Natural gas and pipeline companies are thriving due to a weak dollar and high overseas demand, says Matt Berler, co-manager for the Osterweis Fund (OSTFX), as a result he is bullish on Williams Companies (WMB - Get Report) and Magellan Midstream Partners (MMP - Get Report).
The $1.4 billion fund, which garners 4 stars from Morningstar (MORN), is down 2% over the past year, putting it in the 97th percentile of Morningstar's mid-cap blend category. Over the past five years, the fund has returned an average of 1.3% annually, ranking it in the fund-tracker's 56th percentile.
"Williams has a terrific collection of pipeline and natural gas processing assets. I view it as less of a play on natural gas prices as opposed to natural gas liquids that go into a thriving petrochemical business here in the United States," says Berler.
Berler also likes Magellan, which operates a refined products system pipeline that runs from Houston to the mid-West. He likes that fact that its assets are strategically placed for growth in the next few years, benefiting from the development of the oil industry in West Texas.In addition to its natural gas holdings, the fund also has positions in several companies that are in the process of restructuring, including American Water (AWK - Get Report), Kraft (KFT) and Hewlett Packard (HPQ - Get Report). Osterweis took a position in Kraft after hearing rumors the company would restructure to maximize its margins in the United States. Another attraction was its thriving international consumer packaged goods business especially with the addition of Cadbury, which he says will help it sell brands like Oreos to emerging markets like India.