Clipper Fund Inc.'s independent directors picked Davis Selected Advisors to replace Pacific Financial Research as the fund's adviser, effective Jan. 1, according to announcements by Clipper and PFR parent, Old Mutual Asset Management. Clipper chose Davis over Barrow, Hanley, Mewhinney & Strauss, the affiliate Old Mutual chose to manage PFR's concentrated deep-value equity portfolios soon after PFR founder James H. Gipson and two senior portfolio managers announced in late September that they would move on at the end of the year.
In a report by Morningstar, Senior Analyst Kunal Kapoor called the move an all-too-rare sign of independence by a mutual fund board.
The fund had only 23 stocks as of Sept. 30. Michael Glazer, a lawyer for the Clipper Fund, a lawyer for the Clipper Fund, said Christopher C. Davis, CEO of Davis Selected Advisors, and portfolio manager Kenneth C. Feinberg will run the Clipper Fund with 15 to 25 holdings.
A source familiar with Barrow Hanley who declined to be named said Barrow executives told the Clipper board that its risk parameters precluded it from running a portfolio with as few as 15 names. While Davis' flagship mutual fund has more than 70 holdings, Messrs. Davis and Feinberg have run an institutional portfolio with roughly 15 names for the past nine years.
The board saw Davis Selected Advisors as the firm best able to manage the Clipper Fund "in the same spirit as it has been done in the past," said Mr. Glazer.
"We appreciate the consideration given to this decision by the Clipper Fund directors," Old Mutual CEO Scott Powers said in a news release. He pledged to work closely with the fund to ensure a "seamless transition."