Q. My OfficeMax Inc. shares are doing better. What does the future hold?
P.K., via the Internet
A. The No. 3 U.S. office-products firm is continuing to cut costs to improve profitability and sales in a highly competitive sector hampered by the weak economy.
OfficeMax isn’t, for example, opening any new stores this year. It also is increasing the number of products bearing its name to lower prices while expanding profit margins. About one-fourth of its sales are private label.
It expects sales to decline in the second half of the year due to cutbacks in corporate America, the economy and an expected lackluster back-to-school season.
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Shares of OfficeMax (OMX) were up 41 percent this year through Monday after drops of 63 percent last year and 58 percent in 2007. While the company lost $17.7 million in the second quarter, that beat expectations and boosted its stock.
OfficeMax still lacks the economies of scale of its larger rivals.
The consensus is “hold,” according to Thomson Reuters, with one “strong buy,” three “buys” and seven “holds.”
Earnings are expected to slide 75 percent this year compared with a 6 percent gain projected for the office-supplies industry.
Q. Please give your opinion of Oakmark Global I Fund.
V.B., via the Internet
A. This concentrated fund of 38 holdings has done a good job of finding stocks that have been beaten up.
The confidence of its portfolio managers allows it to invest in out-of-favor areas such as carmakers Daimler AG and Toyota Motor Corp., as well as financials Daiwa Securities and Julius Baer Holding Ltd.
The $1.7 billion Oakmark Global I (OAKGX) was down 10 percent in 12 months through Aug. 21 and has a three-year annualized decline of 1 percent. Both rank in the upper quarter of world stock funds.
“We like the fund quite a bit because its value approach has served it well, and it is a great core holding,” said John Coumarianos, analyst with Morningstar Inc., who believes investors might wish to complement this fund with a smaller-cap fund.
Clyde McGregor, in charge of the U.S. portion of the fund since 2003, and Rob Taylor, handling the international segment since 2005, are veteran portfolio managers with long histories of capable stock picking. Each has more than $1 million of his own money in the fund.
Financial services and consumer goods each comprise about 17 percent of the portfolio, with consumer goods and health care each at about 12 percent.
This “no-load” (no sales charge) fund requires a $1,000 minimum initial investment and has an annual expense ratio of 1.16 percent.
Q. Is there any advantage to having my individual retirement accounts with the same investment firm?
A.S., via the Internet
A. It can make things easier because you can check all online in same place and will have fewer statements to contend with.
“You’re picking the investments, so you’re not giving up that control to the investment firm,” said Marilyn Capelli Dimitroff, certified financial planner and president of Capelli Financial Services Inc., Bloomfield Hills, Mich. “Within your account, however, you want to make sure that you have diversified investments.”
Still, nothing should tie you to one firm if you feel that you can find funds at an another firm that better meet your goals.
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Andrew Leckey answers questions only through the column. E-mail him at [email protected].