Bill Frels

Last Update: 2014-08-14

Number of Stocks: 196
Number of New Stocks: 2

Total Value: $7,052 Mil
Q/Q Turnover: 2%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Bill Frels' s Profile & Performance

Profile

Mairs and Power Inc is a small firm whose strength and success has resulted from applying a conservative growth investment approach consistently for over 70 years. Both the Growth and Balanced Funds are built on a foundation of selected quality growth stocks purchased at what management considers to be reasonable valuation levels. When these securities are purchased, the intention is to hold these issues for relatively long periods of time to maximize tax-efficiency and allow the power of compounding to build wealth for its shareholders. However, sales are made on occasion in response to such factors as changing fundamentals, investment strategy shifts, and excessive valuation.

Bill Frels is the portfolio manager at Mairs & Power, the investment advisory firm where he started in 1992. Frels plans to retire at the end of 2014, but will remain as the chairman of the investment committee and a shareholder.

Web Page:http://www.mairsandpower.com/

Investing Philosophy

Mairs & Powers follows a consistent and conservative investment approach. Mutual funds and individual accounts are built on quality growth stocks and fixed income securities. Equity securities are held for relatively long periods of time to maximize tax efficiency. Fixed income securities are held to maturity.

Total Holding History

Performance of Mairs & Power Growth Fund

YearReturn (%)S&P500 (%)Excess Gain (%)
201335.6431.554.1
201221.9115.46.5
20110.742.08-1.3
3-Year Cumulative66.6 (18.5%/year)55 (15.7%/year)11.6 (2.8%/year)
201017.415.062.3
200922.5226.46-3.9
5-Year Cumulative139.6 (19.1%/year)125.5 (17.7%/year)14.1 (1.4%/year)
2008-28.51-378.5
20074.95.61-0.7
200610.2415.79-5.6
20054.374.91-0.5
200417.99126.0
10-Year Cumulative143.9 (9.3%/year)104.1 (7.4%/year)39.8 (1.9%/year)
200326.3328.7-2.4
2002-8.12-22.114.0
20016.48-11.918.4
200026.48-9.135.6
19997.1621-13.8
15-Year Cumulative308.6 (9.8%/year)98.3 (4.7%/year)210.3 (5.1%/year)
19989.3628.6-19.2
199728.6633.4-4.7
199627.76234.8
199547.737.610.1
19945.661.34.4
20-Year Cumulative1046.4 (13%/year)483.2 (9.2%/year)563.2 (3.8%/year)
199312.8310.12.7
19927.877.60.3
199142.0530.511.5
19903.63-3.16.7
198928.0631.7-3.6
25-Year Cumulative2530.2 (14%/year)1050.7 (10.3%/year)1479.5 (3.7%/year)
198810.0316.6-6.6
1987-2.335.1-7.4
198611.5418.6-7.1
198534.7731.63.2
1984-2.026.1-8.1
30-Year Cumulative4063.2 (13.2%/year)2235.1 (11.1%/year)1828.1 (2.1%/year)
198315.7622.4-6.6
198239.1621.417.8
1981-3.86-51.1
198016.2732.3-16.0

