Muhlenkamp Fund Falls on Hard Times
The performance of this Kiplinger 25 member has lagged lately, but it still has a fine long-term record.
The past few years have been unforgiving to Ron Muhlenkamp. His Muhlenkamp fund (symbol MUHLX), a member of the Kiplinger 25, has fallen 3% in 2007 through October 31. That trails Standard & Poors 500-stock index by a whopping 14 percentage points. Over the past three years, his fund gained only 8% annualized, lagging the index by an average of five percentage points per year.
Over ten years, Muhlenkamp sports a fine record -- up an annualized 10%, an average of three points a year ahead of the S&P -- but clearly he's stumbled badly in recent years. "I held housing [stocks] too long," Muhlenkamp says ruefully.
He made money for shareholders during the housing boom by investing in homebuilders, such as NVR (NVR), and mortgage lenders, such as Countrywide Financial (CFC), but he failed to eject these holdings before the housing and housing-related credit-market collapse.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Muhlenkamp, a keen economic observer, says his key error was failing to observe that mortgage originators were increasingly making loans to customers with shaky credit records even as interest rates were moving up in 2005-2006.
What now? Muhlenkamp expects a soft landing for the U.S. economy -- 2% to 3% growth -- rather than a recession in 2008. But he's shifting his portfolio away from financials and makers of long-lasting products aimed at U.S. consumers and moving toward capital-goods producers.
"I want capital goods made in the U.S. and shipped to the rest of the world," he says, noting that a falling dollar and stronger economic growth overseas is shifting purchasing power to foreign buyers and away from American consumers.
For example, he added Boeing (BA) and Corning (GLW) to the portfolio in the third quarter and increased his holding of Cisco Systems (CSCO). "I'm selling housing and buying Cisco," he says.
He's bullish on demand for oil and gas but finds petroleum prices difficult to forecast. Thus, he's focusing on investing in companies with the capacity to pump greater volumes, as well as equipment and service companies that serve the oil patch. He likes Anadarko Petroleum (APC) and Devon Energy (DVN) and exporters of heavy equipment such as Caterpillar (CAT) and Terex (TEX).
As with many fund managers, Muhlenkamp is rejiggering his portfolio to benefit from the crumbling U.S. dollar.
Given the fund's poor performance this year, I wouldn't recommend buying it. But if you already hold shares, you might give Muhlenkamp more time to turn things around, given his past record of success. In the meantime, Kiplinger's Personal Finance will be re-evaluating the standing of Muhlenkamp fund -- as well as the 24 others -- on the Kiplinger 25 list, which will be updated next spring.
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
-
Why Tesla Stock Is Soaring After a Q1 Earnings Miss
Tesla came up short of analysts' expectations for its first quarter, yet its stock is roaring higher today. Here's why.
By Joey Solitro Published
-
Eight Easy Ways to Save Money Without Compromising Your Lifestyle
Saving money can be as simple as a quick phone call.
By Kiplinger Advisor Collective Published
-
The 5 Best Actively Managed Fidelity Funds to Buy Now
mutual funds In a stock picker's market, it's sometimes best to leave the driving to the pros. These Fidelity funds provide investors solid active management at low costs.
By Kent Thune Last updated
-
The 12 Best Bear Market ETFs to Buy Now
ETFs Investors who are fearful about the more uncertainty in the new year can find plenty of protection among these bear market ETFs.
By Kyle Woodley Published
-
Don't Give Up on the Eurozone
mutual funds As Europe’s economy (and stock markets) wobble, Janus Henderson European Focus Fund (HFETX) keeps its footing with a focus on large Europe-based multinationals.
By Rivan V. Stinson Published
-
Best Bond Funds to Buy
Investing for Income The best bond funds provide investors with income and stability – and are worthy additions to any well-balanced portfolios.
By Jeff Reeves Last updated
-
Vanguard Global ESG Select Stock Profits from ESG Leaders
mutual funds Vanguard Global ESG Select Stock (VEIGX) favors firms with high standards for their businesses.
By Rivan V. Stinson Published
-
Kip ETF 20: What's In, What's Out and Why
Kip ETF 20 The broad market has taken a major hit so far in 2022, sparking some tactical changes to Kiplinger's lineup of the best low-cost ETFs.
By Nellie S. Huang Published
-
ETFs Are Now Mainstream. Here's Why They're So Appealing.
Investing for Income ETFs offer investors broad diversification to their portfolios and at low costs to boot.
By Nellie S. Huang Published
-
Do You Have Gun Stocks in Your Funds?
ESG Investors looking to make changes amid gun violence can easily divest from gun stocks ... though it's trickier if they own them through funds.
By Ellen Kennedy Published