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Issue 89 Published First Quarter January 2009
On December 31, 2008, the Net Asset Value of the Muhlenkamp Fund was $38.60, down $26.40 year-to-date.

Quarterly Letter
by Ron Muhlenkamp In 2008, we had a lousy year. It’s not much comfort to know that nearly everyone else had a lousy year also. In reviewing our thinking and our newsletter over the past few years, it’s clear that we failed to appreciate the degree to which a number of problems would come together to create a mutually reinforcing downward spiral in nearly all asset prices. This asset list includes stocks, real estate, commodities, and bonds (with the lone exception of Treasury bonds). We believe the one common driver to all these asset prices is that some of the owners had to sell, and that the subsequent markdown in prices forced additional selling. Most of the selling should now be completed, but if there is another round, it should occur in Q-1 ’09 as people respond to yearend statements and companies satisfy their auditors. Meanwhile, we think many of the specific fundamentals that drove the forced selling have been alleviated. Bank balance sheets are much stronger partly due to infusions of capital by the U.S. government. Leverage on the balance sheets of brokers and hedge funds has been reduced dramatically. Mortgage rates have declined significantly, allowing most mortgages to be refinanced at lower rates and make the resets of ARMs (Adjustable Rate Mortgages) written 2-3 years ago to be less painful. The price of commodities has fallen, most significantly, energy and food grains. Some of the items we track to monitor the effectiveness of the actions by the government have improved, including the rates at which banks lend to each other. It now looks like the main reason many people fear that market prices will fall further is that they’ve already fallen. But they’ve already fallen to levels that appear to represent the best values in over twenty years. Just as today’s prices in housing represent attractive levels to buyers, we believe today’s prices in many stocks and bonds represent attractive levels to buyers. While we continue to monitor the fundamentals and the effects of governmental actions, we’ve begun putting our cash back to work. The comments made by Ron Muhlenkamp in this article are his opinion and are not intended to be investment advice or a forecast of future events. Copies of past newsletters are available at

2008/2009 IRA Contributions Contributions can be made to your IRA for tax year 2008 by the due date for filing your 2008 tax return, not including extensions. For most people, this means contributions for 2008 must be made by April 15, 2009. This includes Traditional, Roth, and Coverdell Education Savings Accounts. When making a contribution between January 1 and the due date for filing your tax return, we suggest that you specify the year for which you are making the contribution. Too many people realize too late that they made a current year contribution (the year in which the contribution is actually received), and not a prior year contribution (the year for which they are filing their return). If you have any questions, please call us toll-free at (877)935-5520, extension 4. For tax year 2008 and tax year 2009, traditional and Roth IRA contribution limits are the lesser of $5,000 or 100% of your earned income. “Catch-up” contributions for persons age 50 and above are $1,000. Please refer to IRS Publication 590 for more information. CESA annual contribution limits are $2,000 for each beneficiary. Please refer to IRS Publication 970 for more information. You can download copies of the above mentioned IRS publications at Remember: It’s not too early to begin funding your 2009 IRA. Equity returns compounded over long periods can be truly amazing. continued on page 6


