Fund name: Jordan Opportunity (JORDX)

Objective: This is a non-diversified, no-load fund that seeks capital appreciation, primarily through investments in growth stocks of various sizes.

Adviser: Windowpane Advisors, though it is sub-advised by Hellman, Jordan Asset Management.  HJAM was founded in 1978 and it offers asset management through pension funds, separate accounts and partnerships, as well as this fund.  Hellman, Jordan’s prior claim to fame might have been employing Manu Daftary, the manager of Quaker Strategic Growth which has the second-longest streak of outperforming the S&P 500 (next to Bill Miller's Legg Mason Value).  

Manager: Jerry Jordan.  Mr. Jordan, who is about 40, received a business degree from Harvard and then joined Hellman, Jordan, the investment company started in 1978 by his dad, who still runs the show. In 1996, Jerry Jordan took over management of the firm’s separate accounts and limited partnership funds, which were run in the same investment style and contain many of the same assets as the Jordan Opportunity Fund.

Inception: January 21, 2005.

Minimum investment: $10,000 for regular accounts, $5000 for retirement accounts or for accounts linked to automatic investing plans.

Expense ratio: 1.98%.

Comments: With the intensity of the current craze for value investing, it’s nice to come across the successful momentum growth investor.  Like a number of other new funds, Jordan Opportunity started life as a limited partnership years before opening to the public. Jordan Opportunity pretty clearly pursues a style reminiscent of the late 1990s.  The fund’s three investing premises are: “the best investments are the common stocks of companies that are providing strong earnings growth to investors . . . profitable investments usually occur when stock markets, the industry groupings, and the particular stock all have technical factors that conspire toward higher stock prices. . . . thematic concentration in both industry sectors and companies is necessary to provide long-term outperformance.”  True to its credo, the 37-stock portfolio is tilted toward mid- and large-cap growth stocks and has substantial overweights in several sectors (tech and industrial materials) while completely avoiding others (financials, for instance).

Nonetheless, he has some interest in gold shares (four of the fund’s top 25 holdings are gold companies), holds about 25% of the portfolio in foreign stock, reserves the right to hold substantial amounts of debt securities, and claims that he’ll move into a defensive posture if the trend isn’t being a friend.  And there’s some evidence that Mr. Jordan is capable of making money with some consistency.  As of August 1^st, the fund and the partnership from which it developed claim to have beaten the S&P in every trailing time period shown below:

Likewise, over its short existence as an open-end fund, JORDX has consistently outperformed its large-growth peers: Morningstar places it in the top 6% of such funds over the past year, when it gained about 11% to its peers’ gain of zero.

With only $22 million in assets, the fund has the potential for being a nimble player in a volatile market.

That said, there are issues which bear some thought.  First, the manager trades a lot.  The portfolio warns investors to expect turnover routinely above 200%, and Morningstar reports a current turnover ratio nearly twice that.  Warren Buffett it ain’t.  Such high rates of turnover can, unless handled really well, generate drag on the portfolio and unpleasantness at tax time.  Second, the excellent long-term performance of the fund came under a different set of rules.  The company warns that, “The limited partnership . . . was not subject to certain investment limitations, diversification requirements, and other restrictions imposed by the 1940 Act and the Internal Revenue Code, which, if applicable, would have adversely affected its performance.”  On the other hand, “The limited partnership’s expenses during the periods presented were higher than the Fund’s proposed expense ratio” which should strengthen the fund’s performance.

Bottom line:. JORDX appears to have a pretty strong, experienced growth manager operating within a well-established, disciplined system.  It has performed well despite the fact that market conditions haven’t been favoring its investment style.  While it hasn’t established itself as a “gotta have” investment, it merits serious attention from investors who are anticipating a cyclical swing from value to growth.

Company link: http://www.jordanopportunity.com