Fundmastery Blog

Kurt Brouwer August 21st, 2007

One interesting mutual fund we like is Wintergreen Fund. The Fund generally invests in stocks, however it is not just a stock fund. We consider it an alternative equity fund because of its investment strategy. Wintergreen Fund (WGRNX) has a flexible, value-oriented strategy that gives David Winters, the portfolio manager, a broad mandate to seek undervalued assets.

Winters formed the Fund in 2005 after a long stint at the Mutual Series group, which is part of the Franklin Templeton family of funds. When he left Franklin Templeton, he was president and chief investment officer for the Mutual Series group, which had $35 billion in assets at that time.

We used funds from the Mutual Series group for many years, however we stopped using them in 1996 when the group was sold to Franklin by Michael Price. In a way, we can say welcome back to Wintergreen. The Fund is quite new, but the investment approach is very similar to one which we like very much and had used for many years.

Here are a couple of excerpts on the fund’s investment philosophy. I shortened the list below to its main headings. Much more information on the Fund’s investment philosophy, risk profile and many other factors is available from its web site:

‘… The Investment Manager will follow a global approach to investing that combines the following key elements:

• Activism and Arbitrage…
• Bankruptcy…
• Cash and Convertibles…
• Distressed Companies…
• Equities That Are Undervalued…
• Financings…
• Global…
• Hedging…
• Integrity…

…With an emphasis on undervalued equities, risk arbitrage and other arbitrage transactions and distressed companies, the Fund will focus its investments in areas where it finds the most compelling opportunities at any given moment and on situations that, in the Investment Manager’s opinion, have the potential for capital appreciation…’

Given some of the strategies it employs, I suspect the Fund is pretty busy these days. With the subprime mess, the failure of several hedge funds, mortgage companies and others, there are lots of opportunities to evaluate distressed income and equity securities. As they say, “One man’s trash is another man’s treasure.”

A couple of additional points. Many industry observers were surprised that Winters formed a no-load mutual fund rather than a hedge fund. We were too, but it may be that he is seeking to combine the best of both worlds–hedge funds and mutual funds.

Wintergreen Fund has a high expense ratio compared to other equity mutual funds. However, compared to alternative investments such as hedge funds, Wintergreen is priced competitively.

• Hedge Funds , Mutual Funds
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