Tickers in this Article: RAH, ASGR, BOS.TO, UHAL, R, CAR, PSA
If you invested $10,000 in the Bruce Fund back in September 2000, today it would be worth $49,000. It's the best performing balanced fund over a 10-year period according to Morningstar.com. Holding 31 stocks and 15 bonds, it has a turnover rate of just 11%, meaning it hangs on to the average position for nine years. That's fantastic and so too is Bruce & Company's 17.2% annual return over the past decade. With such a good record, let's highlight a few of its current and past stock holdings.

IN PICTURES: 7 Tools Of The Trade

  1. American Italian Pasta
    The fund first purchased 565,400 shares of the nation's largest dry pasta maker in the first quarter of 2006 at an average cost of $3.94 a share. By the time American Italian Pasta was purchased by Ralcorp (NYSE:RAH) in July, it had become the fund's largest holding generating a capital gain of $15.4 million on the 313,900 shares it still owned. From nearly a five-year holding period, the fund achieved a 1245% return. Who says pasta is unhealthy?

  2. America Service Group (Nasdaq:ASGR)
    This is currently one of the Bruce Fund's largest holding, which it has owned since the first quarter of 2002. America Service Group specializes in health care for correctional facilities and has done so since 1978. It went public in 1991 and its stock is up 39.6% since the fund first purchased it. While this is a reasonable return, it's less than the Morningstar Small Cap benchmark over the same period. Going on eight years holding the stock, Bruce obviously is waiting for a bigger return. The company currently has 58 contracts in 20 states serving approximately 167,000 inmates. The contracts themselves are between one and three years with possible extensions. I'm guessing that after 32 years doing this, it's figured out how to keep business. In the next 12 months, $750 million in new annualized revenues are up for grabs. This has the potential to be a catalyst for greater profits. Its second-quarter report indicated revenues for 2010 would be around $650 million. It's an interesting niche for sure.

  3. AirBoss of America (TSX:BOS.TO)
    This is another large holding of the Bruce Fund. AirBoss has the capability of supplying 250 million pounds of rubber annually. Its customers include the U.S. and Canadian military whom it supplies protective hand, foot and respiratory wear. Its second-quarter revenues grew 28% year-over-year to $62.0 million from $48.5 million and earnings per share were $0.13, much improved from a $.03 loss a year earlier. Its chairman, P. Gren Schoch, bought 100,000 shares May 24 at $5.40 a share, upping his ownership stake to 18.4%. Although it was a clear sign of confidence, the stock hasn't done much since. Bruce's average cost is $3.44 a share so if it's still holding at the end of September, you can be sure the forecast is that the stock is worth more than $5.40.

  4. Amerco (Nasdaq:UHAL)
    The holding company owns U-Haul, America's largest do-it-yourself moving and storage operator. Competing with companies like Ryder (NYSE:R), Avis Budget Group (NYSE:CAR) and Public Storage (NYSE:PSA), it also owns insurance companies and real estate investments. In the first quarter, it earned $3.26 a share, up substantially from $1.01 in 2009. Back in May I wrote about Amerco's 8.6% preferred shares being attractive. The Bruce Fund owns both, which is good because the stock is up 64% year-to-date. Here's to the small-cap conglomerate that works. (They don't call him "The Oracle" for nothing. Learn how Buffett comes up with his winning picks. For more information, see Think Like Warren Buffett.)
The Bottom Line
One of the best ways to find good investments is to follow what the top managers are doing. With a long-term philosophy, the Bruce Fund's stocks are all worth considering.

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