One morning earlier this month, the stock market started falling almost from the opening bell. By the time Chris Linden, portfolio manager of the FPA Perennial Fund, rolled out of bed at 6:45 a.m. Pacific time, the Dow Jones industrials already were off 18 points.
By the time he read the sports page, got dressed, ate breakfast, tended his three horses, said goodby to his wife and set off to work, the market had dropped another 10 points.
Was Linden worried about the weak opening and its impact on Perennial's $54-million portfolio and 2,700 shareholders? Not at all. He drove away from his Topanga Canyon house and, following his normal routine, headed straight for the beach. "If there are waves, I go surfing," he says. "I carry a board all the time."
Welcome to a day in the life of a portfolio manager.
Chris Linden doesn't fit easily into any pinstripe stereotypes, as portrayed in movies such as "Wall Street" and "Trading Places." But aside from his early morning recreation, Linden insists that he spends his day like a lot of other fund managers across the country--reading about companies, placing stock orders, talking on the phone, meeting with an occasional visitor and reading some more.
Linden works for Angeles Corp., which owns the FPA Funds. The company's offices overlook the Rancho Park Golf Course in West Los Angeles, about six miles from the beach. The sea was placid on the day of this interview, so Linden had given up on surfing. He arrived at work shortly after 8 a.m.
"Depending on water conditions, I get in between 7:30 and 9:30," he explained. "I generally don't make appointments before 10."
Linden's office reflects his laid-back personality. There's a computer terminal for checking stock prices, a baseball cap with dog ears attached and a sign that says: "Refuse to Grow Up." Linden practically apologized for a wall chart that traces the history of stock market movements from 1969 on. "It helps my memory," he said.
The 40-year-old Southland native started working at Angeles' predecessor company in 1972 while earning an MBA degree at UCLA. Before that, he attended Inglewood High School and USC as an undergraduate. Linden has been with the company ever since, except for a five-year stint in the mid-'70s, when he worked as a security analyst, first in Houston and later in New York.
When he gets to work, Linden's first order of business is catching up on the news. He scans the Wall Street Journal, Los Angeles Times and the morning's reports on the Dow Jones News Service. He checks for information on any of the roughly 400 companies he follows on a regular basis, including the 40 currently held by Perennial. "A big part of my daily routine is monitoring the securities we already own."
Linden doesn't try to time the market or forecast the economy, because he doesn't think that it can be done consistently.
The stocks that Perennial holds are mostly blue chips. The fund takes a low-risk approach to equity investing, with Linden focusing on stable companies showing low debt and above-average returns on assets and equity. "We're looking for businesses that aren't going to fail, at least not quickly. Our emphasis is on eliminating fear."
For the most part, Linden has succeeded in that objective. Since the fund debuted in 1984, he lost money in just one year--a modest 1% decline in crash-marred 1987. Otherwise, Perennial's annual gains have ranged from 10% in '86 to 26% last year. Mutual Fund Values of Chicago gives the portfolio, which charges a 6.5% up-front fee, a four-star rating (out of five).
This morning, Linden was watching for news on Melville Corp., a Harrison, N.Y.-based retailer that represents Perennial's largest holding. That company had recently bought a drugstore chain and a toy store chain. For the past two weeks, Linden had been talking to Melville executives, independent analysts and others about the acquisitions. He checked his computer terminal and sifted through a couple of research reports on his desk for any word about Melville. Nothing caught his eye.
He wasn't expecting any big news. "We have two full-time traders who get to the office around 5:30 in the morning. If something important happened, they would have called me at home," he explained.
Around 9:45, one of the traders informed Linden that shares of National Service Industries, an Atlanta-based company, were selling down 1 1/2 points. It was a bargain-hunting opportunity. The fund manager thought for a bit, then placed a buy order. "We study these businesses all the time, so we're prepared to move."
A bit after 10, some mail arrived. Linden spent time browsing through a copy of the Wall Street Transcript newsletter, the Oil & Gas Journal and two brokerage research reports. There also was a small pile of annual reports awaiting his attention. At 10:50, he received another batch of the morning's financial news wire. Twenty minutes later, he again huddled with a trader and decided to place a bid on another stock.