Ron Muhlenkamp
(Money Magazine) -- Many portfolios on the Money 70 list of best funds were easy to recommend. Muhlenkamp Fund (MUHLX) wasn't one of those.
Manager Ron Muhlenkamp has strong views and invests accordingly. He's lagged lately, but in the early 2000s he whipped the S&P 500. That makes him a candidate for adventurous investors who want at least a shot at outsize gains.
Muhlenkamp spoke with contributor Laura Lallos.
You trailed the market by nine percentage points last year. What went wrong?
If this had been a normal cyclical recession, we would have been fully invested coming out of it. But we had the financial collapse, and lower interest rates did not encourage consumer spending. Then Greece hit the fan. We were cautious. [Note: Up to 30% of the fund was in cash at one time.] And it hurt us. (See 'My biggest money mistake')
What's your view on the economy now?
It is tricky: We see regulation, taxes, and health care costs going up. So we are paying more attention to balance sheets than we normally do coming out of a recession. We don't like a lot of debt. If you don't owe 'em money, they can't put you out of business.
Beyond that, what do you look for in a stock?
A strong return on equity -- which shows profits on the money shareholders put in -- is our screen for how well a company is run.
So what's passing the test?
Big international growth companies look cheap. It is fascinating that Intel (INTC, Fortune 500) sells for just 10 times earnings. Intel dominates the chip market, and its balance sheet is rock-solid. And it has a 3.3% dividend yield -- that is irresistible.
Even though computing has been moving toward tablets and away from powerful "Intel Inside" PCs?
It's a challenge, and Intel will not be the growth stock it used to be -- but, shucks, it's a value play!
You have a big stake in health care now. Can you single out one stock?
Medical-testing company LabCorp (LH, Fortune 500) generates plenty of cash and has been growing earnings reliably at over 10%.
Do you worry about talk of cuts to Medicare?
To save on health care, you test before treatment. LabCorp has an advantage of scale over hospitals and independent labs. 
| Index | Last | Change | % Change |
|---|---|---|---|
| Dow | 32,627.97 | -234.33 | -0.71% |
| Nasdaq | 13,215.24 | 99.07 | 0.76% |
| S&P 500 | 3,913.10 | -2.36 | -0.06% |
| Treasuries | 1.73 | 0.00 | 0.12% |
| Company | Price | Change | % Change |
|---|---|---|---|
| Ford Motor Co | 8.29 | 0.05 | 0.61% |
| Advanced Micro Devic... | 54.59 | 0.70 | 1.30% |
| Cisco Systems Inc | 47.49 | -2.44 | -4.89% |
| General Electric Co | 13.00 | -0.16 | -1.22% |
| Kraft Heinz Co | 27.84 | -2.20 | -7.32% |
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