A Promising, Concentrated Fund That Requires Patience
Alec Lucas: Bronze-rated Poplar Forest Partners has promise but requires patience. Manager J. Dale Harvey builds a roughly 30-stock portfolio using a contrarian and benchmark-agnostic approach. Heightened volatility comes from his proclivity to invest early in out-of-favor stocks like top-10 holding Signet Jewelers.
When Harvey first bought Signet in late 2016, its share price had already been cut in half. Following disappointing sales and scandal, its stock fell about a third more in 2017's first half. Harvey remains committed, however, as he believes its brick-and-mortar jewelry business will survive, and the firm's normalized earnings power makes it a bargain.
Harvey won't get every call right, but his background breeds confidence. Before founding Poplar Forest Capital in 2007, Harvey spent 16 years at Capital Group, contributing initially as an analyst and then as a portfolio manager. This strategy has subjected investors to big ups and downs, but it has a competitive record as a mutual fund and even more impressive results dating from its separate-account origins. This large-value fund worth a look.