Portfolio Manager Perspectives

Jeff Benjamin

Tom Forester: Top-heavy markets sending signs to take gains

The manager of the Forester Value Fund said he's looking to trim some of his best performers as the year winds down

Sep 18, 2009 @ 2:13 pm

By Jeff Benjamin

Tom Forester, manager of the Forester Value Fund, will bring into the fourth quarter a cautiously optimistic perspective that will include a bit of his trademark profit-taking from some of the portfolio's best performers.

Mr. Forester, president and founder of Forester Capital Management Ltd., stood out in 2008 as the best performing diversified equity mutual fund with a 0.4% gain — the only diversified fund to produce positive performance last year, according to Morningstar Inc.

“Right now I'm feeling that the market is getting a little top-heavy, and I have already taken some beta out from some of the industrial names,” he said.

One stock that he still owns, but has trimmed following a significant run up, is Coca-Cola Enterprises Inc. (CCE). The stock, which was trading in the $21 range last week, is up more than 77% from the start of the year — and up 116% from the March 9 low, when it closed a $9.72 per share.

A few other positions that have helped his large-cap value strategy include State Street Corp. (STT), and Hewlett-Packard Co. (HPQ).

Both stocks were added to the portfolio right around the March low.

Hewlett-Packard, which was trading above $46 last week, is up 84% from when Mr. Forester bought it and up 27% from the start of the year.

State Street, which traded above $54 last week, is up 217% from where Mr. Forester bought it and up 38% from the start of the year.

“I guess the only problem is I didn't buy enough,” Mr. Forester said of some of his top-performing stocks.

Mr. Forester is less concerned about the upcoming third-quarter earnings season than he is about the year's fourth-quarter earnings, which will first begin getting reported in January 2010.

“I think third-quarter earnings will be good because there has been a lot of stimulus,” he said. “But the question will be whether we can continue as these stimulus programs run off, because investors are already baking in better numbers for the fourth quarter.”

A trademark of Mr. Forester's performance is his willingness to move to the sidelines and into cash when everyone else seems to be moving into the market — a strategy that could lead to underperforming the broad indexes in bull markets, but outperforming in a bear market environment.

The Forester Value Fund (FVALX) gained 13.5% this year through Thursday. By comparison, the S&P 500 gained 17.9% gain over the same period. (For a full analysis of Mr. Forester's portfolio management strategy, see Jeff Benjamin's Investment Insights column in the Sept. 21 issue of InvestmentNews).


What do you think?

View comments

Most watched


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.


Schwab's Jeff Kleintop: Prep for volatility given China trade uncertainties

China could be considered a developed market in five to seven years , according to Jeff Kleintop, chief global investment strategist, Charles Schwab.

Latest news & opinion

Advisers step up efforts to help clients manage student loan debt

As some Democrats campaign to wipe the slate clean, financial planners focus on limiting the amount students borrow.

Funding for Reg BI, other SEC advice reform efforts denied in Waters amendment

House likely to approve measure that effectively kills rule package, but it faces uphill battle in Senate

Wall Street lashes out at Sanders' plan to pay off student debt with a securities trading tax

Financial pros argue that a transaction levy will hurt mom-and-pop investors along with investment houses.

GPB paid B-Ds and reps steep commissions to sell troubled private placements

GPB paid commissions of 9.3%, or $167 million altogether, on the firm's private placements.

Give us a break, active managers say

Seven portfolio managers share their outlooks for the rest of the year, generally agreeing that it's been hard for active managers to stand out.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print