ATLANTA (TheStreet) -- Marc Heilweil, manager of the Marathon Value Portfolio (MVPFX) - Get Report, says he looks for companies whose CEOs "know how to make money." Tyco International (TYC) and Emerson Electric (EMR) - Get Report are among the stocks his mutual fund owns.
The $35 million fund, which has earned five stars from
, has returned 6.1% annually during the past decade, better than 97% of its large-cap blend peers. The fund has lost 1% annually during the past three years, beating 93% of competing funds.
Fund Manager Five Spot, where America's top mutual fund managers share their views on the market through five questions.
When you look at a company for your fund, what do you look for in a manager?
What I look for in a manager is the ability to make money. I would guess more than half the CEOs of
companies could not make money operating a corner candy store. They just don't have the sense of how it is to make money. They may be very smooth, good talkers or good managers of people. But they just don't understand how a business makes money.
That's a company that makes innovative tools to apply paint, change your oil and the like. It's extraordinarily well-run with 40%-plus returns on capital during a normal economic environment.
Another company in the Marathon portfolio is Tyco, a company which has not always had the greatest management. Why do you like that one?
That's not the greatest name in corporate America for good reason. But since they threw out Kozlowski, it's been very well-managed. They have a 9% return on cash flow, and 40% of their revenues are recurring revenues from service and maintenance, with security being their best business.
Valspar management knows how to make money. They drive down costs. A lot of their business is coatings that go on beverage cans and the like. In addition, of course, they make paints and they have begun to build up their own brand name at
and other places. They have high returns on capital for a company in a relatively prosaic business.
What do you like about the management at Emerson Electric?
Emerson is an iconic American company, probably our best overall large manufacturing company. They have high returns on capital and are very businesslike in their approach to managing the company and keeping costs down. They outsource internationally when it makes sense. They are traditionally viewed as a growth stock, but we were able to buy it at around $30 a share when the world was falling apart. I looked at that stock for about 25 years and it was always a little too high price for me. I was glad to be able to get into it.
Reported by Gregg Greenberg in New York
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.