By Tom Lauricella
The past year has been a frustrating one for stock pickers, unless you're Brian Barish and the rest of the team at Cambiar Investors LLC. The Cambiar Aggressive Value /zigman2/quotes/200981064/realtime CAMAX -1.89% fund is up more than 70% over the past 12 months, leaving every other fund in Morningstar Inc.'s large-value category in the dust.
Skeptics might say this fund has just $121 million in assets and carries a mandate that allows it to own smaller stocks and international names that aren't found in competitors' portfolios. But the other three funds run by Denver-based Cambiar, which oversees $5.8 billion, all boast strong track records over the past several years. The firm's biggest offering, the $1.3 billion Cambiar Opportunity /zigman2/quotes/209711246/realtime CAMOX -1.49% , has beaten about 90% of its large-blend peers over the past 10 years.
Cambiar's strategy centers on finding out-of-favor stocks it can buy on the cheap and ride for big gains. Unlike many value managers, Cambiar doesn't spend time trying to calculate what a company should really be worth, otherwise known as its intrinsic value. That process is very "subjective," says Mr. Barish, Cambiar's president. "It's very dependent on the variables that you put in" the models.
Instead, Cambiar practices a "relative value" strategy, looking for stocks that are cheap compared with their long-run actual valuations, based on earnings, book value, cash flow and sales. The firm also keeps an eye on bigger-picture factors, such as oil prices for energy companies.
Cambiar also will factor in stock price patterns—known as technical analysis—when deciding when to pull the trigger on a purchase or a sale. It's a practice to which some fund managers may not readily admit. "There is a certain voodoo to it," Mr. Barish says. "But there's something very interesting to me when the technical readings line up very closely to the fundamental read on the company."
The Aggressive Value fund, which acts as a kind of best-ideas portfolio with just 20 or so stocks, also can bet that stocks will fall, either as a hedge against losses or as an outright bet that a stock is overvalued.
Here's how Cambiar put its overall strategy into practice last year: Aggressive Value was holding BP /zigman2/quotes/207305210/composite BP -2.07% PLC shares when the Gulf oil spill took place last spring. The fund bailed out of BP and, amid growing concerns about the global economy, pared back on stocks in general and raised cash holdings.
But Mr. Barish and his team decided the market was unfairly punishing other energy companies, so in mid-August the fund loaded up on stocks such as Hess /zigman2/quotes/203832174/composite HES -1.44% Corp., National Oilwell Varco /zigman2/quotes/208758290/composite NOV -3.98% Inc. and Halliburton /zigman2/quotes/210488727/composite HAL -2.13% Co., along with a batch of semiconductor names beaten up in the market selloff. By year-end, these stocks had surged. TriQuint Semiconductor Inc., for example, is up about 125% since Cambiar bought it last summer.
Cambiar Aggressive Value, with its concentrated portfolio, can be a volatile holding. But for investors looking for evidence that stock pickers haven't gone the way of the dinosaur, Cambiar at least gives some hope.
Send questions and comments to Mr. Lauricella at email@example.com.