BySergei Klebnikov,
Forbes Staff.
T
wenty years ago Wexford, PA-based Muhlenkamp Fund was a perennial star on Forbes annual mutual fund Honor Roll list. Year-after-year it bested the S&P 500 using a low risk investment formula seeking large and small cap companies whose return on equity surpassed their price-earnings ratios and whose revenue growth was at least 10% a year.
It owned stocks like Ford, Alaska Airlines and Lockheed Martin. But in the early 2000s, founder Ron Muhlenkamp began loading up on stocks of homebuilders like NVR and Beazer Homes, which appeared to be great bargains on paper, just as the housing bubble was filling up with irrational exuberance. Fund assets swelled from around $200 million in the late 1990s to more than $3 billion just prior to the Financial Crisis.