Intelligent Investing with Steve Forbes
Ron Muhlenkamp was a recent guest on a new web-based program, Intelligent Investing with Steve Forbes. The video interview is available at www.forbes. com. Following is sample content from the video. Steve Forbes: The veteran go-anywhere mutual fund manager talks about finding value in the bear market and the real financial weapon of mass destruction: mark-to-market accounting. Ron, we’re in one of these extraordinary periods in investing where a month seems like a decade. I first would like you to give our viewers and listeners a roundup of your investment philosophy, which is not the usual pigeon-hole things we see. You’ve described it as go-anywhere, macro economics, and bottom fishing. Ron Muhlenkamp: We like to invest in good companies when the price is right. We prefer stocks to bonds because we want management working for us as opposed to against us. There are two ways you can put money into a company. You can loan it money, in which case management’s job is to minimize your return. Or, you can actually be an owner of the business, in which case management’s job is to maximize return. We like management working for us. We think in terms of investing in companies, as opposed to buying and selling stocks. We’re small enough that we can’t really buy companies like Warren Buffet might, but that’s the philosophy we follow. We always want to own good companies, and our definition of a good company starts with return on shareholder equity (ROE). If you made columns and sorted companies by return on equity and then by reputation, you’d find they pretty much match with each other. The best companies, by and large, have the best reputation -- but we don’t know how to quantify reputation. We do know how to quantify return on shareholder equity. Historically, we tell the public that we’re trying to buy Pontiacs and Buicks when they go on sale. Some folks say the only stocks you want to own are the best companies, but the best companies don’t go on sale very often. Now happens to be a time when the Cadillacs are on sale, not just the Pontiacs and the Buicks, but the Cadillacs are on sale. The average return on equity for companies we own is 18%. Corporate average ROE throughout America is about 13 and, frankly, has been between 12 and 15 since World War II. It’s an amazingly stable number. The best companies run around 20 (ROE), or maybe a little above that. So at 18 (ROE), we think we’ve got at least Buicks. When interest rates are 5% or 6%, and inflation’s on the order of 2%, if we can get an 8%-9% return on our investment, we think that’s worth book value. In this case, that would be about an 11 or 12 multiple. In today’s economy, however, we can get an 18-20 ROE at P/Es (price-to-earnings ratios) below 10. So, today, we can buy Cadillacs below Chevy prices. The difficulty is, of course, that two months ago you could buy Cadillacs at Pontiac prices; they keep getting cheaper. We think this is due to forced selling. I tell folks if you want to understand markets, go to auctions. When you go to an auction, the auctioneer, if it’s a $100 item, will start by asking for a $100 opening bid. And then, he’ll go from $90 to $80 to $70 to $60. There’s no point in making an opening bid until he gets to $20. You say, “Okay, I’ll open a bid.” Now, if you’re lucky and you’re the only person there, you may get a $100 item for $20. More often than not, everybody else has been playing the same game and it ends up selling for $85 or $90, or maybe $110 or $120. But the point is, right now in the stock market, there’s been no reason for anybody to step up and make an opening bid. So prices just keep falling based on investors who must sell. Steve Forbes: You talked about return on equity. But, you also like to buy companies that are out of favor. That often means they’ve taken a loss where they have zero ROE. How do you try to take a long-term view? Ron Muhlenkamp: I learned a long time ago that “turnarounds” (i.e. a company that has been profitable and isn’t today) take about three times as long as they’re supposed to. We have found, in many cases, you can find companies that are quite profitable, but get cheap for any number of reasons. Some people think cheap companies mean a low price-to-book (P/B) ratio. We think that’s not true, unless they’re profitable. More often than not, we have found companies that were quite profitable, but, for some reason, they were out of favor. It might be that the phases of business cycle were not in synch, or akin to buying small, non-tech firms during the ‘dotcom’ era. Usually, there are bargains just because people think the times were worse than reality. Where you can make money is the difference between perception and reality. Steve Forbes: Can you give a couple of quick examples from the past where reality diverged from perceptions?


MuhlenkampMemorandum is a quarterly information service of Muhlenkamp & Company, Inc. ©2009

