We often see waves of fund manager departures in the first quarter of a calendar year, as managers stick around long enough to pocket their bonuses from the year prior. In 2007, however, we saw managers coming and going at prominent funds right up through the fourth quarter.
Here's a review of some of last year's most notable fund-skipper changes, along with our take on what the alterations at the top mean for shareholders.
Janus Fund, Janus Twenty, Janus
Orion, Janus Growth & Income
Among the biggest fund headlines of 2007 was the wave of manager departures that beset Janus in the second half of the year. Scott Schoelzel, longtime manager of Janus Twenty, announced in late summer that he would leave the firm at year-end. And just a few months later, Minyoung Sohn (Janus Growth and Income) and David Corkins (Janus Fund) abruptly departed the firm. These developments have shaken our confidence that Janus can mount a sustained turnaround, notwithstanding strong recent performance. Schoelzel and Corkins were among the firm's most seasoned managers, and Sohn was a rising star. Moreover, the firm has also seen changes in its executive ranks over the past few years.
Templeton Foreign and Templeton Growth
Jeff Everett, manager of Templeton Foreign since 2001 and a Templeton veteran since 1989, left the firm in September 2007. A few months later, the firm announced that Templeton Growth manager Murdo Murchison would be leaving that fund. But unlike the Janus situation, we don't think these departures are cause for alarm. Recent performance had been sluggish under Everett, and his replacement, Tucker Scott, has used a similar discipline at Templeton Smaller Companies since 2000. At Templeton Growth, Cindy Sweeting will fill Murchison's lead-manager role. Sweeting joined Templeton in 1997 and had been part of the teams that ran small-cap portfolios; she will continue to be backed by Lisa Myers, who has served as Murchison's backup on Templeton Growth for the past four years. These remaining managers also draw upon a strong infrastructure at Templeton. The firm's 35-person-strong research ranks are collaborative, and all of its funds buy stocks from a centralized bargain list.
First Eagle Global, First Eagle
Overseas, First Eagle U.S. Value
It's not often that the new manager taking over a fund has more experience than the one stepping off, but that was the case when Jean-Marie Eveillard took the reins of these funds after Charles de Vaulx's abrupt departure in March. We've long been big fans of Eveillard but wouldn't rate any of these funds a strong buy at this point. That's because Eveillard isn't here permanently; he expects to reduce his role on the funds over the next five years.
Moreover, Eveillard's most likely successor at the firm, Charles de Lardemelle, left the firm in September, taking two other experienced analysts along with him.
T. Rowe Price Growth Stock, T. Rowe
Price International Stock
Impact: Negative for Growth stock, Positive for International Stock
For a firm that doesn't typically have many personnel changes, T. Rowe saw its share of switcheroos in 2007. Notably, veteran manager Bob Smith left Growth Stock to head up International Stock along with Mark Bickford-Smith. We're excited about what we're seeing on T. Rowe's international lineup and consider the arrival of a heavy hitter like Bob Smith on International Stock to be a positive for that fund. At the same time, Smith's departure from Growth Stock is a blow to shareholders in that offering. New Growth Stock manager Rob Bartolo is a well-regarded investor who ran T. Rowe Price Media & Telecom before landing here, though we don't yet have the level of confidence in him that we had in Smith.