Word: coxing
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Instead, Dodge & Cox believes the more vantage points there are the better. On the stocks side, 20 analysts track companies, waiting for chances to buy solid, long-term businesses on the cheap--a classic value-investor stance. When an analyst thinks a company is something Dodge & Cox would be well advised to hold for five years, the analyst makes the case to an investment-policy committee...
...might sound iffy--decisions made with no one in charge--but Dodge & Cox has the track record to show that peer review works. The firm's three mainstay funds--Stock, Income and Balanced--all beat more than 95% of similarly invested funds over the past 10 years, according to investment tracker Morningstar. The International Stock fund has sported a similar track record over its shorter lifetime and is one of the 10 hottest-selling retail funds in any category; over the past 18 months, assets have more than tripled, to $45 billion...
...Dodge & Cox is used to being popular. After the late-'90s tech-stock bubble, investors disillusioned with momentum plays grew hip to the firm's strategy of buying out-of-favor companies and patiently waiting for them to rebound. Although Dodge & Cox doesn't advertise and shies from almost all publicity, word spread. In the wake of scandals involving some fund firms giving preferential treatment to big-time investors, money poured into Dodge & Cox, which consistently wins top grades on corporate governance from Morningstar and often appears in commentary pieces like "Our Favorite Sleep-at-Night Funds." (Disclosure: Through...
...Dodge & Cox also exhibits a level of commitment to employee development unheard of in layoff-crazy corporate America. When freshly minted M.B.A.s are hired to become analysts, the expectation is that they'll remain for their entire careers and eventually become shareholders in the firm. Seven out of nine people on the domestic-stocks team started as analysts straight from B school. Dodge & Cox rarely hires people who have worked elsewhere in finance: disagreements are fine (and considered a strength), but operating with a different investment philosophy isn't. "When we visit, it's almost eerie how on the same...
Part of preserving that culture is keeping the right ratio of experience to fresh talent. Dodge & Cox hires only one or two analysts a year. Starting in the 1980s, that became a problem as the firm began covering foreign companies. Dodge & Cox could have hired a big batch of analysts but decided not to, fearing it would wreck the apprenticeship model. "If you hire five people at the same time, they all start going to lunch together," says president Ken Olivier, a member of the U.S.-stocks committee. And as years passed, there might not have been enough promotions...