Heebner's World View
The manger of CGM Focus fund shares his outlook for 2008.
By Andrew Tanzer, Senior Associate Editor
From Kiplinger's Personal Finance magazine, January 2008
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Ken Heebner played the market like a fiddle in 2007. His CGM Focus fund (symbol CGMFX) gained nearly 70% to November 12 (when the January issue went to print), crushing the S&P 500 by 65 percentage points. As of December 17, the fund was up 66%. We visited Heebner at his office, high above Boston Harbor, to get his take on the current environment.
Although the U.S. housing market is mired in a depression, says Heebner, he thinks the economy will still escape recession in 2008. "It really takes a sledgehammer blow to turn this economy down, and I don't think the housing market itself is that blow," he says.
Heebner thinks it's important to view investing globally: "You have to look at the entire world. Up until the past year or two, the U.S. consumer was the driver of the global economy." That is no longer the case. "The portfolio remains focused on the beneficiaries of strong global growth," Heebner adds.
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His favorite sectors -- energy, industrial raw materials, infrastructure builders and agribusiness -- satisfy the voracious appetites of fast-growing emerging markets. For instance, he recently had 30% of his fund's assets in oil-production and oil-services companies. "As people go from bicycles to motorcycles to cars, there is a big increase in fuel consumption," he says.
Heebner is bullish on Petrobras, an oil giant half-owned by the Brazilian government. He reckons that Petrobras will be able to raise production significantly over the next five years, based on deep-water offshore discoveries. It announced recently that one of its deep-water sites may contain up to eight billion barrels of oil and natural-gas equivalents. Heebner also likes oil-services outfits, such as Baker Hughes and Schlumberger, that are able to sell globally to national oil companies, such as Saudi Aramco. "The oil-services company has really replaced the international oil company as the Western face of oil production," he says.
Heebner also minted money in fertilizer stocks, including Potash Corp. of Saskatchewan and the Mosaic Co., foreseeing that the U.S. ethanol program and surging consumption of animal protein in developing countries would raise the demand for grain.
Reader Comments (7)
Posted by: J.R. at 12/18/2007 12:56:10 PM
High returns generally are driven by relatively high risk. What is this fund's return history? What benchmark is being us(ed)? What assessment of risk was determined before placing these bets? To what degree were these bets hedged?
Posted by: Allen at 12/18/2007 02:24:32 PM
Can't argue with that success
Posted by: SG at 12/19/2007 03:43:50 PM
If he can do it, why can't other financial planners do it?
Posted by: JAG at 12/19/2007 07:24:40 PM
While this is an impressive return the fund still trails the Fidelity Leverage Stock Fund (FLVCX) by about 10% per year over the past 5 years and has 50% more risk. (Both funds are mid-cap blends). However, Heebner does have about a 4% better return for the past 3 years, but still with 50% more risk. He also under-performed the avg mid cap blend by 10% in 2006. Only 2 mid cap blend funds had higher standard deviations over the 3 and 5 year period. So, now you know why it outperformed most funds.
Posted by: thesooth at 12/22/2007 10:01:00 AM
Hebner smoked Fidelity since the inception of its fund, by 100%. Fidelity had one year that has given it the big return 2003 at 96%. Outside of that, it has done as well as the rest of the fido family. Too much spent on advertising, not enough on research.
Posted by: PP at 01/06/2008 09:44:59 PM
Actually, Heebner's CGM Focus had a 22%, not 4%, better return than FLVCX(37% vs.15%) for the past three years ending Dec 19, 2007
Posted by: Three Bears at 07/28/2008 10:02:57 AM
Mr. Heebner is no doubt one smart man. Low e/r cost for all his funds,performance is great. Wonder how much is lost to taxes on frequent trades.