Top Ranked Articles

Mairs and Power Balanced Fund Third Quarter Commentary: HSY, GM, TGT, IR, BMY
The Balanced Fund produced a disappointing investment return of -10.2% in the third quarter. This result was better than -13.9% for the benchmark Standard & Poor's 500 Index and -11.5% for the Dow Jones Industrial Average but worse than Mairs and Power Composite Index of - 6.7%. The Barclays Capital Government/Credit Bond Index was up 4.7% in the third quarter. Mairs and Power Balanced Fund lightly lagged balanced mutual funds reported by Lipper, which turned in an average return -9.6% in the third quarter. On a year-to-date basis, the fund delivered a return of -5.1% which is better than -8.7% of the S&P 500 but worse than 3.9% for the Dow Jones Industrial average. The Barclays Capital Government/Credit Bond Index was up 7.5% and the Mairs and Power Composite Index was down -2.3% on a year-to-date basis. Read more...
What are Gurus Doing with Target (TGT)?
Target (TGT) is just above 52-week lows and has been on a slide since early January. At the end of 2010 shares traded at $60. Since then Target stocks have given nothing but pain. Bill Ackman, who holds very focused positions, continues to hold a large position in the retailer. In addition to him, 20 other gurus hold positions of varying sizes. Read more...
Mairs & Power Funds Report Q1 Portfolio
Mairs & Power was founded by Bill Frels. The funds invest in growth companies at reasonable prices. They look for high quality companies characterized by earnings that are reasonably predictable; return on equity that is above average; market dominance; and financial strength. Some emphasis is placed on small to medium sized companies, generally located in the upper Midwest region. Read more...
Mairs & Power Funds Buys Western Union, Norfolk Southern, Baxter International, Sells Adobe Systems Inc., Integrys Energy Group, Nokia Corp.
This is the Q2 portfolio update of Mairs & Power Funds. Mairs & Power Growth Fund is run by the firm’s CIO Bill Frels. Over the past 10 years, the fund averaged 5.93% a year, while the market is negative. The Fund gained 7.9% versus 5.4% for the S&P 500 index in the first quarter. Read more...
Mairs & Power Funds Buys Hormel Buys HRL, MDT, PG, DIS, WAG, NVEC, IWR, SCHB, Sells SSYS, SRDX, ADP, JCI
Bill Frels at Mairs & Power Inc. reported his fourth quarter portfolio. As of 12/31/2010, Mairs & Power Inc. owns 135 stocks with a total value of $3.5 billion. These are the details of the buys and sells. Read more...
» More Bill Frels Articles

Commentaries and Stories

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Why Bill Frels Is Long in Bemis
In this article, let's take a look at Bemis Co Inc. (BMS), a $3.94 billion market cap company, which is a leading maker of a broad range of flexible packaging and pressure-sensitive materials. More...

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What About CarMax and Its 'Non-Conventional Strategies'?
In this article, let's take a look at CarMax Inc. (KMX),a $11.69 billion market cap company, which is the largest U.S. retailer of used vehicles. It owns and operates more than130 used car superstores in about 60 markets and sells new vehicles at five locations. More...

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Baxter Will Remain Diversified and With Competitive Advantages Bill Frels,Jim Simons - Baxter Will Remain Diversified And With Competitive Advantages
In this article, let's take a look at Baxter International Inc. (BAX), a $40.61 billion market cap company, which is a global medical products and services company that provides critical therapies for people with life-threatening conditions. More...

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Bristol-Myers: Absolute Valuation Model versus Relative Valuation Model Bill Frels,Jean-Marie Eveillard - Bristol-Myers: Absolute Valuation Model Versus Relative Valuation Model
In this article, let´s consider Bristol-Myers Squibb Company (BMY), an $83.79 billion market cap that has a trailing P/E ratio that indicates the stock is relatively undervalued (PE 31.4x vs Industry Median 44.3x). More...

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Abbott: A Brighter Future
In this article, let's take a look at Abbott Laboratories (ABT), a $64.06 billion market cap company, which is a diversified health care products company that is now focused on nutritionals, diagnostics, generic drugs, and medical devices, following the spinoff of its R&D-based prescription pharmaceuticals business. More...

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Duke Energy Continues Its Maximization of Shareholder´s Wealth
In this article, let's take a look at North Carolina-based Duke Energy Corporation (DUK), a $50.58 billion market cap company, which provides electric and gas utility services in the southeastern U.S. and Ohio. More...

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United Technologies Looks Attractive For Investors
In this article, let's take a look at United Technologies Corp. (UTX), a $95.34 billion market cap company, a multi-industry holding company that conducts business through five segments: Otis; UTC Climate, Controls & Security; Pratt & Whitney; UTC Aerospace Systems; and Sikorsky. More...

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You Should Consider Adding GlaxoSmithKline Based on Tremendous ROE
In this article, let´s see one of the most important financial ratios applying to stockholders, the best measure of performance for a firm's management: the Return on Equity (ROE), and we are going to analyze it in the case of GlaxoSmithKline plc (GSK). More...

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Boeing Should Double To Be Fairly Value
On June 30, Ken Fisher (Trades, Portfolio), the chief executive officer and chief investment officer of Fisher Investments, takes a long position on The Boeing Company (BA), an $86.36 billion market cap, which is the largest aircraft manufacturer in the world and one of the largest aerospace and defense giants. More...

