Better Know a Stock Picker

Welcome, Fools, to part 36 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?

Excelsior Mid-Cap Value & Restructuring (UMVEX)

Expense Ratio

1.13%

Fund Size

$314 million

1-Year Return

18.86%

5-Year Return

11.70%

10-Year Return

15.00%

Sources: Excelsior Funds, Morningstar

Top 5 Holdings

Company

% of Assets

Brink's (NYSE: BCO  )

4.0%

Devon Energy (NYSE: DVN  )

3.9%

Aracruz Cellulose (NYSE: ARA  )

3.8%

Shire PLC (Nasdaq: SHPGY  )

3.6%

Harris Corp. (NYSE: HRS  )

3.5%

Sources: T. Rowe Price, Morningstar

Meet Timothy Evnin
The fightin' team at Excelsior Mid-Cap Value and Restructuring is led by co-managers Timothy Evnin and John McDermott, who first teamed up in 2000. Since then, Lipper says that they've beaten their category peers by roughly 5% annually. Talk about superstantial.

But it's Evnin who earns the spotlight this time because of his extraordinary 20-year record serving alongside David Williams, who leads Excelsior's Value and Restructuring fund. Together, they have outclassed the bogey and peers over the last 5- and 10-year periods. Eat that, Wall Street.

Now that Williams is nearing retirement, press reports say that Evnin is being groomed to take over. Smart move. Evnin knows that there's no sure bet in investing. As he recently told Fortune, "The market is reasonably efficient, but it is less good at valuing companies that are going through significant adjustments."

How he invests
That's why Evnin is more likely to jump on the bargain bandwagon than to cuddle with the growth-huggers. He told Fortune that he and McDermott tend to shop for restructuring firms that, if successful, could produce big returns on capital.

Among his favorites is Kennametal (NYSE: KMT  ) , which is in the process of diversifying away from pure metalworking and towards projects requiring more advanced materials. That's a good sign for Evnin, who told Fortune that a broader portfolio could reignite growth.

He told CNBC viewers a similar story in December, right around the time management announced a dividend increase and a share repurchase plan. The stock is up roughly 6% since, and it's ahead of the S&P 500 over the same period.

But of course, it's the long term that matters most, and unlike most of Wall Street's investapo, Evnin stays off the hamster wheel when it comes to portfolio management. Mid-Cap Value and Restructuring swaps out just 23% of its holdings annually, well below the 97% category average.

Is this fund for you?
So could Evnin be the next Peter Lynch? Probably not. His value-driven returns are far less than the 29% annual average that Lynch earned over his 13 years running Fidelity Magellan.

But Lynch was also one of a kind, and I'm no less impressed with Evnin, despite his record mano-a-mano versus Fido's most famous stock picker. What's more, Mid-Cap Value and Restructuring, with no loads and a 1.13% expense ratio, is cheap for a fund that sports just $300 million in assets. That suggests to me that Evnin and partner McDermott believe they can earn their keep by walloping the market. That, in turn, could make this fund a champ in the making.

How good are the champs? Shannon Zimmerman's portfolio of winners is up by more than 14% on the benchmarks as of this writing. See them all with 30 days of free access to Champion Funds, which you can get by clicking here.

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

For more Foolish coverage of the bargain bunch:

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 35% vs. just 21% 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 subscribe.

Fool contributor Tim Beyers, ranked 2,159 out of more than 23,200 in our Motley Fool CAPS investor intelligence database, is a regular viewer of The Colbert Report. (Stay the course.) Tim didn't own shares in any of the companies mentioned in this article at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on mutual funds, Foolishness, and investing in general may be found in his blog. The Motley Fool's disclosure policy is always championship caliber.


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