Another Sign of Successful Fund Managers: Humility and the Admission of Mistakes

Southeastern Asset Management released first quarter results for its three Longleaf Partners funds today, along with each fund's letter to shareholders.

Mason Hawkins and Staley Cates run one of the most ethical, not to mention best-performing, mutual fund operations around.

You can tell an investor-oriented mutual fund by whether or not the managers own a significant amount of the fund themselves. And whether or not they're willing to close the fund to new investors when conditions warrant.

Yet another sign is when the managers freely admit their mistakes. Humility is a trait of most every successful value investor -- and the folks at Longleaf are no exception. In discussing the first quarter results for the flagship Longleaf Partners Fund and their International Fund, Hawkins and Cates call their investment in UBS "a mistake" and explain why. (I note they still hold it.)

I try to write this blog in a non-hype fashion. I'm at least partially successful in that attempt because I've received several emails from readers since launching the site in 2005 telling me they appreciate my laid-back approach. I spend as much time here referring to my so-far losers -- especially the Japanese consumer lenders and Media General -- as I do my winners.

So I'll almost certainly never equal the longterm success of Mason Hawkins and Staley Cates. But I can try to duplicate their willingness to be humble and admit mistakes. Like many things in life, it's a work in progress.

Comments

[MikeFletcher]

I just discovered this site yesterday. I am excited to find it. I am a longtime shareholder in Longleaf Partners and Smallcap. Their humility and knowing their money is right in there with mine has allowed me to hang in there through the lean times. I know that value will eventualy "out". I'm looking forward to following and occasionally adding my comments to this fine blog.

[John]

Mike: Thanks for your kind words. Glad you found us and I hope you'll find this blog worthy of your continued interest.

[slick]

Excellent comments.
Humility and honesty are so rare in individuals - more so in organizations. So sad.

I enjoy your site, John.
Thanks for your efforts.

[John]

slick: Thanks for your comments and I hope the site will continue being an enjoyable experience.

[shawn]

It seems that Longleaf funds are closed to new investors. Does anyone know of other mutual fund companies that have a similiar approach to investing (and are open)?

[John]

shawn: I thought Longleaf Partners Fund and Longleaf International had reopened (with only the Small Cap fund closed) -- check www.longleafpartners.com for the latest.