Every value player learns that just because something has fallen doesn't mean that it can't drop further — or that it won't stay stuck at a depressed price for a long time. A hallmark of value investing is patience.
One of Crescent Fund's biggest holdings is Microsoft Corp. The shares have mostly traded between $25 and $32 since 2004. The company's many critics say it has lost its way.
Romick, however, believes that Microsoft still has significant growth potential in areas such as cloud computing, its Xbox gaming unit and its Microsoft Office products. The stock "should be getting a re-rating, in my opinion," he said. But if it doesn't, he believes his risk of loss from current levels is low. And the stock's current dividend yield is 3.4%.
Yet as he looks across financial markets, Romick said he doesn't see a lot of screaming values to add to his $9.9-billion fund, which on average has gained 6.3% a year over the last five years, beating 95% of its peer funds. He's holding 28% of the fund's assets in cash, waiting for better opportunities in stocks or bonds.