Surprise change at top value shop First Eagle

Aaron Pressman

Jean-Marie Eveillard was one of the most impressive mutual fund managers of all time when he left the stage at the end of 2004. At that point, his little shop of value investors was part of Arnhold and S. Bleichroeder Advisers in New York, which bought the group in 1999 after many years as part of French bank Societe Generale. Eveillard left the handful of funds he managed, including the First Eagle Global Fund (Symbol:SGENX) and First Eagle Overseas Fund (SGOVX), in the seemingly capable hands of his protege, Charles de Vaulx. I interviewed both men together in October 2003 as they prepared for Eveillard's retirement and they sounded like two peas in a pod.

So I was somewhat stunned to receive a press release this morning from Bleichroeder stating that de Vaulx had resigned and Eveillard, who must be approaching 70 years old, was returning to oversee all the funds. No explanation in the release as to why the change was made. The $12 billion First Eagle Overseas Fund had a mediocre year last year gaining 22%, trailing the MSCI EAFE Index Morningstar used as its benchmark by 4 percentage points and falling behind over 80% of similar funds according to Morningstar. The $21 billion First Eagle Global Fund, however, had a better year, gaining 21% and beating two-thirds of similar funds according to Morningstar.

Maybe that's why de Vaulx left. I don't know -- I have a call in with the firm to find out more. Still, the overseas fund posted similar lackluster performance according to Morningstar in 2003 and 2004 before Eveillard left. Perhaps the firm is using other benchmarks or risk-adjusted returns that put the funds' more recent performance in a worse light. I'll update when I find out more.

(UPDATE) John Arnhold, CEO of the firm, says he can't comment on de Vaulx's resignation beyond saying that it was in fact a resignation. He says the plan is for Eveillard to prep a successor over the next few years and then again step back. The old manager was back at his post at 8 a.m., Arnhold reports. Both funds mentioned above remain closed to new investors.

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