The greatest investor you've never heard of

APR 01, 2012
At last month's Lipper Fund Awards, only one mutual fund manager didn't show up to receive his award. In fact, even Lipper Inc. couldn't get in touch with the fund's manager to tell him he won. And apparently, that is just the way James Wang likes it. The reclusive Mr. Wang launched the Oceanstone Fund (OSFDX) in November 2006 with no prior experience running a mutual fund. But since then, he has consistently beaten the pants off the market. As of March 28, the fund's five-year annualized return was 42%, compared with a 2% return for the S&P 500, while its three-year annualized return was 75%, compared with 22% for the index. Indeed, a $10,000 investment at the fund's inception would be worth more than $65,000 today. Mr. Wang's best year was in 2009 as he took advantage of the rebounding market to return 264%, compared with the S&P 500's 26% recovery. The fund hasn't played pure offense, either. In 2008, when the S&P 500 fell 37%, the Oceanstone Fund lost just 9%.

PRIVATE GUY

Despite the eye-popping returns, Mr. Wang has decided to keep himself out of the public eye. The fund does no marketing and contact information on the fund's prospectus and website leads to a third-party shareholder services firm. InvestmentNews was able to contact Rajendra Prasad, one of the fund's four directors. “Mr. Wang does not want any interviews,” Mr. Prasad said. Although most mutual funds disclose their holdings quarterly, Mr. Wang files annual and semiannual reports — the minimum required by the Securities and Exchange Commission. These minimum disclosures could well be attributable to the fund's lean operations. In addition to being the fund's portfolio manager, Mr. Wang serves as its treasurer, secretary and chief compliance officer. According to a filing with the SEC, the headquarters of the Oceanstone Fund is a residential address.

QUESTIONS RAISED

The lack of accessibility raises questions for some experts. “In a case like this, you really want to know how they earned that great performance, and you want to know who's behind it,” said Kevin McDevitt, an analyst at Morningstar Inc. Mr. Wang does reveal something of his strategy in his annual reports. As of June 30, he was looking for companies trading below their “intrinsic” value. “Short-term, stock market can be volatile and unpredictable. Long-term, the deciding factor of stock price, as always, is value,” Mr. Wang wrote. “Going forward, the fund strives to find at least some of the undervalued stocks when they become available in [the] U.S. stock market, in an effort to achieve a good long-term return for the shareholders,” he wrote. Mr. Wang also isn't shy about taking on risk to generate returns. The Oceanstone Fund has a standard deviation of 39, according to Morningstar. By way of comparison, the emerging markets — which are considered to be among the most volatile asset classes — have a standard deviation of 26. “He's in wipeout territory,” said Lee Munson, chief investment officer of Portfolio LLC. “What the market was doing last August is what a standard deviation of 39 looks like,” Mr. Munson said. “Statistically speaking, he could just as easily be down 80%.” But Mr. Munson is still intrigued by Mr. Wang's remarkable track record. “This could be a great manager or a guy who called the bottom and top for a few years. It lasts for some but not for others,” Mr. Munson said. “The problem is, there's no way to know who's going to keep rolling sevens,” he said. [email protected]

Latest News

Advisor moves: LPL lands $350M veteran advisor duo in Florida
Advisor moves: LPL lands $350M veteran advisor duo in Florida

Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.

SEC accuses crypto firm founder of running $425 million Ponzi scheme
SEC accuses crypto firm founder of running $425 million Ponzi scheme

It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.

MassMutual Ascend tops $2 billion in RIA annuity sales as advisors warm to income products
MassMutual Ascend tops $2 billion in RIA annuity sales as advisors warm to income products

Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.

Fintech bytes: Wealth tech firms target advisor productivity with new integrations
Fintech bytes: Wealth tech firms target advisor productivity with new integrations

Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.

Trump Account contributions to get boost from new employer rules
Trump Account contributions to get boost from new employer rules

New Treasury and IRS proposals would let employers add tax-free payroll contributions to the retirement accounts as advisors weigh the fit for client families.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income