Ronald Muhlenkamp (Trades, Portfolio) founded Muhlenkamp & Company in 1977, which today remains a family owned and operated firm. Muhlenkamp is the portfolio manager of the Muhlenkamp Mutual Fund, with his son Jeffery as co-manager.
The fund’s strategy is to find highly profitable companies as measured by the ROE, that sell at discounted prices according to the P/E ratio.
As of the fourth quarter, the portfolio consisted of 71 stocks worth $499 million. Muhlenkamp purchased five new holdings during the quarter, which are listed below in order of portfolio impact.
Muhlenkamp’s largest purchase during the quarter was 268,235 shares of Celanese at an average price of $58.43 per share.
Celanese is a specialty materials company that produces a variety of materials for everyday living, such as acetyl products, which are intermediate chemicals for nearly all major industries. It also produces high performance engineered polymers used in high-value applications.
The stock has been up 10% over the past year and is undervalued when compared to the Peter Lynch earnings line.
The stock currently trades at $58.06 with a P/E ratio of 14.6, and P/S ratio of 1.3.
Celanese has consistently increased its dividend since 2009, and the current yield is 1.6%. The dividend payout ratio is 23%.
American Airlines Group (AAL, Financial)
Muhlenkamp purchased 123,035 shares of American Airlines Group for an average price of $42.93 per share. The holding accounts for 1.3% of the portfolio.
American Airlines Group is the holding company for American Airlines and US Airways. According to the company website, the group, along with American Eagle and US Express Airways, operate 6,700 flights per day to 54 countries.
Diluted EPS has been negative since FY 2008, though preliminary data estimates EPS for FY 2014 will be $3.93.
The stock has been up 37% over the past year and currently trades at $47.02.
Mario Gabelli (Trades, Portfolio), Ken Fisher (Trades, Portfolio), and Whitney Tilson (Trades, Portfolio) also hold stakes in American Airlines Group.
Magnum Hunter Resources Corporation (MHR.PRD, Financial)
Muhlenkamp purchased 12,895 shares of Magnum Hunter Resources for an average price of $42.02 per share.
Magnum Hunter is an oil and gas company that is active in three shale resources plays: The Marcellus Shale in West Virginia and Ohio; the Utica Shale in southeastern Ohio and western West Virginia; and the Williston Basin/Bakken Shale in North Dakota and Saskatchewan, Canada.
The stock currently trades on the NYSE Amex Equities at $34.77 and has been down 28% over the past year.
The company has been operating at a loss since FY 2006.
Teekay Tankers (TNK, Financial)
Muhlenkamp purchased 51,795 shares of Teekay Tankers, which traded for an average of $4.27 per share during the quarter.
The company owns oil tankers and employs a chartering strategy to capture upside in the tanker spot market, while using fixed-rate time charters to limit downside risks. Teekay Tankers competes in the Aframax and Suezmax crude oil tanker market.
The stock has been up 50% over the past year and may be undervalued according to the Peter Lynch chart.
Diluted EPS has been negative since FY 2011, recording at $-0.10 in FY 2013.
Muhlenkamp’s last purchase during the quarter was 82,925 shares of Quicklogic at an average price of $2.95 per share. The company now accounts for 0.052% of the portfolio.
Quicklogic develops low power customizable semiconductor solutions for customers to add new features, extend battery life, and improve the visual experience with mobile, consumer, and enterprise products.
Quicklogic has been operating at a loss since FY 2006. Diluted EPS in FY 2013 was $-0.23.
The stock has been down 56% over the past year and currently trades at $2.17.
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