Old-School Value Fund Re-Opens

Tweedy, Browne Value invests in companies the managers deem significantly undervalued. And it's again taking new investors.

Few money managers have the value-investing pedigree of Tweedy, Browne. Christopher and William Browne, who are brothers, and their colleague John Spears have been investing in stocks they consider undervalued for more than 30 years. Warren Buffett bought most of Berkshire Hathaway, the clothing firm that became the basis of his investment holding company, with the help of the Browne brothers' father at the Tweedy, Browne brokerage in early 1960s. Benjamin Graham, Buffet's mentor and the intellectual founder of value investing, kept an office down the hall from Tweedy, Browne headquarters.

The Brownes and Spears have followed Graham's investment principles in their management of Tweedy, Browne Value (symbol TWEBX; 800-432-4789). The fund invests in companies of all sizes that the managers consider good bargains. In May 2005, the managers closed the fund to new investors because they saw a lack of cheap stocks and the fund's cash stake had grown to more than 10% of its assets. In addition, the managers changed the fund's mandate to allow them to invest up to 50% of its assets in foreign stocks. (Before the change, 20% was the limit on overseas stocks in the fund.) The moves have reduced cash and given the managers a bigger pond in which to find stocks that they think sell at significant discounts to the intrinsic value of the underlying companies. As a result, the $512-million fund will re-open to new investors May 15.

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Contributing Editor, Kiplinger's Personal Finance