Buy and hold. That's the investment philosophy of the Sherman, Dean Fund, the best-performing mutual fund over the last six months. Sherman, Dean, managing some $7.8 million, gained 60.4 percent for the period ending May 30, even outperforming the gold funds, which generally gained 40 to 50 percent for the six-month period, according to the Wiesenberger Investment Companies Service.
What makes Sherman, Dean's performance even more remarkable is that it has not traded a stock for the last year and a half. Walter Sherman, president of the fund, explains the fund's philosophy this way: "If you bought situations and they are still good, hold them."
Among the "situations" the fund has bought is 280,000 shares of Benguet Consolidated Inc., a gold-silver-, and copper-mining and engineering company in the philippines. In the first six months of the year, Benguet was the best-performing stock on the Big Board, rising from $6 per share to $19.It is now about $12 a share.
Mr. Dean says the reason the fund has bought the company is its belief in the stability of the Philippines, compared with South Africa, the world's largest gold producer. He says he likes gold because of all the uncertainties in the world and predicts that its price is going to $1,000 per troy ounce.
The rest of the Sherman, Dean portfolio consists of General Energy Corporation, an oil, coal, and gas producer, which has risen from $16 a share Dec. 31 to $27, and Checker Motors, which is in the process of going private -- that is, buying back its shares from the public. The fund also has a small position in Phoenix Steel, a small producer that Mr. Dean says is a "turnaround" candidate. Finally, the fund has 10 percent of its assets in cash.
Not surprisingly, the rest of the top mutual fund performers for the first six months were gold funds. United Services Fund was up 50.2 percent; Strategic Investments Fund, 48.6 percent; International Investors, 43.2 percent; Research Capital Fund, 42.5 percent; and golconda Fund, 37 percent.
Among those who invested in common stocks, other than gold shares, Able Associates Fund and Constellation Growth Fund were the leaders, gaining 17.8 percent. Dreyfus Number Nine fund picked up 17.3 percent and Twentieth Century Select Investors climbed 16.3 percent.