Ron Muhlenkamp: Back in early 2000, when everybody wanted to talk about dot-com’s, we were investing in housing stocks which, at the time, were four times earnings. We thought the economy was going into a slowdown, probably a recession. As a result, we expected earnings would get cut in half during that slowdown, effectively paying eight times earnings. The great surprise was earnings did not fall. Steve Forbes: How do you know when to get out? Ron Muhlenkamp: Buying is a science; selling is an art. The rules say that when the stock isn’t acting as well as it should, it’s time to sell it. In this regard, we’ve done less well than we had several times in the past. Steve Forbes: Especially in housing? Ron Muhlenkamp: Housing we held a little longer, but we’re out of it. We relied more on backlogs than we should have. Those backlogs disappeared. Recently, we misjudged the velocity of money. If you took your signals from the Fed over the last five years, they’ve essentially been backwards! The Fed started squeezing interest rates in 2005-06, and the “shadow banking” community (including hedge funds, along with banks and other Wall Street firms) continued creating, or leveraging, money at a much faster rate. The Federal Reserve can create money simply by printing it. The money created by the Fed can be further leveraged by banks by lending 8-10 times what they have on deposit. The “shadow banking” system created still more money. The velocity of money kept growing until July 2007 and, then, fell off a cliff. Velocity collapsed. Here’s what happened: Instead of a thirty-year mortgage which is held at a bank or S&L, the mortgage gets pooled with other mortgages and subsequently sold (securitized) to another institution. The originating bank gets its money back and, on the same dollar base, can now write another mortgage. This action doubles the velocity of the money – that is, the money turns over much faster in the economy. When coupled with the amount of leverage hedge funds were willing to absorb (often twenty- or thirtyto-one), the velocity of money increased still more. Steve, as you know, the change in money, times velocity, equals the change in price times quantity. What the government is now trying to do is keep quantity from collapsing, resulting in a serious recession, or prices from collapsing too fast. Steve Forbes: Now, this gets to the strange market that we’re in. I mean, even in the Great Depression where you had bank failures, they were small banks. Most of the large banks survived. Most of the large insurers survived. No big bank failure in Canada. No big bank failure in Britain. This one, it’s the big ones that are going down like bowling pins. What is happening here? Did suddenly companies like AIG become totally insolvent, or Bear Stearns and Lehman? In many cases they were cash-flow positive to the end. What’s happening here? Ron Muhlenkamp: I deal with a little bank located in Mars, Pennsylvania. And I asked, “How does all this affect you?” He said, “It hasn’t affected us at all. We take deposits from local people. We make loans to local people. It’s had no effect.” The small banks weren’t playing with the derivatives. They weren’t financing Wall Street. They weren’t financing the credit expansion where all this has settled. And even though the government forced capital into the nine largest banks in the country, it hasn’t helped much because of two dynamics: forced selling and mark-tomarket accounting (FASB 157). Forced selling is when a fund manager gets redemptions and, in turn, must sell securities. You’d like to sell what you want; if you can’t, you have to sell what you can. For example, if you’re a hedge fund manager and you’ve just gotten word from your banker that he’s been carrying you at a 10-to-1 leverage, but, going forward, he’s only going to carry 5-to-1, you have to sell half what you own. That’s forced selling. Steve Forbes: Explain mark-to-market. Ron Muhlenkamp: My best explanation is to use an example. Most people are familiar with fixed-rate 30-year mortgages. The great thing about a fixed-rate mortgage is that you know what your payment is this month, and next month, and next year, and five years from now. It’s a contract and it’s in the deal. Let’s contrast that with adjustable-rate mortgages. With an adjustable-rate mortgage, the fear was that the interest rate moves from 6% to 8%. (Now, the hope is, it moves from 6% to 4 percent.) As a consequence, your monthly payments might jump by $200 or $300 a month, which is $2,000 or $3,000 a year, and scary to people. Let me posit a third type of mortgage: an adjustable-principal mortgage. In this scenario, the principal amount of your mortgage is up for renewal on an annual basis and the maximum you can borrow is 80% of what a similar house in your neighborhood sold for just prior to your anniversary date. Under this circumstance, what you paid for the house is irrelevant; what you think it is worth is irrelevant; and what the house was valued at last year is irrelevant. Under this circumstance, let’s say a similar house in your neighborhood comes up for sale as part of an estate…and the house you think is worth $200,000 sells at auction for $150,000 just before your anniversary date. continued on page 6 3

MuhlenkampMemorandum is a quarterly information service of Muhlenkamp & Company, Inc. ©2009 • (877) 935-5520


