will join GuruFocus for an interview this month. You can ask him
a question related to investing by leaving it as a comment below.
GuruFocus will receive his answers via a phone interview in the
next several weeks.
is a managing partner at
First Pacific Advisors
, a firm he joined in 1996. He manages several portfolios,
including the $9 billion FPA Crescent Fund. Romick has delivered
a 125.6% cumulative return over the last ten years, compared to
34.9% for the S&P 500, and is in the top 1% of money
The Crescent Fund has a long-short allocation, which is currently
about 66.2% long and 3.4% short. About 46% of the fund is
allocated in the U.S., 21.3% in Europe and 1.8% elsewhere.
Because of his belief in conservative positioning and capital
preservation, Romick was able to dodge the worst of the market
dips of recent decades. Presently, he has a cautious market
outlook and just 69% exposure to risk assets.
Romick is a bottom-up, absolute value investor with a long-term
focus. Foremost, he lets price be his guide, "If a business or
asset is good and cheap - absolutely, not relatively - we'll buy
it," he says in his second-quarter letter.
However, Romick believes that investors ignore the macro picture
at great peril. He has a tendency to be "appropriately fearful,"
which has caused him to be early in evading disasters when he
The Crescent Fund returned 3.5% for the first half of 2012, with
its biggest winners being Walmart (
), Petsmart (
) and Anheuser-Busch INB (
). Its biggest losers were Cisco (
), Canadian Natural Resources (
) and Western Digital (
). Cisco is just below their cost, and Western Digital gave up
most of its gains in the second quarter. Canadian Natural
Resources had operating issues in the first quarter, but a more
general weakness in energy stocks dragged it down in the second
Romick has "a lot of fear" about the economy longer term. Reasons
for this view include slowing U.S. GDP growth, the EU financial
crisis, a housing bubble and unsustainable infrastructure
spending in China, increased government spending and rising
health care costs.
He believes the EU has reached a Keynesian end point when the
government can no longer rely on deficit spending alone to spur
the economy, and the U.S. is just the EU at an earlier stage.
Romick also believes that the U.S. stock market is priced above
average, and valuation depends on sustaining all-time high
operating margins. The margins have been helped by declining
corporate tax rates, labor costs and interest rates - variables
that are unlikely to decline in the future. "Without some
significant improvement in demand, the 'E' part of the
Price/Earnings equation may be overstated," he says.
Steve's largest positions are CVS Caremark Corp. (
), Aon Plc (
), Covidien Plc (
), Microsoft (
) and Walmart (
In the second quarter, he bought Oracle (
), AIG (
), Bank of NY Mellon (
), Aleghany Corp. (
) and Xerox (
He is the only guru whose short positions GuruFocus tracks. See
his stock portfolio
You can ask Steve your investing questions by typing them in the
comments section below.About GuruFocus: GuruFocus.com tracks the
stocks picks and portfolio holdings of the world's best
investors. This value investing site offers stock screeners and
valuation tools. And publishes daily articles tracking the latest
moves of the world's best investors. GuruFocus also provides
promising stock ideas in 3 monthly newsletters sent to