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MUTUAL SERIES FUNDS'
MICHAEL PRICE ET AL.
(continued from preceding
page)
The two foreign funds - where our expenses are much higher - are at 80 basis points. And Mutual Shares at 60 [basis points] is below the industry average. You can't get the kind of investing that we do, I don't think, anywhere else in the [mutual fund] industry - the mix of bankruptcies, deals and cheap stocks - in any other mutual fund group. If you [do] want to duplicate it, you have to buy partnerships. And their fees are 1% plus 20% of the profits in many cases.
So I've thought that Mutual's been a bargain for years....
We get terrific, cheap execution. It's our money, too.
Price: On the trading side, we do a lot of business.
We do it with everyone on Wall Street. Typically, we do it
at 4-5¢ per share. And we get terrific executions. On the
telephones on our trading desk, each turret has 15 pages
of 40 lines [each]. That's 600 different lines. We're using
300-400 of 'em now - to domestic and foreign brokers. We
have nine floor brokers on the New York Stock Exchange,
three on the American, wires to Over-the-Counter firms -
wires everywhere. And we trade as cheaply as we can.
Once again, remember it's our money, too....
E.G., SEARS, ITT AND CHASE.
Big isn't necessarily bad - for example, Sears.... We've owned ITT (profitably) several times in years past.
Page 6 of 28
Shareholder: Some worry that if
Mutual Series funds
get a lot more money, they'll have to go to larger cap stocks
and, therefore, be a lot less nimble. Do you feel very
confident that the Mutual Series funds
will do as well in the future as they have in the past?
Price: Some of our best situations have been the
largest cap stocks. A perfect comparison is Sears Roebuck
- which Rob Friedman got us
involved in - versus Wal-Mart
five years ago. Wal-Mart stock was $25 - and Sears was
$33. In the past five years, Sears went from $33 to today's
price in the high $40s. But, meanwhile, it's given us stock
in Allstate and stock in
Dean Witter and cash distributions.
So adjusting for all of those distributions, Sears's stock is
probably $120 - and Wal-Mart is still $25.
That's the difference between a growth stock that
doesn't grow or whose growth slows and a value stock
where the value's unlocked. And Sears had 350 million
shares outstanding. So it was a huge market cap.
[Editor's note: Actually, we estimate that Wal-Mart
had a larger market cap than Sears, but
who's counting....]
Price: And we find other ... [big cap investments].
For years, Larry Sondike has
worked on ITT. And we've
probably owned it three or four times in the last 12 years.
We've made money every time. As you know, ITT split into
three parts. We traded out of all three parts.
Now we're starting to buy back the three parts - two
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