Washington Post – Ric Dillon, whose $442 million Diamond Hill Focus Long-Short Fund climbed twice as much as the Standard & Poor’s 500-stock index in the past five years, is bearish on carmakersand bullish on airlines.
The 49-year-old mutual fund manager forecasts a further drop in shares of General Motors Corp. and Ford Motor Co. because of competition from Asian rivals such as Japan’s Toyota Motor Corp. He expects US Airways Group Inc. to gain because the bankruptcies of Northwest Airlines Corp. and Delta Air Lines Inc. mean fewer planes are flying.
“For most of the last 28 years, the airline industry has been a bad business,” Dillon said in an interview from his office at Diamond Hill Investment Group in Columbus, Ohio. “Maybe now it’s not a bad business.”
Dillon’s stock-picking produced a return of 17 percent in the past 12 months, exceeding the 12 percent advance of the S&P 500. The Diamond Hill fund rose at an annual rate of 10 percent in the past five years, compared with the index’s 4.5 percent increase and the 8.4 percent gain of the average U.S. equity fund, data compiled by Bloomberg show.
The fund, which Dillon co-manages with Charles Bath, 51, is the second-best performer of about a dozen mutual funds that engage in short-selling. The Baron Partners Fund ranked No. 1 in the past year, up 25 percent, according to Bloomberg data.