Questions and Responses
At our investment seminar on November 18, 2008, Ron Muhlenkamp presented Bailouts, Your Dollars & the Whole Credit Mess to an audience of clients, shareholders, and prospective investors. Afterwards, Ron entertained questions from the audience. A video of the presentation and a booklet summarizing its content are available on our website at If you prefer, call us and we will mail you these materials. The Portfolio What are you doing with the portfolio today, and what timeframe do you look at when making investment decisions? 4 The timeframe for making investment decisions is 3-5 years. When we purchase a stock, we intend to hold it for three or more years. Depending on what happens at the federal and international levels, it may take longer, but we are confident we will survive this downturn. We continue to cull stocks that disappoint; that is ongoing. Disappointment can come in the form of earnings, growth prospects dimming, or when a company falls short of our expectations. At the same time, we have started buying. We believe we are buying Cadillac companies, selling well below Chevy prices. In other words, we are buying companies with above average profitability as measured by return on equity (ROE) which sell at below average prices as measured by price-to-earnings ratios (P/E). Company size is of little importance. How many stocks are in the mutual fund and what are some of the holdings? We think of a normal stock position as being 2½%-4% of the portfolio, so we generally look at owning 25-40 securities. Right now, we own approximately 30 stocks, spread out among a number of businesses. Today, we own more technology stocks than ever because we think there are world-class companies selling at cheap prices, including IBM, Cisco, and Oracle. These companies have an average ROE well in excess of 20% and P/Es ranging from 9-15, which, in our terms, makes them Cadillacs selling at Chevy prices. For the first time ever, I bought Berkshire Hathaway. You all know that Berkshire Hathaway is Warren Buffet’s company. He started this year with about $40 billion in cash. He invested $5 billion into Goldman Sachs as preferred stock and is getting a 10% rate. Buffett also put $3 billion into GE (General Electric) as “preferred’s” and is getting 10 percent. So the reason we bought Berkshire Hathaway is that he had $40 billion in cash, understands credit, and could write his own terms. What is your cash position? As of midsummer, we were running about 25%-30% in cash, but it hasn’t been enough to protect us. We use cash in two ways: 1. As a “parking place” between the sale of one position and the purchase of another. 2. As a defensive measure when we see risk in the marketplace. How do you conduct your research? We begin with various databases, looking for companies with good ROE and modest P/E ratios. As a working definition, ROE is the rate of return of earnings based on the equity capital. It has averaged roughly 14% since WW II, so that becomes our starting point. If the numbers look good, we dig deeper by checking financial statements and annual reports. If satisfied, we call the company’s management. Our three favorite questions are: 1. Are there analysts who do a good job covering your company? This saves us time because we can work off their efforts. 2. What metrics do you use to judge your company’s performance? Some use ROE, some use Discounted Cash Flow, others use Economic Value Added, and so forth. All are valid, but we want to know what they use. 3. At what point on that metric do your executives or employees start earning a bonus? We want to know what they’re trying to accomplish with shareholder money. Sometimes they set their hurdles too low, in which case we’re not interested. Our job is to figure out whether the company will reach its goals and figure out what we’re willing to pay for that. Finally, we talk with the company’s customers. If the customers are happy, the company is doing something right. What are your thoughts about investing in bonds? If you know what you are doing in the bond market, you can find a lot of bonds selling dirt cheap. But, if you don’t spend 60 hours a week conducting investment research, you are competing with those of us who do. I once worked for an insurance company which, in general, isn’t very good at valuing stocks, but darn