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It Is the Right Moment to Bet On Yum
In this article, let's take a look at Yum! Brands, Inc. (YUM), a $30.98 billion market cap company, which is a global restaurant brand, with more than 40,000 units in more than 100 countries, including the KFC, Pizza Hut and Taco Bell chains. More...

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Mairs & Power Balanced Fund Second Quarter 2014 Commentary
While the pace of the economic recovery was somewhat better than expected during the quarter, we continued to keep our primary focus on the long-term fundamental attributes that make companies profitable. While attentive, we are not swayed by the macro-economic details underpinning global market events. By emphasizing the long-term view, we can make the subtle, opportunistic adjustments to company positions over time that keep portfolio turnover low and tax consequences in check. Our first mutual fund, the Mairs & Power Growth Fund, founded in 1958, provides a good illustration of this approach, which is employed by the Mairs & Power Balanced and Mairs & Power Small Cap Funds as well. Portfolio turnover for the Growth Fund, compared to its peers, the Morningstar U.S. Large Cap Blend category, was substantially lower for each of the past 10 years. As a result, the Fund’s annual realized taxable capital gains exceeded $1.00 in only two of the past 10 years. As measured by the Standard and Poor’s Total Return (TR) Index, the stock market advanced 5.23% for the quarter ending June 30, 2014. The market’s strength occurred against a mixed backdrop characterized by a downbeat adjustment to the Gross Domestic Product (GDP) (a key barometer of economic health), a rekindling of the War in Iraq, and hints that higher inflation and rising yields might be just around the corner. The quarter’s biggest economic news was the unexpectedly sharp downward revision of the first quarter’s GDP growth rate from -1% to -2.9%. Like a house guest who won’t leave, the effects of winter’s record cold snap endured and played a major role in depressing the benchmark growth measure, which opened up questions about the long-term hardiness of the U.S. recovery. Meanwhile, as the Iraq War began appearing on the front pages again, the markets experienced some déjà vu: Would this be like 2003 all over again, when America first conquered Baghdad? The answer turned out to be a “no.” Shrugging off short-term inflationary fears from rising energy prices, the markets behaved with much more equanimity than they did 11 years ago when America’s energy independence goals were still far in the future. Instead, our energy selections were able to benefit from new access to cheaper domestic oil reserves as well as growing demand for improved technologies related to fracking. Concerns about rising yields and the inflation rate were short-lived as well. Analysts found their expectations subverted when the benchmark 10-year Treasury rate declined from a high of more than 2.80% earlier in the quarter to 2.53% by the end of the period, and the Barclays Capital Government/Credit Bond Index gained 1.92%. Elsewhere, the Fed continued to dial back its monthly bond purchases by an additional $10 billion more per month. In short, the combined threats of the seemingly everlasting Polar Vortex, the Iraq War and inflationary fears could not dampen investor enthusiasm for stocks during the second quarter. Future Outlook Everybody likes a winner. And, if the stock market was any gauge during the second quarter, there was a lot to like. Stocks extended their winning streak for the sixth consecutive quarter, as measured by the Standard & Poor’s 500 Index – a phenomenon surpassed only six other times since 1928. After such historic gains, though, should cautious investors grow concerned about the second half of the year? We don’t think so. Successful investment approaches never depend on the positive or negative market performance of any single quarter. At Mairs and Power, we base our portfolio decisions on the facts about companies, not the markets. In particular, we endeavor to identify and invest in those companies that have shown their ability to achieve consistent, above-average growth from a position of demonstrable and durable competitive advantage. Looking toward year-end, we will continue to closely evaluate corporate earnings and revenue against the multiples we view to be still slightly above historical levels. The price/earnings (P/E) multiple of the S&P 500, a key gauge of corporate earnings health, stood just above its long term average of around 15.5 at quarter-end, almost exactly where it ended the first quarter. This is further proof to us that