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Acorn Fund’s Ralph Wange

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There is little known about Ralph Wanger other than the fact that he was one of the most successful investment traders in the United States. Wanger is one of the younger investors to be recognized with the likes of T. Rowe Price and Philip A Fisher, but he was excellent with the investments he made. A very private man, Wanger’s career spoke for itself.

Biography

Born in 1933, Ralph Wanger was raised in Chicago. He attended the Massachusetts Institute of Technology where he graduated with a Bachelor’s and Master’s degree, earning the second degree in 1955. Originally Wanger was making a name for himself in the insurance industry but switched careers and started investing in 1960 while working for Harris Associates. He started as portfolio manager and securities analyst until 1977 when the Acorn Fund was formed. He was promoted to the position of portfolio manager for the new fund and then to president, holding the position until he retired in 2003. From 1977 to 2003, under Wanger’s guidance, the Acorn fund gained an annual 16.3% return.

Claim to Fame

Shareholders of the Acorn Fund received ‘witty and far ranging’ quarterly newsletter prepared by Wanger during his time as the lead manager for the fund – between 1970 and 1988. The Acorn fund grew to be one of the best performing small-cap growth funds in the United States during this time.

Why was he successful?

Like many of the investors that paved the way for Wanger, he believed in investing in smaller companies that were financially strong for long periods of time. He preferred to put his money on entrepreneurial managers and businesses that he could understand and that would benefit from the current macroeconomic trend sweeping the nation. He made it a point to look for long term trends in the businesses he invested in, capitalizing on the edge these businesses had.

Wagner also liked to invest in themes. One example he offered when describing this principle was investing during the Gold Rush. He was the type of investor that would have put his money into stocks for the companies that provided miners supplies, like shovels and picks. These companies would provide equipment for years for other consumers who needed them for things other than gold mining as compared to investing in the mines themselves that would play out.

 

When Wanger looked for a company to invest in, he followed these parameters: there will be a growing market for the company’s wares; the company has a dominant market share; management is outstanding; the business is understandable; the company has good marketing skills; investors can get a large stake in the organization; the balance sheet is strong; and the price is a good one. Wanger was always reminding himself and his employees that while the company could be good and doing well, the stock could be bad.

Publications

Ralph Wanger was the author of the following investment book:

* "Zebra In Lion Country" by Ralf Wanger and Everett Mattlin (1999)

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