MuhlenkampMemorandum is a quarterly information service of Muhlenkamp & Company, Inc. ©2009

good at valuing bonds. So, the chances of you getting a good deal in a bond that some insurance company analyst or private equity analyst hasn’t discovered is pretty slim. With investing, it’s helpful to remember the old proverb: “A buyer needs a thousand eyes, a seller needs but one.” How much has the Fund dropped in total investments? The Fund has gone from close to $3 billion in assets to just under $1 billion. If you’re worried about whether the firm is still solvent, yes, the firm is solvent. The Government and the Economy Do you have an opinion on TARP (Troubled Assets Relief Program), and should the government be assisting the auto industry? We don’t like the fact that we had to do it, but we think TARP was necessary. As stated during my presentation, we think the government has been attempting to prevent credit problems from going to Main Street; it has not bailed out Wall Street. We don’t think a bailout of Ford, General Motors, and Chrysler is necessary. Some people tell me that as a matter of loyalty we should help Ford, General Motors, and Chrysler. I think the free market works the other way. It is the job of a producer of goods to make the best product at the best price it can to serve the consumer. We all get to make our own choices about whose products we want to buy. There is no shortage of cars, and certainly no shortage of good cars. In fact, Ford, General Motors, and Chrysler are making good cars these days. They are just not competitive in terms of the prices they pay to the UAW (United Auto Workers) to do it. Folks, this issue will be decided politically. The big questions are always political. How much longer do you expect the recession to last? We have had eleven recessions in the US economy since World War II. This time, it’s the US economy and, likely, the world experiencing recession. Recessions serve a useful purpose; they correct the excesses of the prior expansion. What do you all do in a recession? You just told me, you work a little harder and spend a little less. If you do that for six or nine months, those of you that don’t lose your job — and 97% of you won’t lose your job — will say, “Gee, I am in a little better shape,” and start pulling out your “wish list” once again. That is the normal pattern of recessions. We think the only thing that could prolong this recession is if the federal government doesn’t get it right and messes things up. Milton Friedman said that in the 1930s we turned a normal recession into a depression by doing three things: 1. In order to protect our gold supply, we raised interest rates. Right now, we’re lowering them. 2. In order to balance the budget, we raised taxes. President-elect Obama has promised to do that, but he’s promised to do it for only 5% percent of the people. 3. In order to protect our manufacturers, we raised tariffs. We’re not doing much in terms of protectionism, so we don’t see this as a problem. What about inflation? All the money the federal government is currently pouring into the markets will need to be absorbed once the economy turns around and starts moving up. We had a somewhat similar experience in 2001, when the Federal Reserve lowered interest rates to 1% and was printing money. When the economy is operating below capacity, printing money is not inflationary. But when the economy picks up, the extra money has got to be sopped up. Right now, there is probably a greater risk of deflation than inflation. In this country we tend to associate deflation with depression because the last time we had the two they came together. The Fed is trying to offset the deflation caused by the collapse of the velocity [of money] by shoveling money into financial institutions. The comments made by Ron Muhlenkamp in this article are his opinion and are not intended to be investment advice or a forecast of future events. As of 12/31/08, the Fund held: IBM, 5.2%, Cisco, 4.8%, Oracle, 4.3%, Berkshire Hathaway, 5.7%, Goldman Sachs, 0.0%, GE, 0.0%, Ford, 0.0%, GM, 0.0% and Chrysler, 0.0% as a percentage of net assets. Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. Current and future portfolio holdings are subject to risk. Glossary Price-to-Earnings (P/E) is the current price of a stock divided by the trailing 12 months earnings per share. (Discounted) Cash Flow is a method of valuing a project, company, or asset using the “time value” of money. For example, all future cash flows are estimated and, then, discounted for the cost of capital and perceived uncertainty. Economic Value Added (EVA) is a way to determine the value created, above the required return, for the shareholders of a company.


