Never mind DoubleLine’s Jeff Gundlach and PIMCO’s Mohamed El-Erian giving the thumbs-down to Apple stock last month. When Apple (AAPL) started its fall in fourth-quarter 2012, Roumell Asset Management’s Opportunistic Value Fund (RAMSX) bought the stock for the first time in the fund’s history, and then went out and bought some more in the first quarter of 2013.
Considering that Morningstar ranks RAMSX in the top 1% of the 1,018 funds in its category, portfolio managers Jim Roumell and Ted Crawford of the two-year-old fund may be making a good call on Apple. RAMSX has beat the S&P 500 81% of the time on a rolling three-year basis, and the managers credit their strategy of buying companies that are out of favor, overlooked or misunderstood.
Apple, in other words.
“We bought it when it wasn’t loved,” Crawford said on Tuesday in New York during an interview with AdvisorOne, adding that Roumell Asset Management’s deep-value investing strategy uses a combination of “scuttlebutt” along with quantitative and behavioral analysis. “The change in sentiment in Apple was sharp, quick and visceral, and visceral reactions are usually overreactions.”
Crawford’s primary animating principle in stock-picking is finding companies he would take private in a heartbeat. Before joining Roumell last year, he was a partner with value-oriented long-short equity hedge fund Maple Leaf Partners for six years, during which time he learned to spot stock that was selling at a big discount to what the company would be worth if it were private.
Off 30% From Its Highs, AAPL Seen as a Deep-Value Bargain
RAMSX invests in a mix of deep-value stocks, high-yield corporate bonds and cash, and the stocks usually fall into the micro-cap end of Morningstar’s style map. But when AAPL fell 30% from its highs, to as low as $435 per share from its 52-week high of $705.07, Roumell and Crawford decided to grab it.