Welcome, Fools, to part 18 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?
|
Presidio (PRSDX) | |
|---|---|
|
Expense ratio |
1.5% |
|
Fund size |
$42 million in assets |
|
1-year return |
12.24% |
|
5-year return |
N/A |
|
10-year return |
N/A |
Top 10 holdings
|
Company |
% of Assets |
|---|---|
|
Playtex Products (NYSE:PYX) |
2.76% |
|
Cardinal Health (NYSE:CAH) |
2.59% |
|
News Corp. |
2.59% |
|
Reynolds & Reynolds (NYSE:REY) |
2.51% |
|
Omnicell (NASDAQ:OMCL) |
2.46% |
|
ZOLL Medical Corp. (NASDAQ:ZOLL) |
2.45% |
|
UAP Holding (NASDAQ:UAPH) |
2.39% |
|
Electronic Data Systems |
2.38% |
|
IKON Office Solutions (NYSE:IKN) |
2.37% |
|
Helen of Troy |
2.28% |
Meet Kevin O'Boyle
The fightin' team at the Presidio Fund is led by Kevin O'Boyle, who for the better part of a decade was co-manager of the MeridianValue Fund (FUND:MVALX) with Rick Aster. There, he and Aster bought out-of-favor small- and mid-cap companies that had experienced at least two quarters' worth of poor results, entering just as weak-kneed stockinistas were fleeing for the exits.
And how did that work out? From 1995, when O'Boyle became co-manager, to the end of 2003, when he left the firm, Meridian Value earned 22% annualized returns. Morningstar ranks that as the sixth-best record among all funds during O'Boyle's reign. Eat that, Wall Street.
Of course, there's no guarantee that O'Boyle will deliver a repeat performance as the head of Presidio, which he launched in May of 2005. But there's every indication he has the smarts to do the job right. O'Boyle has two degrees from Stanford: an undergrad degree in Economics, earned with distinction in 1986; and an MBA from Stanford Business School, completed in 1993.
O'Boyle went to work for Aster the next year as a research analyst. He's the guy who crunched the numbers that proved so-called broken small-cap growth stocks would deliver superior returns. Now he's on his own, working without a net. Student meets master, mano a market.
How he invests
But the investapo are already overmatched. Through last week, Morningstar pegged the Presidio fund's one-year return as 12.24%, for a 0.08% edge on the S&P 500. And for the three quarters ended in April, Presidio returned 18.72% versus 8.86% for the Dow Jones Wilshire 5000, O'Boyle's preferred benchmark to compete against.
Why the Wilshire 5000? "... Presidio Fund considers primarily U.S. stocks of all market capitalization sizes for investment. We believe that this index is the best available measure of the entire U.S. stock market." Makes sense to me.
Of course, O'Boyle's secret sauce comes from more than stock-picking flexibility. Instead, he told Motley Fool Champion Funds advisor Shannon Zimmerman in a February interview that he expects to be successful with Presidio because he'll go where others can't.
For example, fertilizer maker UAP Holdings was spun out of ConAgra Foods and remains a top 10 holding today. Unlike most, O'Boyle loves these sorts of situations: "A lot of times, companies that are spun out like that end up a little bit like orphan stocks because the institutional holders ... may not be able to find a rationale for owning the 'stub' stock." So they sell, O'Boyle says, and usually without giving much thought to valuation.
Interestingly, superstantial investor and Fool favorite Joel Greenblatt espouses a similar strategy in the book You Can Be a Stock Market Genius. And all he's done is generate 40%-plus annual returns for more than a decade. Sounds like Wall Street's value-huggers are in dire need of a dose of truthiness.
Is this fund for you?
So is O'Boyle the next Peter Lynch? He's got the Street cred. And Shannon's profile of Presidio in the January 2006 issue suggests it could be a champ in the making. Still, Shannon's endorsement is qualified. He calls Presidio's 1.5% expense ratio a "princely sum" and suggests that the fund's $10,000 minimum investment may be unsuitable for most taxable accounts.
I agree. Therefore, I won't blame you for seeking a more accessible choice. Fortunately, the Champion Funds portfolio sports a few, including one with a $2,500 minimum investment, run by a highly regarded stock picking team, which has bested its benchmark by more than 10% since joining the portfolio in March of 2005. (It is also one of Shannon's many winners; try the service free for 30 days to learn more.)
And that's this week's profile. See you back here next week, fund nation. Good night.
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 20% vs. just 13% 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 is a regular viewer of "The Colbert Report." (Stay the course.) Tim didn't own shares in any of the companies mentioned in this story at the time of publication. Get the skinny on all of the stocks in Tim's portfolio by checking his Foolprofile. The Motley Fool'sdisclosure policyis always championship caliber.
