Quick Take: The Perkins family of funds consists of Perkins Discovery Fund (PDFDX) and Perkins Opportunity Fund (POFDX), which are run by Richard Perkins and his son, Daniel.
Both funds topped their peer groups for the fourth quarter last year. The Discovery Fund, with $8.7 million in assets, rose 20.5%, versus a 12.9% gain for the average mid-cap growth fund. The $14.5-million Opportunity Fund returned 29.6%, compared with 14.1% for its small-cap growth fund peers.
The two funds’ 2004 returns also topped those of similar offerings. Over the longer five-year period, Discovery’s return bested its peers, and has earned an overall rank of 5 Stars from Standard & Poor’s, while Opportunity lagged during the period.
In selecting investments for both funds, the managers look for stocks that have been ignored by other investors for the most part, but that the two men think can pay off with help from a catalyst, like a product introduction. The two men buy profitable companies, as well those that currently aren’t showing earnings but which they see as poised to move into the black.
The Full Interview:
The aim of the Perkins Discovery Fund is to find companies that have been largely overlooked by the market.
Richard Perkins, who manages the portfolio with his son Daniel, doesn’t scan for stocks that aren’t widely followed by Wall Street, but many of the ones they invest in fall into that category, he says. Of course, that can pay off when mainstream analysts begin tracking and touting something they own, Richard says.
The two men will buy growing companies as well as shares they think are undervalued. While they want to own financially sound, profitable companies, they’re willing to bet on those that aren’t generating earnings if they think that situation will change.
Stocks that have broken out after being stuck in a trading range for an extended period pique the managers’ interest, too. In addition, they want managements with successful track records.
A key element of their buying criteria is identifying a catalyst, like a new product or management, that can boost a stock.
About half the companies the managers buy are based in the upper Midwest, Daniel says. The managers, whose office is near Minneapolis, lean towards businesses in the region because their executives can be reached relatively easily, and because the pair can follow company news in local papers.
“There’s nothing we hate worse than missing a stock or missing an opportunity in our own backyard,” says Richard. “It just irritates us.”