Q–I’m trying to obtain information on what I’m told is an excellent investment called Weitz Hickory Fund. How can I get in touch with this fund? What’s your opinion of it?
A–It’s been a real firecracker and is rapidly gaining assets from new investors. The $350 million Weitz Hickory Portfolio was up 36 percent over the past 12 months to rank in the top 1 percent of small-cap value funds. Its three-year annualized return of 45 percent similarly placed it at the top percentage point of its peers. Only 1994, when it dropped 17 percent in value, could be described as a clunker.
The fund requires a hefty $25,000 minimum initial investment, although buying through the Charles Schwab or Jack White mutual fund marketplaces permits a more reasonable $2,500 initial purchase.
“I’d say the Weitz funds are awesome in their performance, but I’d also caution that they have a fairly narrow industry focus, and those particular industries have suddenly been going great guns,” noted Russel Kinnel, equity fund editor with the Morningstar Mutual Funds investment advisory. “In addition, this has been a tiny fund most of its life, so you must take its past record with a grain of salt.”
Manager Richard Lawson, in charge since the fund opened in 1993, is a contrarian willing to load up on a stock he likes, leaving the fund with fewer than 30 holdings and individual stakes that can be more than 10 percent. Cable and cellular stocks have done particularly well for him.
His heaviest emphasis is services, followed by financials. His top holdings were recently Redwood Trust, Centennial Cellular Class A, Century Communications Class A, 360 Communications, Novastar Financial, Valassis Communications, Capital One Financial, Resource Bancshares Mortgage Group, Imperial Credit Industries and Corecomm.
The toll-free telephone number of this “no-load” (no initial sales charge) fund, located at 7125 S. 103rd St., Omaha, Neb. 68124, is 800-232-4161.
Q–I have shares of Trans World Airlines Inc. Shall I sell, hold or buy more?
A–While many things are looking up for the nation’s seventh-largest carrier, Wall Street remains cautious because so much is going on.
In terms of earnings, TWA earned 28 cents a diluted share in the second quarter, compared to a loss of 31 cents a diluted share in the second quarter of last year. The low price of fuel is expected to keep all airlines’ costs flat.
As far as labor relations are concerned, after 13 months of negotiations with the Air Line Pilots Association, TWA agreed last month to a four-year labor contract that gave the 2,500 pilots their first pay increase in more than a decade. Also, the carrier and the union representing flight attendants in June resolved differences over the number of crew members and pay on Boeing 757s, averting a possible strike of the aircraft.
Stock of TWA is currently rated a “hold” by the Wall Street analysts covering it, according to the Boston-based First Call Corp. research firm. That compares to an overall “weak buy” recommendation for the airline industry. However, TWA’s five-year annualized growth rate is 13 percent, compared to 10 percent industry-wide.
Finally, a federal judge refused in June to limit the potential damages the families of the 230 people killed aboard TWA Flight 800 could recover from TWA and Boeing Co. That means family members who have filed nearly 150 lawsuits against TWA and Boeing can continue pressing damage claims for pain and suffering, loss of companionship and punitive damages.
Q–Nine of my co-workers and I would like to invest together over a period of at least five years. We’d like expenses to be kept to a minimum. What’s your advice?
A–Investment clubs are a great way to learn and make money at the same time. Organized properly, they have basic ground rules for their general operation, including investment selection, handling withdrawals, adding new members and cashing out when a member dies.
To deal with all these issues, clubs are generally set up as partnerships. One member is elected a financial partner and empowered to act as the agent for the club, putting in orders with a broker and filing both the IRS Form 1065 and the state return.
“The partnership is set up in the name of the club, which gets a tax identification number,” explained Kenneth Janke Sr., president and chief executive officer of the National Association of Investors Corp., which was formed in 1951 and has 37,000 member clubs worldwide. A partnership is not taxed, but acts as a conduit to pass on the income to the individual partners, he noted.
Membership as a club in the NAIC is $35, plus $14 for each member. There are also individual memberships for $39 annually. A magazine, a low-cost investment plan, investor reports and many special events and programs are among the perks. Contact the NAIC at P.O. Box 220, Royal Oak, Mich. 48068.
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Andrew Leckey, a financial anchor on the CNBC Cable Network, answers reader questions only through the column. Address inquiries to “Successful Investing,” 76 N. Maple Ave., Suite 367, Ridgewood, N.J. 07450, or by e-mail at successinv@aol.com.
