Oelschlager's Tech-Oriented Funds Are Sturdy Oaks

The manager of the White Oak, Pin Oak and Red Oak funds is a buy-and-hold tech investor. He also likes bank stocks.
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Try talking to most tech-heavy managers these days and you're lucky to hear anything beyond frantic yells of "sell!" or "buy!" The temptation to trade is hard to resist in a sector whose only consistency seems to be its volatility.

But you'd never know that chatting with Jim Oelschlager, who manages

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White Oak Growth, a top-performing diversified fund with a big stake in technology. One of the best tech pickers around acts as if he has all the time in the world. And to investors jonesing to jump in and out of their stocks, his advice is simple: "Take a walk in the park."

I know, I know. That kind of buy-and-hold advice is quite simply basic and boring. But I always check in with the plain-spoken Oelschlager of Ohio-based

Oak Associates

when skittish markets can't seem to make up their minds.

This longtime money manager with 30 years of investing experience is worth listening to. He consistently delivers returns that are anything but boring. According to

Morningstar

, his flagship White Oak Growth ranks among the 10 best-performing U.S. equity funds of the past five years, kicking out an average return of 34% annually -- a full 8 points ahead of the

S&P 500

index.

Year-to-date, the fund has already added 19.4%, again easily outpacing both its peers and the index. Siblings

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Pin Oak Growth and

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Red Oak Technology Select are even more high-powered.

Still not convinced? Well, consider the fact that before his fund family was born, Oelschlager bought

Cisco

(CSCO) - Get Report

for some private clients at its 1990 public offering and held on to it. Since then, the stock has appreciated more than 41,000%. No, that is

not

a typo.

Despite its phenomenal performance, the highflier is still a buy, says Oelschlager. He applauds the networker's recent acquisitions, especially the recent deal to buy privately held

Cerent

, maker of fiber-optic networking gear. "They execute very well," Oelschlager says of Cisco. "One strategy that really works: Acquire a variety of niche companies in related areas rather than develop the technology itself."

If you weren't that smart (or lucky) to get into Cisco early, Oeschlager thinks there's always a good time to buy: now. "Cisco always looks pretty expensive, but anyone who bought it any time over the past nine years has done well. It just doesn't look expensive over time."

While he doesn't flinch at Cisco's price, valuation does bother him when it comes to other Internet stocks. None of his funds dabbled in the dot-coms when they were red hot and he continues to be hands-off now that they have cooled.

Instead, he prefers less-direct Internet plays, such as top holding

Intel

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, which makes up nearly 7% of his portfolio. Oelschlager sees the chipmaker's recent rise as just a taste of things to come.

"One of the big surprises is that demand for PCs hasn't fallen off. And Intel is the clear dominant player in the production of chips -- it just makes 'em faster and cheaper," he says. The stock has been an important position to Oelschlager since he bought it nearly seven years ago.

That's typical. Oelschlager sticks with an aggressive style of making big bets on a few favorite names. White Oak and Pin Oak usually hold fewer than two dozen stocks each -- Red Oak is even more concentrated. They're usually big, fast-growing companies in two key sectors: tech and financials. After buying, he holds. And holds. And holds. White Oak's turnover rate is just 6%, and it is among the most tax-efficient large-growth funds.

So selling hasn't been much of an option of late. But that doesn't mean he hasn't been busy. There's certainly no shortage of cash to go on a bit of a shopping spree. More than $560 million of fresh money flowed into White Oak so far this year, and Oelschlager says he's been steadily pouring it into some of his top picks.

Citigroup

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is among them, now 5% of White Oak. In fact, he considers the big bank stocks to be tech plays in disguise. "They need to become efficient and integrate the acquisitions made along the way. There will be huge tech expenditures."

Perhaps not next month. But surely in the next few years. And that's the Oelschlager thinks tech believers need to have an investor's -- not a trader's -- time frame.

Scared now that those stocks seem to take a tumble one day and a leap the next?

You know what he would say. Get those walking shoes on.

Taking Stock

Lots of buzz about the fact that investors recently sold mutual funds at the fastest rate in more than a decade. But that's a trend we've seen for a while. It's no secret that some of the money taken off the table is shifting into stocks and that much of the fresh fund money is heading straight into index funds instead of actively managed ones.

That makes a lot of sense. Because funds have a lot of problems. As I've pointed out before, investors are right to ask why they shouldn't do it themselves and cut out the middleman. Or if only funds will do, why not go with ones that take less money via expenses and make more in returns?

(Surprised to hear me say that? You shouldn't be. Because I write about mutual funds, one reader recently called me "Miss Mutual Fund." Sorry, I never entered the contest -- don't even try to hand me that crown.)

But again and again, many of the "experts" say the reason people are moving from funds to stocks is price. Yes, online trading continues to bring down the price of stock buying, and index funds have a clear cost advantage, too. But let's not kid ourselves -- investors will continue to head to stocks so long as they perform better. People are chasing performance, not price. Sure, that's investing by rearview mirror, but it's human nature, too. And until funds start beating the market on a consistent basis, count on that chase to continue.

Brenda Buttner's column, Under the Hood, appears Thursdays. At time of publication, Buttner owned shares of the White Oak Growth fund, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or funds. While she cannot provide investment advice or recommendations, Buttner appreciates your feedback at

TSCBrenda@aol.com.