Huntington Situs Fund A (HSUAX)

By Ian Wyatt, MutualsAdvisor.com | HSUAX | Mar 07, 2008 | 2 comments

By Ian Wyatt, Editor-In-Chief

 Jason Cimpl, Research Analyst

 Ann C. Logue, Research Analyst

Fund Type: Small Blend

Expense Ratio: 1.65%

Min. Investment: $1,000

Web: http://www.huntingtonfunds.com

Top 3 Holdings:

Jacobs Engineering

Precision Castparts

Standard Microsystems

The Huntington Situs Fund, formerly the Huntington Situs Small Cap Fund, invests in small companies anywhere in the world. The fund has an interesting stock selection bias. “Situs” means “where the property is located,” meaning the fund looks for companies that have an advantage because of where they are located. The advantage could draw from the demographics of the local area, the political climate, or the resources that are available. The success of the business depends very much on its location and the location of its customers. Although the fund can invest anywhere, its bias is toward the United States, where 88.6% of assets as of Sept. 30, 2007 were invested. (Quite possibly, the Situs Fund takes advantage of the point of view of its own location in Central Ohio.)

The fund has been run like a small-cap growth fund since its 2002 inception, but the investment objective was changed at the end of January 2008 to eliminate capitalization limits on the fund’s holdings. This reflects the ongoing effect of market appreciation that makes traditional cut-off points obsolete whenever stocks are hot and allows the Situs portfolio manager to stick with its winners rather than sell them when they exceed market capitalization boundaries. It also makes it easier for the managers to find suitable international investments.

The fund’s largest holding, at 4.5% of assets, is Jacobs Engineering Inc. (NYSE: JEC), an engineering and consulting firm based in California. Its services in engineering, construction and environmental management rely on the company’s ability to understand the geology of the client’s project. Next, at 3.3% of assets, is Precision Castparts Corp. (NYSE: PCP) a metals casting and forging operation. It’s based on Portland, Ore., where the port makes it easy to ship finished products. The third largest holding is Standard Microsystems Corporation (Nasdaq: SMSC), which makes siliconbased integrated circuits and constitutes 2.9% of assets. It has operations in New York, Texas and Arizona to be near major electronics manufacturers.

The 10 largest holdings together make up 27.1% of assets; the fund has 126 stocks all together. Industrial companies represent 17.4% of assets, which makes sense; these companies usually rely on location to give them both distribution and material advantages. Technology companies make up 16.1% of assets and consumer discretionary businesses are another 14.4% of holdings.

The fund’s portfolio manager, B. Randolph Bateman, is also the president and chief investment officer at Huntington Financial Services, a division of Huntington Bank in Columbus, Ohio. He is a Chartered Financial Analyst who has managed the fund from the beginning. Like all of the Huntington portfolio managers, he uses economic research from Laffer Associates. The distribution of the fund is handled by Federated Investors in Pittsburgh. It’s not widely available because, like all Huntington Funds, it is intended to give people a reason to select Huntington Financial Services for their financial planning.

The Situs Fund’s A shares carry a maximum 5.75% load with the first breakpoint at $50,000, as well as a 12b-1 fee of 0.25%. Those who are interested can buy B shares, with a contingent deferred sales charge and a 12b-1 fee of 0.75%. The total expense ratio comes in at 1.65%.

These expenses are high, but performance has more than made up for it. In 2007, the A shares were up 9.66%, while the S&P 500 was up 5.49% and the S&P Small Cap 600 Index was down 0.30%. It’s simply the latest in a string of good numbers; over the last five years, the fund is up an average of 18.99% per year while the S&P Small Cap index is up just an average of 16.04%.

The Situs Fund has a great track record and its broader investment objective should help the fund’s analysts find more ways to generate profits in a global economy. For all the talk of how the world is flat, it really isn’t; place matters to many people and forms a strategic advantage for all sorts of businesses. The fund isn’t a core holding, but the quirky emphasis on location makes it an interesting adjunct to a traditional equity portfolio. Randolph Bateman has created a strong track record working with both the market capitalization and the stock selection constraints. Now that he has more freedom, the fund’s performance may become even more impressive.

 This article is from the Spring 2008 report, "MutualsAdvisors.com, Mutual Fund Investing 2008: The 10 Best Funds to Buy Now," Click here for the latest report!

Comments on this article

Posted by Brigitte-Roulett  on  08/19  at  02:22 PM

Posted by Tricks For  on  08/20  at  06:20 PM

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