JPMorgan Value Advantage’s portfolio manager and deep analyst resources give it a chance to deliver value, resulting in a Morningstar Analyst Rating of Bronze for cheaper share classes, while more-expensive ones receive Neutral.
This all-cap strategy relies heavily on the insights of manager Jonathan Simon, who has much to offer given his 40 years of experience. He’s steered this strategy since its 2005 inception, producing an admirable track record in aggregate, though one which has become less impressive since the strategy pivoted to large-caps about a decade ago. While Simon’s background is in mid-cap stocks (he’s comanaged Silver-rated JPMorgan Mid-Cap Value FLMVX since 1997), he can rely on J.P. Morgan’s experienced core research team to help with idea generation and monitoring within the large-cap universe.
Simon’s process here differs from his legacy mid-cap strategy, though not in a way that has demonstrated benefits. He focuses on higher-quality companies with strong financial profiles but makes way for stocks with weaker fundamental support if he feels the valuation compensates for the added risk. While a deeper-value skew isn’t a negative in of itself, Simon’s had some noticeable missteps. The portfolio’s multi-year stake in struggling radio station owner Entercom Communications AUD turned sour as the company raised capital to fund acquisitions which didn’t pan out, ultimately leading the company to cut its dividend to pay down debt. Other unprofitable trades include a brief stint in the troubled retailer Sears Holdings Corp. in 2011 and embattled mega-cap bank Wells Fargo WFC, a current holding. To be sure, it hasn’t been easy for many managers to pick winners within the deep-value market segment. While riskier plays may pay off in another environment, Simon hasn’t shown a demonstrable edge thus far.
Simon, now in his early 60s, doesn’t have imminent plans to retire, but there aren’t clear candidates who could pick up his responsibilities should he need to step away unexpectedly. Graham Spence became comanager in November 2020 but operates as a generalist analyst. He figures to play a larger role in the future and could ultimately be a successor, though he lacks other money management experience. Comanager Larry Playford focuses more on the mid-cap value strategy he oversees with Simon. While questions loom, the strategy remains in capable hands for now.