Company Visits and Mutual Fund Performance: New Evidence on Managerial Skills

This study shows that the use of private information obtained during company visits is related to managerial skills. We construct a novel measure of a mutual fund’s capability of using such private information by considering the overlap between its stockholdings and its site visits. We fnd that the allocation of stocks of visited companies in a fund portfolio signifcantly improves its performance. The impact is more pronounced for mutual funds that hold relatively neglected stocks or stocks with inadequate information disclosure. Our fndings suggest that communications with company managers provide signifcant information advantages for fund managers.