Oakmark Ousts Manager Sanborn


After a five-year slump, capped off by big money-losing bets on beaten-down stocks such as Mattel (ticker symbol: MAT) and Philip Morris (MO), Robert Sanborn got the hook Tuesday.

The head of the Oakmark Fund becomes the highest-profile “value” manager to date to be ousted. But analysts don’t think he’ll be the last, especially if value stocks don’t make a sustained comeback soon.

Under Sanborn, Oakmark ranks as the worst large-value fund over the last one and three years, and the third-worst over the last five. It is down more than 14% year to date, after losing nearly 11% in 1999.


Sanborn will remain with Chicago-based Harris Associates, which runs the Oakmark funds, managing private accounts.

Bill Nygren, who manages Oakmark’s sister fund, Oakmark Select, will replace Sanborn at the helm of the $2.7-billion portfolio.

“It was an untenable situation for Sanborn,” said Scott Cooley, an analyst with Morningstar Inc. “Both he and Bill Nygren pick stocks off the same select list of approved stocks [chosen by the firm], and Nygren was doing so much better than him.”

Unlike Sanborn, who steadfastly refused to invest in technology stocks at current nosebleed valuations, Nygren recently held 16% of Oakmark Select in tech. His fund has beaten 96% of its mid-cap value peers over the last three years, according to Morningstar.

Nygren denied that his appointment means there’s going to be any change in philosophy at Oakmark. “I don’t think there was anything structural that led to the poor performance numbers that Oakmark had,” said Nygren, who will continue managing Oakmark Select. “The last few years, [Sanborn] had some bad luck on stock selection.”

In recent years, as “growth” investing has come to dominate the market, Sanborn dug in his heels and “concentrated” the Oakmark fund a bit more, recently holding just 28 stocks. That means he made even bigger bets on other beaten-down stocks such as Lockheed Martin (LMT) and Bank One (ONE). Those stocks, along with Mattel and Philip Morris, have slid 48% to 55% each over the last year.

“In essence, he doubled down--and lost,” said Morningstar’s Cooley.