MuhlenkampMemorandum is a quarterly information service of Muhlenkamp & Company, Inc. ©2009 • (877) 935-5520

Steve Forbes
continued from page 3 In turn, your bank or S&L would say, “All we can loan you for the next year is 80% of $150,000, or $120,000.” All of a sudden you’ve got to come up with $40,000; (the difference between the original fixed-rate mortgage amount of $160,000 and the adjustable-principal mortgage amount of $120,000). What would this do to your planning and budgeting? Is there anyone here who would purposely get an adjustableprincipal mortgage – knowing that next year the 80% you have in principal might be $40,000 less? You would have to create a cushion to stay afloat! Steve, this is called “mark-to-market.” Think of what that does to your planning and budgeting. If I’m faced with that, I’m going to try to gather every dollar I can, in case I have to come up with $40,000. That’s the impact of mark-to-market. They’re marking the value of my house and my mortgage to what happened in the neighborhood. That’s what every bank and every insurance company in the country is faced with since November 2007. Steve Forbes: Now, if there’s a mortgage-distress sale that goes, say, for 70 cents on the dollar, even though the mortgage payments are being made, even though the bond is being serviced, they have to write it down. Which means they have to raise more capital, which means the rating agencies now will knock them down…And so it goes in a death spiral. Ron Muhlenkamp: You got it. Steve Forbes: Why, in Washington, have they not called a timeout for an accounting standard that is clearly going against every established banking and insurance principle of the past, which is you don’t treat reserves, you don’t treat capital, as you would a common stock and a mutual fund? Ron Muhlenkamp: I don’t know. The only thing I can think of is the Financial Accounting Standards Board (FASB) doesn’t want to reverse itself in a year. The only rationale for mark-to-market is that market prices are always fair. We think on average they’re fair, but, at any given time, they may not be. Steve Forbes: But as you well know, if you were told, “Sell your car in the next ten minutes,” you’d get a very different price than if you could sell it over ten days or ten weeks. As Bernanke in testimony has pointed out, there’s a difference between a distressed price and one held to maturity. Ron Muhlenkamp: Yes. Steve Forbes: How long will this play out? And how is it affecting your investing decisions? As you know these otherwise solvent companies are being run into the ground with the short-selling because of forced selling and mark-to-market? Where does this end? Ron Muhlenkamp: The SEC could suspend it overnight. Chris Cox, the head of the SEC, can suspend it. He can’t rescind FASB 157, [mark-tomarket], but he can suspend it. For the entire interview, visit and look for the topic Intelligent Investing. As of 12/31/08, the Fund held AIG, 0.0%, as a percentage of net assets. Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. Current and future portfolio holdings are subject to risk. Glossary Book Value (BV) or “Book” is the owner’s equity in the business. It is often quoted as Book Value/Share. Book value is, in theory, what would be left over for shareholders if a company shut down its operations, paid off all its creditors, collected from all its debtors, and liquidated itself. Return on Equity (ROE) is a company’s net income (Earnings) divided by the owner’s equity in the business (Book Value). This percentage indicates company profitability, or how efficiently a company is using its equity capital.

continued from page 1 2008 Distributions An income dividend of $0.141981 per share was paid on December 29, 2008 to shareholders of record on December 26, 2008. There was no capital gain distribution in 2008. IRS Form 1099DIV will be issued during January 2009 to all taxable accounts that received a dividend in excess of $10.00. Reminder: For all redemptions over $50,000 from any account, the signature(s) on the redemption request must be guaranteed by an “eligible guarantor institution.” These include banks, broker-dealers, credit unions and savings institutions. Signature guarantees will be accepted from any eligible guarantor institution that participates in a signature guarantee program. A notary public is not an acceptable guarantor. Please refer to the most recent Prospectus for additional information. Any tax or legal information provided is merely a summary of our understanding and interpretation of some of the current income tax regulations and is not exhaustive. Investors must consult their tax advisor or legal counsel for advice and information concerning their particular situation. Neither the Fund nor any of its representatives may give legal or tax advice.


