The top three sectors for this fund are: Real Estate, 52.83%; Financial, 24.8%; and Consumer Cyclical, 14.17%.
Kinetics Paradigm (WWNPX)
From Moneyletter
Kinetics Asset Management, an employee-owned investment advisor, was established in 1996 and currently manages about $5.5 billion in assets via nine mutual funds and other accounts. Since the firm’s founding, it has held to a long-term, value-oriented investment philosophy. This approach “seeks to capitalize on the long-term price inefficiencies that can be created by the collective, short-term focus of the markets.”
At the heart of the Kinetics philosophy is the belief in an “equity yield curve,” similar to the well-known interest rate, or debt yield curve. The premise behind the equity yield curve is that the further away the potential investment reward, the steeper the equity yield curve. So, while a company’s stock price is influenced in the short term by many factors and can fluctuate significantly, there exists a long-term value of the firm’s business (three to five years in the future).
Kinetics seeks to acquire investments when they sell at a high discount to that future value. Rather than looking at traditional screening tools based on, for example, price/earnings momentum, sector/industry analysis, and traditional style characteristics, Kinetics states that they emphasize “predictive attributes that are verifiable but not always readily quantifiable.”
Kinetics emphasizes a long-term, patient investment view, with reasonable investment risks and a high probability of long-term investment success. Kinetics Paradigm (WWNPX) takes a US-based, but global all-cap approach in its portfolio. It has more than 10% of assets in large-cap stocks, and 49% in mid-cap issues. It is very concentrated, with two-thirds of assets in the top ten holdings.
Paradigm’s performance is compared to the mid-cap growth fund category, where its 36.2% year-to-date return outpaces 98% of its peers. The 2014 and 2015 calendar years were similarly dismal for this fund. And the same top holdings have driven recent returns.
The fund has investments that provide exposure to Bitcoin. While that was likely an advantage in the past it has not been favorable this year.
Walter Frank, Moneyletter, www.moneyletter.com, 800-890-9670, June 2018