The World's Greatest Investors: Anne Gudefin (Magazine Cover)

Published July 14, 2009 at 4:00 a.m.

Editor’s note: Even as stocks come crawling back from the abyss, big name money managers are still going to have a hard time regaining investors’ trust – even if they deserve it. In this special report, SmartMoney spoke with four of the world’s greatest investors to see how they managed to minimize investors’ losses during the worst of the downturn and how they’re making money now.

Anne Gudefin

Manager, Mutual Global Discovery

Columbia University finance professor Bruce Greenwald recalls the day MBA student Anne Gudefin talked her way into his value-investing class. When Greenwald protested that he had hundreds of students on his waiting list, Gudefin pointed to the copy of stock-picking bible The Intelligent Investor on his desk. “Okay, fine,” she said crisply in French-accented English. “But how many of them spent their summer in China reading that book?”

Greenwald moved Gudefin to the head of the line. Thirteen years later she’s first in a different class: In four years running the $13 billion Mutual Global Discovery fund, she’s outperformed 95 percent of global stock managers.

Foreseeing trouble in banking in 2007, she sold off financial stocks, shorted European and U.S. stocks, and had 58 percent of her fund parked in cash by the time the markets hit their worst stretch. While Discovery took losses last year, it beat the MSCI EAFE world stock index by 17 percentage points.

Daughter of an American banker and French real estate investor, Gudefin grew up in Switzerland and France. Her post-MBA efforts to get into money management were thwarted at first—one company placed her in client services, stereotypical women’s work at old-boy firms. But she broke into the business at a hedge fund before joining New Jersey–based Mutual Series in 2000 as an analyst covering European stocks. That meant working closely with David Winters, one of SmartMoney’s 2008 World’s Greatest Investors. More crucially, it meant an apprenticeship in Mutual Series’ ethos of investing widely outside traditional stocks and bonds. David Petso, a Boise, Idaho, financial adviser with $25 million of his clients’ money invested in the Discovery fund, says he’s been impressed with Gudefin since she took over from Winters: “She’s very bold.”

Gudefin certainly can’t be accused of running with the crowd. Hosting us on a gloomy day in her London office, she isn’t yet warming to the idea of a market recovery. Though she’s shrunk her cash position to under 40 percent, she’s staying conservative, buying ultrasafe utility bonds and high-dividend stocks while using covered-call options to hedge against a volatile market. She won’t call a market bottom until she sees large-cap stocks make a stronger move than they have so far. If investors would rather hear something more upbeat, well, tough luck. “I know I cannot be the popular girl at dinner parties,” she says with a nonchalant toss of her head that sends her earrings flying.

Stocks She Likes

British American Tobacco (BTI)
Cigarette maker has pricing power and high dividends.

Eutelsat (ETL)
This French satellite company, listed in Paris, has a huge moat against competition.

Group Danone (DANOY)
Holdings in bottled water and infant nutrition look recessionproof.

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