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Monday, November 28, 2005

Perkins Opportunity Fades Away

by: Sean Hanna, Editor in Chief

Perkins Capital Management is closing one of its two mutual funds. The Waysata, Minnesota-based fund advisor plans to liquidate its Perkins Opportunity Fund by the end of the year. Perkins disclosed the move in a letter to shareholders sent November 2. That letter also encouraged shareholders to move their assets to the $12 million Perkins Discovery fund.

The move will formally end the life of one of the high-flying funds from the late nineties. However, shareholders have already mostly foresaken the fund, which is down to just $8 million in assets.

Even at its peak in size -- $150 million -- the fund was still relatively small for a flagship fund compared to those offered by larger asset managers.

Richard Perkins, a former stock broker with Piper Jaffrey, opened the fund in 1993. The fund then lived by its performance as one of the top funds of the 1990s and died by its performance, slipping well below its benchmarks during the past five years.

Eventually, his sons Dan and Dick joined him in the business.

Perkins told the Twin Cities Pioneer Press that the small-cap fund's performance suffered from a volatile ride as investors first poured money into the fund only to yank the funds out after the Nasdaq collapse.

"The money came in like gangbusters," Perkins told the paper. "Our great fortune was also our misfortune. Be careful what you wish for. It's just very difficult to manage a fund when the money keeps going out."

For other fund advisors, though, the lesson provided by Perkin's example is not the one taken away by Richard Perkins. Performance, every advisor should realize, is ephemeral. Therefore, fund advisors who seek to build a long-term business need to offer something than just the highest returns in the market.

Perkins, unfortunately, never figured out what that something was.  

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