12th Street's small-cap value portfolio was one of the only crossovers for the one- and five-year periods ended Dec. 31; it held the No. 1 spot on the five-year ranking with an annualized return of 28.29%, followed by its opportunity strategy with 23.01%. (All multiyear returns are compound annualized figures.)
“We are very consistent in our investment process,” said Michael O'Keefe, founding partner of Chicago-based 12th Street. “We're really dedicated to a concentrated portfolio and we're willing to hold cash when we're not finding bargains. I think it's also important we don't invest by committee.”
The small-cap value portfolio primarily has holdings in transportation, paper, pulp and retail. Some of the firm's most successful holdings over the past few years have been Buckeye Technologies Inc., Monro Muffler Brake Inc., and LKQ Corp. Mr. O'Keefe said turnover rate is about 40%.
Miller/Howard's utilities strategy has focused on infrastructure and foundational type investments since its inception more than 20 years ago. “Utilities have long been a great source of dividend growth,” said Bryan Spratt, portfolio manager at Miller/Howard, Woodstock, N.Y. “We've been focused on dividend equities strategies for 20 years.”
Some of the top-performing stocks for the strategy over the past several years have been El Paso Corp. and Southern Union Co.; the holdings in both have since both been sold by the firm.
Behind the two 12th Street strategies, other leaders for the five years ended Dec. 31, were: Invesco's MLP strategy, No. 3 with a gross return of 18.81%. Salient Partners LP's MLP energy strategy with 18.49%; and the TAAP precious metals strategy of AIS Capital Management LLC at 17.14%.
“Our belief is that growth in the global economy is in the developing world,” said John Hummel, chief investment officer at AIS Capital Management. “Therefore we want to be invested in things that the developing countries need, or things in the U.S. that might be selling into those markets.”
Mr. Hummel said the strategy is primarily invested in materials, energy, agriculture and tractor supply retailers. He did not cite a turnover rate but said that it is generally low over a long period of time.
For the five years ended Dec. 31, the median overall equity return was an annualized 1.29%; the Russell 3000 returned -0.01%.
Among collective trusts, real estate strategies comprised seven of the top 10 strategies for the year ended Dec. 31.
Prudential Retirement Real Estate Fund was first with a gross return of 13.93%, followed by the SSgA/Tuckerman Active REIT fund of SSgA Funds Management Inc. with 11.09%. In third was Adelante Capital Management LLC's total return real estate fund with 10.71%, while the Total Return REIT fund of Wilmington Trust Financial Fiduciary Service Co. came in fourth with 10.55%. Ranger Investment Management LP's Small-Cap Fund was fifth with 10.36%. The median one-year return for collective trusts was 0.42%.
For the five years ended Dec. 31, Speece Thorson Capital Group Inc.'s midcap value fund was first among collective trusts with an annualized return of 7.59%. In second was the small-cap opportunistic value fund of The Boston Co. with 7.39%, followed by Westwood Management Corp.'s smidcap blend fund with 7.28%. Rounding out the top five were Frontier Management LLC's small-cap value fund and Pyramis Global Advisors' small/midcap core fund, which returned 6.47% and 6.24%, respectively.
The five-year median return for collective trusts was 0.30%.