Few stocks, few holders make for cozy little fund

In August, the annual meeting of the Gintel Fund Inc. will be held at Robert Gintel's house in Greenwich, Conn. The meeting will be followed by a barbecue in his backyard.

An annual meeting at the president's house is a possibility available to few other mutual funds, but with only 350 shareholders, the one-year-old Gintel Fund has more flexibility than most funds to do what it wants. This freedom includes following an investment strategy other investors would consider the equivalent of walking a tightrope.

The fund is what is known as a ''nondiversified'' investment company. Unlike mutual funds that diversify their portfolios -- and spread the risk -- among several dozen, often hundreds of investments, the fate of Gintel's stock portfolio rests on the shoulders of just 12 stocks. And about 35 percent of the portfolio is in just three stocks, Mr. Gintel said.

This strategy seems to be working. When the fund opened on June 10, 1981, its net asset value (NAV) stood at $50 a share. Since then, its NAV -- or assets, minus liabilities, divided by the number of shares - has climbed to ''$58 and some change,'' Mr. Gintel says. Its total assets stand at about $41 million. The fund's stated investment goal is ''long-term capital appreciation with minimal emphasis on current income.''

While he admits to some occasional ''nervousness,'' Mr. Gintel takes a somewhat fearless attitude toward his highly concentrated investment policy.

Keeping up good performance with such a small number of stocks does not concern him too much, he says, since ''that's the way I've always operated.'' Before starting his fund, he headed an investment advisory firm in which selecting a few stocks for a client was standard practice. The mutual fund grew out of that work, partly as an effort to give his clients more flexibility in investments.

''This is our style,'' he says of the investment strategy. ''It's how we've had our success in other places.''

Owning so few stocks means there is a great potential for ''volatility'' in the share price. If just one stock goes up or down dramatically, it could have a very visible effect on the net asset value. This volatility ''is something I've learned to live with,'' Mr. Gintel says.

Getting into the Gintel Fund is no more difficult than with any other fund, if you have the money. The minimum initial investment in the no-load fund is $ 100,000. That's one way Mr. Gintel keeps the number of shareholders down. Another way is a ''ceiling'' on assets. When the fund gets up to $150 million, no new shares will be sold.

The size of the fund also helps keep the number of investments down, Gintel says. ''We have a small staff. We can only keep track of so many companies,'' he says.

Keeping the fund small, he maintains, gives it more flexibility to move in and out of stocks when conditions call for a move. As of now, the fund has the same stocks it started with, with one exception. At the beginning of this year, when a few airlines began experiencing cash-flow problems and started to cancel orders for the Boeing Company's new 757 and 767 jets, Mr. Gintel sold his Boeing shares.

The fund's largest holding is Zayre Corporation, the giant retail chain. Retailing, Mr. Gintel notes, has been doing fairly well in the current recession.

''The consumer spending part of the economy is holding up better than capital goods spending,'' he says. And with new management which has ''rejuvenated and revitalized'' the company, Zayre has been leading this sector, he believes.

The next largest investment at the fund is H.H. Robertson Company, a nonresidential construction firm. Unlike housing construction, which has been almost completely stopped by high mortgage rates, this segment of the construction industry has maintained some strength, particularly in the South and West.

Actually, the largest portion of the Gintel Fund's investments is not in stocks at all. Mr. Gintel is no more pleased by the performance of the equity markets these days than a lot of other investors, so he has parked about 45 percent of his fund's assets in US Treasury bills, government agency securities, and other cash-equivalent investments.

This attitude has also been applied to another fund which Mr. Gintel started in January, the Gintel Erisa Fund. Designed for individual retirement accounts, Keogh accounts, and pension plans, the fund currently has about 75 percent of its $21 million in assets in cash equivalents.

Mr. Gintel has another reason for keeping the number of shareholders in his funds down. Every month, a ''president's letter'' is sent to all 350 shareholders, to keep them up to date on current investments and future plans. If he had too many more investors, he says, he would have to stop signing all those monthly letters himself.

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