showed a strong energy and commodities bias among its top holdings across all its funds. Those sectors peaked just as Q3 was getting underway and so did CGM Focus. CGM's shift into financials sometime during Q3 looks to have been ill-timed as well.

Heebner is known to move in and out of positions fairly quickly, but judging by the performance of his mutual fund during Q4 and the performance of the financial stocks the fund reported holding at the end of Q3, it seems likely that Heebner maintained at least some of his bias towards the financial sector for much, if not all, of Q4. Heebner also shifted into some traditionally safer names, which offset the weakness in the financial names in the CGM portfolio.

Looking at CGM's top holdings from the start of Q3, one can see a whole lot of red. The worst of the bunch are large money sector banks Citigroup (NYSE: C - News), Bank of America (NYSE: BAC - News), insurance firm Prudential (NYSE: PRU - News), and Russian telecom firm Mobile Telesystems (NYSE: MBT - News).

None of CGM's top holdings from the end of Q3 is above breakeven, though Wal-Mart (NYSE: WMT - News), McDonald's (NYSE: MCD - News), and Abbott Laboratories (NYSE: ABT - News) were the closest. Investors will be curious to know whether Heebner is sticking with these safer names as 2009 gets underway.

Of course, investors won't be sure of where Heebner stands now until next month, when the deadline for Q4 filings hits.
biz.yahoo.com
.:.

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