Paramés Criticized for Losing Half of Fund Capital

Paramés Loses Half of Capital; Myth of 'Spanish Buffett' Cracks

Francisco García Paramés has destroyed around 50% of his investors' capital since going independent, according to growing criticism in forums. Cobas Internacional's net asset value has fallen for more than three years, dropping below 50 after starting at 76. The question is no longer if value investing is in a bad cycle, but whether Bestinver's legendary streak was professional skill or luck with an expiration date.

What Peine to Cobas Internacional, Paramés' Fund?

The vehicle launched after leaving Bestinver hits new lows without interruption. Compared to global indices and low-fee roboadvisors, the fund diverges from benchmarks monthly, a trend many deem irreversible. He argues this behavior is "normal" for his style: buying cheap and waiting for the market to correct prices. However, the wait exceeds three years, while the 1.75% fee remains unchanged. Some describe the client relationship as almost faith-based.

Aryzta, Golar, DIA, and Pescanova: A List of Failed Bets

Swiss baker Aryzta, a major thesis, trades at 68 cents while he continues to defend its value. Golar, his second-largest position, halved in January after he sold the idea to participants and accumulated shares. Previously, there was DIA, entered despite visible franchisee lawsuits, and Pescanova, a top Spanish holding just before bankruptcy. Renault, Teekay, and Dixons also underperform the index.

Is Value Investing Dead, or Is This Strategy Flawed?

Here lies the rift. Some argue value investing is dead, replaced by growth stocks that trade high and rise regardless. Others recall Warren Buffett facing similar doubts in the late nineties, proving his worth when the tide turned. A more uncomfortable suspicion remains: if global indices and roboadvisors exist, what justifies paying fees to consistently lag behind the market?

Bestinver Success: Talent or Trinc Effect?

At Bestinver, Paramés invested in small, illiquid stocks. One debate participant suggests that when he highlighted companies falling without reason, trinc bought en masse, driving prices up and boosting his fame. Bestinver Internacional, focused on large caps, never stood out. Rumors, unsupported by evidence, suggest some successes relied on insider information or whispered tips. Outside that structure, the market is colder.

Other Spanish Value Funds: AZ Valor, Magallanes, True Value

The issue isn't isolated. AZ Valor posts disastrous results, and Magallanes included companies like Carrefour, pushing investors toward foreign growth funds. True Value makes money but charges high fees and fails to beat the market. Numantia, managed by Emérito Quintana, is the only domestic fund clearly praised. Active management struggles to justify its costs with performance charts.

Fees Unrelated to Performance

As summarized in forum discussions, a fund's business is assets under management, not investor returns. Cobas charges 1.75% annually on a substantial portfolio, regardless of gains or losses. Additionally, a 4% redemption fee applies if held less than four years, though one investor claims it wasn't charged. The fund's size forces purchases within a limited Iberian universe, including names like DIA, Bankia, or Vocento.

The Final Twist: The Fund That Returned to 100

Years later, the same fund recovered to 100, allowing a participant to exit with over 50% profit. This peine through luck and time, feeling like success for the wrong reasons. Harsh analyses persist: concentrating in few stocks makes a manager a god when right and a target when wrong, with overall results trailing indexed alternatives.

If credit tightens and money flows from trendy firms to cheap ones, the thesis may work again. No one knows when. Not even those who have spent over three years explaining why the market is wrong about their stocks.