Growing Rich - Arabictrader.com

KIRK KAZANJIAN
GROWING HIS FIRM
When Davis decided to leave the bank to focus on the mutual fund
business in 1983, the first thing he realized was that in order to make
his company grow, he had to have more than just one fund. That’s
when the old Lincoln National came back into his life. “It controlled
a company called Chicago Title and Trust,” he says. “Chicago Title
owned a group of mutual funds called the Retirement Planning Funds
of America. They weren’t making any money for the company, so I
was able to buy them for a very good price.” Davis acquired three
funds in the deal and transformed them into the Davis Growth Opportunity
Fund, the Davis High Income Fund, and the Davis Tax-Free
High Income Fund, all of which are run by other managers.
Several years later, Davis won the management agreement to run
the Selected Funds, following the departure of Don Yacktman and
Ron Ball, who, as we now know, went on to form their own investment
firm. Davis says he had tried to get the management contract
before, but had lost out to Yacktman’s old firm, Prescott Ball and
Turben. After Yacktman’s highly publicized departure from Kemper
Financial, the company wanted to add a load to the Selected funds
so they could be sold by Kemper’s team of brokers. However, Selected’s
independent board of directors refused to go along with the plan. The
funds had been around since the 1930s and historically had been noloads.
“The board’s attitude was we’ve had several people run our
funds in the past, but we have always dictated who was going to
manage them and how they would be sold,” Davis says. “They didn’t
want the funds to have a sales load. So they decided to search for
another money manager, and we were lucky enough to win the
search.”
As part of the deal, Davis agreed to change the name of his firm
to Davis Selected Advisers. The Selected Funds board wanted to
maintain its independence, so Davis obliged them by listing the Selected
and Davis funds separately in the newspaper. Davis inherited and
initially managed both Selected American, a growth and income fund,
and Selected Special, which is more oriented toward small companies.
Later, he hired Elizabeth Bramwell to take over Special in 1994, after
she left the Gabelli Growth fund to go out on her own. “I saw that
she was leaving, and, since I no longer wanted to run the Special
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