Q&A; Andrew Leckey

The Baltimore Sun

Please share your thoughts on the Clipper Fund, which was recommended to me.

P.R., via the Internet

Run for nearly three years by respected managers Christopher Davis and Kenneth Feinberg of Davis Selected Advisors, the value-oriented fund made the mistake of owning some companies hit hard by the financial crisis, including American International Group Inc. and Merrill Lynch & Co.

It is volatile because of its concentrated portfolio and lack of cash cushion.

The $1.1 billion Clipper Fund (CFIMX) is down 52 percent during the past 12 months and has a three-year annualized decline of 17 percent. Those results land it in the bottom 5 percent of large growth and value funds.

"Acknowledging that this has been a terrible period to own this fund, we still like it," said Dan Culloton, an analyst with Morningstar Inc. in Chicago, who said it could play a supporting role in a portfolio. "You are betting on the skill, resources and commitment of the managers, who are independent thinkers making research-intensive stock picks in a low-turnover portfolio for the long term."

Davis and Feinberg each has invested more than $1 million of his own money in the fund, and Davis Selected Advisors has invested $50 million, proof of their belief that brighter days are ahead. The two managers have shown themselves at other funds to be capable of good long-term records. This fund is shareholder-friendly and has lowered its expenses, making it one of the least expensive in the no-load, large-cap category.

Davis and Feinberg aim to buy great companies whose shares are temporarily depressed, basing their purchase on earnings and cash analysis. They seek to determine how well a firm has historically allocated its capital.

Nearly half of Clipper Fund's portfolio is in financial services, with energy and consumer services other significant concentrations. Its top holdings were recently Costco Wholesale Corp., American Express Co., Berkshire Hathaway Inc., Bank of New York Mellon Corp., Canadian Natural Resources Ltd., ConocoPhillips, Procter & Gamble Co., American International Group and Harley-Davidson Inc.

The fund requires a $10,000 minimum initial investment and has an annual expense ratio of 0.69 percent.

When is a stock delisted? Does each exchange have specific regulations? How bad does it have to get?

Z.S., via the Internet

A company's stock is delisted, or removed from the exchange on which it trades, when it is no longer in compliance with the exchange's listing requirements.

Minimum share price, total capitalization, financial ratios, sales levels and number of shareholders are among the considerations. Requirements of the New York Stock Exchange and Nasdaq stock market are specific on all counts.

"A company is often delisted because it declared bankruptcy or because its stock has gone down too far in value," said Paul Nolte, investment director of Hinsdale Associates in Hinsdale, Ill. "It is pretty serious, and while some companies make a comeback, it is definitely not a good event."

After being delisted, a company may continue to trade on the Pink Sheets or OTC Bulletin Board. and also may change its ticker symbol. Neither of those entities has listing standards, though before a stock can be quoted on the OTCBB, the Securities and Exchange Commission requires that it is current in its filings.

E-mail Andrew Leckey at yourmoney@tribune.com.

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