Longleaf Partners Small-CapLLSCX

Morningstar Rating

Fund Research and Analysis

by Gregg Wolper

Those who are already shareholders of Longleaf Partners Small-Cap have every reason to continue owning it.

This fund is closed to new investors and isn't likely to reopen anytime soon. That's unfortunate for those who'd like to get in, but a benefit for shareholders, for it keeps the fund's asset base from growing so large it would further reduce its flexibility. Read more

Kudos

Strong long-term performance.

Excellent, long-tenured managers.

Exceptionally clear and forthright shareholder communications. Read more

Risks

Large positions in individual holdings expose the fund to substantial stock-specific risk.

Emphasis on extremely cheap securities means managers will hold some troubled companies. Read more

Strategy

This fund's comanagers buy small-cap companies trading at discounts of 40% or more to the team's estimates of their intrinsic values. In order to determine those intrinsic values, the managers and analysts often rely on their estimates of future free cash flows but will also take into consideration a company's net assets and the sales prices of comparable businesses. Read more

Management

Staley Cates and Mason Hawkins have comanaged this fund since 1991. They also manage Longleaf Partners LLPFX and Longleaf Partners International LLINX. They rely on a group of in-house analysts. The managers and analysts, along with all other employees of advisor Southeastern Asset Management, are required to keep all of their own invested assets in Longleaf Partners funds. Read more

Inside Scoop

This value maven is closed to new accounts. The managers have vast experience here and at other Longleaf Partners funds. Read more

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