The Weitz Value Fund (Nasdaq:WVALX), managed out of Warren Buffet's hometown of Omaha, Nebraska, has a superior record of long-term performance going back to its start in 1986, and has survived intact through the bear market.
The Weitz Value Fund is the largest of the eight funds managed by Wallace R. Weitz & Company, with $762.1 million in net assets. It is a concentrated fund with its top 10 holdings representing 51.2% of total assets.

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It's no secret given the name of the fund, that the Weitz Value Fund follows a value investing strategy. The fund purchases large-cap stocks in companies that are easy to understand, produce free cash flow, have a defensible market niche and that trade at a discount to its private market value. The managers define this as what a rational buyer would pay for the entire company. (Learn more about the basic tenets of value investing in our article: The Value Investor's Handbook.)

The Weitz Value Fund was started in 1986, giving potential investors the benefit of a long-term track record to study, and the fund does not disappoint in this regard. The fund has outperformed its benchmark since inception and on a 10-, 15- and 20-year basis. It is behind by more than 400 basis points on a five-year basis and flat over the last 12 months. The full returns are in the table below:

Q1-09 1 Year 5 Year 10 Year 15 Year 20 year Inception
Weitz Value -9.3% -38.6% -9.0% -0.4% 7.4% 8.5% 8.5%
S & P 500 -11.0% -38.1% -4.8% -3.0% 5.9% 7.4% 7.9%
Returns are annualized as of 3/31/2009

The fund has 13.4% of its assets in the Class B shares of Berkshire Hathaway (NYSE:BRK.B), an iconic name familiar to most investors, and owned by many value funds.

The second largest position is Redwood Trust (NYSE:RWT) at 6.3% of the portfolio. Redwood Trust is a mortgage real estate investment trust (REIT). Let's hope the managers did their research on this name given the carnage in the mortgage market the last year. The company was unprofitable in the first quarter of 2009, but is still paying a reduced dividend that will represent a return of capital.

WellPoint (NYSE:WLP) is another large position at 5.1% of assets. Wellpoint is a managed care company that is profitable, but lately the company has been subject to volatility as the Obama administration starts to publicize elements of its healthcare reform package.

Telephone and Data Systems (NYSE:TDS) is 4.3% of the fund. The company provides local, long distance and wireless services through its own brand and through United States Cellular Corporation (NYSE:USM), a subsidiary of the company. Telephone and Data Systems has long been a target of activist investors who are currently trying to get a slate of candidate selected to the board. Weitz owns the special common shares, which limits voting rights to electing the board.

Bottom Line

The 23-year record of outperformance by the Weitz Value Fund is an extraordinary achievement, and should be recognized by all investors, even those who are not devotees of value investing. (Read Buy When There's Blood In The Streets, to learn how contrarian investors find value in the worst market conditions.)

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