Who is Randolph McDuff? Marketocracy's Biggest Star

Randolph McDuff is a 43 year old former stockbroker living in Winnipeg. He manages his own money while running two virtual finds at Marketocracy.com, a site that allows users to create a virtual mutual fund. Randolph McDuff was featured in a June 16, 2008 article in Forbes magazine.

Forbes article: The Oracle of Manitoba
In the June 16, 2008 edition of Forbes magazine, Randolph McDuff was featured under the headline: "The Oracle of Manitoba: Randolph McDuff may be the best stock picker the world has never heard of" by Matthew Schifrin. The article paints a very flattering picture of McDuff, discussing his upbringing, record, and investing style.

Interestingly enough, Randolph McDuff used to be referred to as Randy McDuff. This wouldn't seem to be a big deal, but comments on Forbes.com in response to this article showed that a simple Google search under "Randy McDuff" would have brought up a number of investigations and complaints against him during his days as a stockbroker. In the article it was said that Randolph McDuff retired in 2000 to manage his own money, in the investigations it was alleged that he had a difficult time dealing with stress and was unable to properly carry out his functions while allegedly steering clients to inappropriate investments. For more information on these investigations, visit this settlement agreement for BMO Nesbitt Burns and this National Post article.

While his stock-picking record listed in the Forbes article is not in question, the inconsistencies about Randolph McDuff's background make the article less than trustworthy. Additionally, the article's comparison to Warren Buffett could be construed as offensive when McDuff's history is added to the equation, given that Buffett holds his own ethics to such high standards. Also very concerning is how Randy McDuff turned into Randolph McDuff for the sole reason, it appears, for the author to not have to mention his sordid background.

Marketocracy Fund: RMG ValueCatalyst and investing strategy
Marketocracy is a Web site where users can gain experience as mutual fund managers by creating a virtual mutual fund. Randolph McDuff created two funds on Marketocracy, although I'll only highlight his RMG ValueCatalyst fund, which began on July 24, 2000. You can follow Randolph McDuff's other fund by visiting his Marketocracy page.

At the time of the Forbes profile of Randolph McDuff, his RMG ValueCatalyst fund had returned 36.4% since its inception. Today that's down to 13.35% annualized, which compares favorably to the S&P 500's negative 6.79% annualized return. Heartbreakingly, though, the last 12 months have brought Randolph McDuff's RMG ValueCatalyst fund down 74.18%.

Randolph McDuff's Investing Strategy is value-oriented. He prefers well-run companies that aren't well followed by analysts. He chooses companies that have high operating profit margins, a wide moat, and low amounts of debt relative to assets.

Randolph McDuff's investment record is well-established and his stock picking skills are genuine. His record at Marketocracy speaks for itself, although this most recent down market has negatively affected McDuff's funds. His investment strategy promises above average returns in up markets, though, compared to benchmarks like the S&P 500. His stock picks are worth following, but his profile in Forbes should be taken with a grain of salt.

Matthew Schifrin, The Oracle of Manitoba, Forbes