Better Know a Stock Picker

Welcome, Fools, to part 33 of our several-thousand-part series, "Better Know a Stock Picker," which is loosely, but not too loosely, based on Stephen Colbert's "Better Know a District" from The Colbert Report.

Like Stephen and his thorough investigations into America's congressional districts, each week I take a look at a fund you may want to own. What's on tap this week?

Cambiar Opportunity (CAMOX)

Expense ratio

1.20%

Fund size

$1.39 billion

1-year return

16.64%

5-year return

12.81%

10-year return

N/A

Source: Cambiar Investors

Top 5 holdings

Company

% of Assets

Intel (Nasdaq: INTC  )

4.1%

Infineon Tech. (NYSE: IFX  )

3.9%

Western Union (NYSE: WU  )

3.7%

Washington Mutual (NYSE: WM  )

3.0%

Wyeth (NYSE: WYE  )

3.0%

Source: Cambiar Investors

Meet Brian Barish
The fightin' team at Cambiar Opportunity is led by Brian Barish, who has helmed the fund since its founding on June 30, 1998. He's pummeled the market ever since. Over the last five years, for example, Cambiar Opportunity is up 4% annually on the S&P 500. Eat that, Wall Street.

Or don't. After all, it's not like Barish wanted to be in the fund business. He said as much in my interview with him at his Denver office earlier this week. But former Cambiar parent United Asset Management (UAM) offered to eat the overhead and pay the firm a flat management fee to create a fund. Cambiar Opportunity was born.

But growing up wouldn't be easy. "It was a microscopic fund for the first three years," Barish says. By the summer of 2001, Opportunity had only $6 million in assets under management -- $5 million of which, Barish estimates, came from friends and family of the firm's employees.

Then there was 9/11, which hit just three months after Barish and other insiders -- including his father, who founded Cambiar during the 1973 bear market -- had engineered a management buyout of UAM. "Business got scary in late 2002 and early 2003," Barish says. He estimates that the firm's total assets under management had declined to $1.1 billion-$1.2 billion. Today, Cambiar manages more than $8 billion in total assets.

How he invests
Ultimately, the problems proved to be transitory -- a word Barish likes and which plays a central role in how he invests. Why? Barish is a self-described value investor, though not of the Graham & Dodd school. Instead of seeking firms trading for less than their asset value, Barish preaches, and practices, a relative value discipline.

"Certain industries follow certain valuations," Barish says. "The market doesn't value stocks randomly." How, then, does he find bargains? Barish looks for compressed multiples, citing Intel as a key example.

Barish says the chip champ, which has taken its lumps from rival Advanced Micro Devices (NYSE: AMD  ) , needs only to regain the 30% operating margin it boasted for years in order to deliver massive returns to investors. A promising pipeline of chips and steady global demand makes that possible, Barish says.

So far, investors haven't shown much enthusiasm for his thesis. But he's sticking it to the investapo by holding fast. Plus, he believes the catalysts are in place to drive gains. And that's important. "We're not overly catalyst-focused," he says, "but it's important for investors to understand that cheap stocks can stay cheap for a while."

Besides, with catalysts, there's a greater chance that Barish will realize the 50% or better gain he seeks over the 12-18 months after opening a position. That's also why he won't invest in a potential turnaround at Ford (NYSE: F  ) . "Sure, they're trying, but I don't see it," he says.

Is this fund for you?
Could Barish be the next Peter Lynch? Perhaps. While he likes the fast lane when it comes to cars -- he drives a Porsche 911 -- he's more likely to be in the slow lane when it comes to stocks. In that sense, he reminds me far more of John Neff, who invested in very low P/E stocks because of the opportunity for multiple expansion.

And while Neff never produced 29% annual gains over the course of 13 years as Lynch did, Lynch didn't beat the market by an average of roughly 3% annually over 31 years as Neff did. Barish would do well to get even close to Neff's record.

He's off to a very good start with Cambiar Opportunity. Indeed, now that Bill Miller's 15-year streak of beating the S&P 500 is over, Barish, along with a handful of others, is next in line with eight straight years of market-beating performance.

What's more, Barish eats a lot of his own cooking. According to the most recent statement of additional information for Cambiar, he owned roughly 6% of the firm's International Fund. By my math, that equals just less than $2 million. Barish says he has roughly the same dollar value invested in Opportunity, and that a substantial portion of his liquid net worth is in his firm's funds.

That's a powerful indicator, according to Motley Fool Champion Funds advisor Shannon Zimmerman. Mix in no loads, and Cambiar Opportunity is a fund I'd consider owning. But so far, it hasn't been given championship status. Many of the value funds that have been chosen are equally solid market-beaters, including one that's beaten the bogey by nearly 20% since being selected to the portfolio in July of 2004. Want to find out what these winners are? Click here to get 30 days of free access to Champion Funds.

And that's today's profile. See you back here next week, fund nation. Good night.

For more Foolish coverage of the value vanguard:

Think you can't beat the market with funds? Think again! The selections in Shannon Zimmerman's Motley Fool Champion Funds portfolio are up an average of 31% vs. just 19% for their comparable benchmarks. Ask us for an all-access pass to get an unfettered look at all of Shannon's picks, manager interviews, and model portfolios. Go ahead; it's free for 30 days and there's no obligation to buy.

Fool contributor Tim Beyers, ranked 854 out of more than 20,300 in Motley Fool CAPS, is a regular viewer of The Colbert Report. (Stay the course.) Tim didn't own shares in any of the stocks or funds mentioned in this article at the time of publication. Get the skinny on all of the stocks in Tim's portfolio by checking his Fool profile. Intel and Western Union are Inside Value picks. Washington Mutual is an Income Investor selection. The Motley Fool's disclosure policy is always championship caliber.


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