Veteran investor Ken Heebner has long held to a strategy that on its surface is simple: He looks for opportunities wherever he can find them and then pursues them aggressively, quickly diving in and out of stocks of all sorts. Heebner's results, though, have been anything but ordinary: His CGM Focus fund has rocketed more than 60% since the beginning of the year, thumping the S&P 500 stock index by some 57 percentage points. Even more impressive, CGM Focus has chalked up astounding average returns of 25% a year over the past ten years.
Those striking gains are the result of Heebner's keen eye for global trends and his willingness to make bold bets. In years past, for example, Heebner has bought and sold
technology, homebuilders, energy, and other sectors. CGM Focus holds just 23 stocks, and nearly 60% of the fund's $5.2 billion in assets is concentrated in its ten largest
holdings. Turnover in the fund can easily surpass 300% a year, meaning that the portfolio may look drastically different from quarter to quarter.
Lately Heebner has been powering up on energy stocks, with holdings such as Schlumberger, China's CNOOC, and Petrobras Energia (one of our Ten Best Stocks for 2008). In keeping
with his anything-goes style, Heebner can also bet against stocks by selling them short, and while he's unwilling to talk about those positions, the fund's recent reports show a
prescient wager earlier this year against mortgage lenders Countrywide Financial and Indymac Bancorp.
Such big bets have at times made for a rocky road. In 2002, CGM Focus lost 18% as Heebner prematurely anticipated an economic recovery. With swings like that, the fund may not
suit investors who want to avoid volatility. "This fund's style and eye on highfliers leaves us uncomfortable," Morningstar analyst Michael Herbst wrote in a recent report.
But Heebner's bets have paid off more often than not, making him a gutsy master we'd trust with our money.