MuhlenkampMemorandum is a quarterly information service of Muhlenkamp & Company, Inc. ©2009

Mark Your Calendar
The World Money Show February 4-7, 2009 Gaylord Palms Resort, Orlando, FL Ron Muhlenkamp will deliver the following free workshops: • Back to Basics: How to Make Money in the Current Investment Climate • Recessions: What Do They Look Like? • Bailouts, Your Dollars & the Whole Credit Mess • Where to from Here? To register, please call (800)970-4355 or visit and reference priority code #012877. If you would like to talk with us at the show, please stop by our exhibit booth, #503. AAII – Coastal Carolina March 11, 2009; 7:00 p.m. Calabash Fire Department 892 Persimmon Road, Calabash, NC Tony Muhlenkamp will deliver Bailouts, Your Dollars & the Whole Credit Mess For more information, please call our Client Service Department at (877)935-5520 extension 4. AAII – Columbus Chapter March 26, 2009; 8:00 p.m. Caffe Daniela 652 North High Street, Worthington, OH Tony Muhlenkamp will deliver Bailouts, Your Dollars & the Whole Credit Mess For more information, please call our Client Service Department at (877)935-5520 extension 4. The Las Vegas Money Show May 11-14, 2009 Mandalay Bay Resort, Las Vegas, NV For more information, visit or call (800)970-4355. If you would like to talk with us at the show, please stop by our exhibit booth, 605. Speaking engagements to be determined.

Average Annual Returns as of 12/31/08
Muhlenkamp Fund Return Before Taxes Return After Taxes on Distributions*+ Return After Taxes on Distributions and Sale of Fund Shares*+ S&P 500** Expense Ratio: 1.15% Three Month -21.88% -21.98% Year to Date One Year Past 3 Years Past 5 Years Past 10 Years 3.14% 2.69% 2.85% -1.38% Past 15 Years 7.62% 7.19% 6.87% 6.46% Since Inception 11/1/1988 9.13% 8.68% 8.31% 8.37%


-40.39% -40.39% -17.55% -5.52% -40.47% -40.47% -18.34% -6.09%

-14.22% -26.25% -26.25% -14.04% -4.31% -21.94% -37.00% -37.00% -8.36% -2.19%

Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be found on our website at The Fund imposes a 2.00% redemption fee on shares held less than 30 days. Performance shown does not reflect redemption fees. Had a fee been reflected, performance would be lower.
*After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your situation and may differ from those shown. Furthermore, the after-tax returns shown are not relevant to those who hold their shares through tax-deferred arrangements such as 401(k) plans or IRAs.

Returns subject to change pending valuation of qualified dividend income percentage.

**The S&P 500 is a widely recognized, unmanaged index of common stock prices. The figures for the S&P 500 reflect all dividends reinvested but do not reflect any deductions for fees, expenses or taxes. One cannot invest directly in an index. Information contained in this newsletter does not constitute an offer to sell, or a solicitation of an offer to buy shares of the Muhlenkamp Fund, nor shall any shares be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase, or sale would be unlawful under the securities laws of such jurisdiction.

Mutual fund investing involves risk. Principal loss is possible. The Fund may invest in smaller companies, which involve additional risks such as limited liquidity and greater volatility. The Fund may also invest in foreign securities which involve greater volatility and political, economic and currency risks and differences in accounting methods.

The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The Prospectus contains this and other important information about the investment company, and it may be obtained by calling (800) 860-3863, or visiting Read it carefully before investing.
The Muhlenkamp Fund is distributed by Quasar Distributors, LLC. (1-09)

MuhlenkampMemorandum is a quarterly information service of Muhlenkamp & Company, Inc. ©2009 • (877) 935-5520

Muhlenkamp & Company, Inc.
5000 Stonewood Drive, Suite 300 Wexford, PA 15090-8395

Inside this issue: • Ron’s Quarterly Letter • Intelligent Investing with Steve Forbes • Questions and Responses

Bailouts, Your Dollars, & the Whole Credit Mess

At our investment seminar on November 18, 2008, Ron Muhlenkamp presented Bailouts, Your Dollars & the Whole Credit Mess to an audience of clients, shareholders, and prospective investors. Afterwards, Ron entertained questions from the audience. A video of the presentation and a booklet summarizing its content are available on our website at If you prefer, call us at (877) 935-5520 extension 4 and we will mail you these materials.