stock prices continue to be influenced more by actual, organic company earnings and revenue growth than by the Federal Reserve’s waning stimulus program. While we believe economic conditions appear sufficiently strong to support this current, positive earnings trend, a market correction in the near term would not surprise us. The advantages of investing in well-diversified portfolios, rebalanced regularly, provide one of the better, more reliable routes for meeting long-term goals regardless of the quarter. By focusing our attention on companies and how they perform, we remain confident in our ability to identify, over the course of a full market cycle, those profitable, well-managed firms likely to outperform their competitors regardless of marketplace events. Balanced Fund Performance For the second quarter and six months ending June 30, 2014, The Mairs & Power Balanced Fund gained 3.82% and 5.92% respectively; in line with its benchmark composite index (60% S&P 500 Stock Index and 40% Barclays Capital Government/Credit Bond Index), which gained 1.92% and 3.94%, for the periods. The pace of the economic recovery continued steadily through the first half of the year. It seems a little surprising that it was only 12 months ago last May when the market went into full flight to safety mode after the Fed announced it would scale back the stimulus policy of quantitative easing (QE) sometime in the fall of 2013. All in all, the market stayed in a cool, calm and collected mood during the first half of the year and took war, stimulus tapering, hints of inflation and rising yields in stride. In general, our selections in energy and higher dividend stocks benefited the portfolio. America’s move to greater energy independence which began more than a decade ago has continued to benefit firms like Schlumberger (SLB) whose businesses are concentrated in oil and gas exploration. Accordingly, Schlumberger proved to be a top contributor to Fund performance for both the past quarter and the past six months through June 30, and gained 20.97% and 30.90%, respectively. Since 2008, Schlumberger has made major investments in technology innovations, product reliability and better processes. As it gains market share, the firm continues to hold leading market positions in proprietary software, patents, and major equipment. Another strong contributor to performance in the first half of the year was global supply chain consultant C.H. Robinson Worldwide, Inc. (CHRW), which gained 21.76% and 9.34% respectively for the second quarter and first six months. The firm’s efforts to better service high-end customers resulted in a favorable report in the first quarter and helped reverse a downbeat, two-year performance trend. At its attractive levels of value, we continued to add to our position in C.H. Robinson during the first half of the year. Healthcare company Medtronic, Inc. (MDT) also contributed to performance, gaining 3.61% and 11.10% for the second quarter and first six months, respectively. Pending a shareholder vote either later this year or in 2015, however, Medtronic is expected to merge with medical device supplier Covidien Plc and change its legal domicile to Ireland. Once completed, the merger will create a taxable event for Fund shareholders who will realize a long-term capital gain estimated at $5.5 million or $0.75 a share. As always, Mairs and Power is committed to a policy of low portfolio turnover, and low exposure to taxable gains; we view this tax event as an anomaly. Performance detractors included Pentair (PNR), IBM (IBM) and Target (TGT). However, we did not trim any of our positions as we continue to view these selections favorably over the long term. On the income side, we saw our companies increase their dividends at a rate that outpaced the dividend for our benchmark through the first half of the year. Additionally, interest rates generally declined, especially bonds with durations of 10 years and beyond on the Treasury curve. Overall, bond prices improved during the first half of the year. Accordingly, we maintained a concentration in investment-grade bonds with longer durations as we saw a tightening in yield spreads in the U.S. Government sector. We still think more may be gained on the fixed income side as the Federal Reserve continues to taper back on quantitative easing. For investors who prefer a single vehicle that can straddle the equity and fixed income markets to take advantage of growth opportunities as well as favorable movements in the debt markets, we believe the Mairs & Power Balanced Fund continues to offer an effective way to do so. Ronald L. Kaliebe William B. Frels Lead Manager Co-Manager Continue reading here. More...

