David Winters is an activist mutual fund manager who has been vocal about compensation issues at The Coca-Cola Co (NYSE:KO) this year. He even criticized Warren Buffett a few months ago. He was on Squawk Box this morning again criticizing compensation and performance of The Coca-Cola Co (NYSE:KO)’s Muhtar Kent. “I think that there really is an issue at management because management basically didn’t execute,” said Winters. In response to Winters’ point about pay for performance Becky Quick made the following point completely destroying David Winters’ credibility in the process:
“We get into the pay for performance. I wasn’t sure I was gonna go down this path but I looked at performance for the Wintergreen funds. If I look at your performance 7.1% annualized since the inception date of the investor shares. If I was just to invest in the S&P over that period of time it’s a 7.8% annualized. You charge a 185 basis points. I can get that for 20 basis points elsewhere by just investing in the S&P 500.”
David Winters didn’t have any solid responses for Becky Quick’s assualt on his performance figures because you really can’t argue with facts. Wintergreen Funds were basically outperforming the S&P 500 index by 115 basis points before fees and charging 185 basis points for this performance. David Winters is criticizing The Coca-Cola Co (NYSE:KO) company’s management because they are trying to get paid more than the value they create, yet Winters is doing the same thing in his own fund. We, at Insider Monkey, have been saying for a long time that fund managers are talented at picking the right stocks on average but they are paid more than the value they generate. It is ironic that fund managers like David Winters criticize company’s about this issue and do the same thing to their own investors. Our research has shown that investors can achieve much higher returns by imitating fund managers’ best picks themselves (see our research results here).