Andy Engel is co-portfolio manager of the Leuthold Core Investment Fund. According to Barron's (subscription required) Engel's fund boasts a five-star Morningstar rating and has outperformed both its peers and the S&P 500 for the last two years. And he has a China play! Here are excerpts from the Barron's interview:
....Our chairman, Steve Leuthold, had been involved with commodity markets as a trader and a broker with PaineWebber. He noticed the metal demand coming from emerging economies had really grown. Unlike commodities such as corn or grains, which can be produced quickly, it takes up to three years to get metals out of the ground. And a lot of mines were closed down ahead of the recession but have since reopened. In our analysis, it looks like there's a limited supply out there as well, which will continue to keep prices high.
On Stock Picks:
We like Inco, an industrial metal company. Inco (ticker: N) is primarily a nickel-producing company, and there is a wide demand for nickel. It's in products such as batteries. We think China is going to continue needing the metal in the coming years. And there is going to continue to be big demand from other emerging economies like Indonesia and India.
....It is the pre-eminent nickel miner in the world, and they are just trying to maintain the supply to meet that demand, trying to get the material out of the ground as fast as they can. And because they are the dominant player, it is really a positive for Inco as a whole.
On Inco's Outlook:
Metals have sold off, but I think it's really been tied to the economic outlook on a world-wide basis. Again, China has been such a key player. If the government starts making noises that they are going to be cutting back on production, trying to slow down their economic growth, that tends to impact the metals. It's also that metals have had a very strong run lately, and I think part of [the sell-off] is profit-taking at this point.