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Mairs & Power Small Cap Fund Comments on United Fire Group
Portfolio additions during the second quarter included United Fire Group (UFCS), a company based in Cedar Rapids, Iowa that writes property and casualty insurance, life insurance, and offers annuities. With a strong history of conservative underwriting, this steady performer grew its Return on Equity (ROE) 10% last year, while its stock traded at a discount to book value – considered a rare event at current valuations. Another aspect we like about this company is that its management goes out of its way to tell potential investors that, while they must report their results quarterly, they manage their company for the much longer term; music to our ears. From Bill Frels (Trades, Portfolio)’ Small Cap Fund Second Quarter 2014 Commentary. More...

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Mairs & Power Small Cap Fund Comments on Landauer
In contrast, the radiation detection firm Landauer (LDR) proved to be the biggest laggard in the first half of the year. However, a number of recent regulatory changes that address shortfalls in U.S. hospital radiation monitoring appear likely to provide the company with an opportunity to turn their stock performance around. From Bill Frels (Trades, Portfolio)’ Small Cap Fund Second Quarter 2014 Commentary. More...

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Mairs & Power Small Cap Fund Comments on Vasco Data Security
The password authentication hardware and software firm, Vasco Data Security (VDSI) also contributed heavily to performance for both the six-month and second-quarter periods, returning 50.06% and 53.85%, respectively. Having an already strong European consumer banking presence, Vasco has now started to make inroads into the U.S. market. Every day, new headlines trumpeting widespread data vulnerabilities help to drive up greater demand for this firm’s products. From Bill Frels (Trades, Portfolio)’ Small Cap Fund Second Quarter 2014 Commentary. More...

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Mairs & Power Small Cap Fund Comments on Gentherm
Gentherm (THRM), a manufacturer of automobile seat heating and cooling equipment, contributed the most to outperformance for the six-month and second-quarter periods, through June 30, returning 65.80% and 28.02%, respectively. Gentherm continues to benefit from increased inclusion of its products on Original Equipment Manufacturer (OEM) auto platforms as well as from other applications of its proprietary technology (consider how welcome heated seats would have been during Minnesota’s brush with the Polar Vortex last winter). From Bill Frels (Trades, Portfolio)’ Small Cap Fund Second Quarter 2014 Commentary. More...

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Mairs & Power Small Cap Fund Second Quarter 2014 Commentary
While the pace of the economic recovery was somewhat better than expected during the quarter, we continued to keep our primary focus on the long-term fundamental attributes that make companies profitable. While attentive, we are not swayed by the macro-economic details underpinning global market events. By emphasizing the long-term view, we can make the subtle, opportunistic adjustments to company positions over time that keep portfolio turnover low and tax consequences in check. Our first mutual fund, the Mairs & Power Growth Fund, founded in 1958, provides a good illustration of this approach, which is employed by the Mairs & Power Balanced and Mairs & Power Small Cap Funds as well. Portfolio turnover for the Growth Fund, compared to its peers, the Morningstar U.S. Large Cap Blend category, was substantially lower for each of the past 10 years. As a result, the Fund’s annual realized taxable capital gains exceeded $1.00 in only two of the past 10 years. More...

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Bill Frels Comments on Toro Co
A number of other industrial companies in our portfolio detracted from performance, including Toro Company (TTC), a major provider of landscape maintenance equipment. Due, in part, to last winter’s unseasonably cold weather, the firm lowered earnings expectations. Prior to the disappointing earnings report, we had scaled back our position somewhat, while retaining the firm as a top 10 holding based on our conviction that Toro’s strong product lineup is likely to deliver revenue growth later in the year. More...

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Bill Frels Comments on Cray Inc
The largest detractor from performance during the quarter was Cray Inc. (CRAY), a major super computer manufacturer. However, given our long-term view of the company, we took advantage of this attractive valuation to increase our position. More...

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Bill Frels Comments on Medtronic Inc
Healthcare company Medtronic, Inc. (MDT) also contributed to performance, gaining 3.61% and 11.10% for the second quarter and first six months, respectively. Pending a shareholder vote later this year or in 2015, however, Medtronic is expected to merge with medical device supplier Covidien Plc and change its legal domicile to Ireland. Once completed, the merger will create a taxable event for Fund shareholders who will realize a long-term capital gain estimated at $60 million or $1.50 a share. More...

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Bill Frels Comments on CH Robinson Worldwide Inc
Freight shipper and global supply chain consultant C.H. Robinson Worldwide, Inc. (CHRW) gained 21.76% and 9.34% respectively for the second quarter and first six months, and was a strong contributor to Fund performance. The firm’s efforts to better service high-end customers resulted in a favorable report in the first quarter and helped reverse a lackluster, two-year performance trend. As the requirement for “just-in-time” freight delivery becomes increasingly important to a company’s profitability, customers will turn to third-party logistics firms like C.H. Robinson to coordinate shipments and generate the information customers need in real time to manage their inventories and deliveries. More...

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