Wall Street’s Best Stock Pickers Pin Rut On Market Warped By Fed

‘Ideal Environment’

The Yacktman Fund, after beating competitors in the market selloffs of 2002 and 2008, has averaged annual returns of more than 13 percent in the past 15 calendar years, handily beating the S&P 500.

Over the past five years, the fund trails the benchmark. Investors withdrew $1.7 billion in 2014, according to Morningstar estimates.

The current market is reminiscent of the late 1990s, say Hawkins and Cates, who have overseen the $7.5 billion Longleaf Partners Fund for more than two decades and still have a top 15- year record.

Then, as now, stocks marched higher “while fundamentals mattered little,” the pair told shareholders in a January letter. Once the dot-com bubble burst in 2000, stock pickers eventually regained favor.

“At this moment of relative weak performance with active management in disrepute, our optimism about future relative performance is exceptionally high,” the two wrote.

Others who have cooled off say their approach will win the day again, whenever that day comes.

“History shows that sticking to your discipline is a good thing to do,” said Eric Schoenstein, who is part of the team running the $5.6 billion Jensen Quality Growth Fund.

“This is setting up as an ideal environment for stock pickers,” said Neuberger’s D’Alelio.