MW Stocks that benefit from chaos are helping a husband-and-wife investing duo beat the competition

By Barbara Kollmeyer

AutoZone, Ross Stores and Fastenal are all picks for Marshfield fund managers

One way to survive chaotic markets? Invest in companies that thrive on it.

Husband-and-wife portfolio managers Elise Hoffmann and Christopher Niemczewski, who have 75 years of experience between them, have been doing just that for the Morningstar five-star Marshfield Concentrated Opportunity Fund MRFOX.

Companies that can do well in tough times have "a different kind of cyclicality," that doesn't just "obey prevailing economic cycles," said Hoffmann, in an MarketWatch interview with the co-managers on Monday. "Our companies are better suited than many, to deal with changes in their environment in a way that kind of doesn't fully immunize them, but gets a better outcome than many of their competitors."

Revenue for insurers and auto-parts retailers, they say, are driven by something slightly different from the economic cycle. "And we like that because it makes the portfolio more resilient in times of stress, because it's not all pro-cyclical in one direction," said Hoffmann.

This fits into their process of not bending to market or economic stress - what they do in a robust economy is repeated for a difficult one, and if a stock hits their buy price, they buy it.

The fund seeks to preserve capital and beat its benchmark. In the first quarter of 2025 that has meant losses for rivals, the Marshfield fund is up, albeit just 0.7%. It also made money in 2022 when the S&P 500 fell 19%, and has beat that index over three and five years.

Their edge is also being so different from that index, shunning tech, healthcare and utilities. "We don't want to own lots of stocks that other people want to own, the general stocks that are popular in the market and even stocks that are popular with other value investors," Niemczewski said.

As for those "chaos" beneficiaries, he pointed to auto parts retailers AutoZone $(AZO)$ and O'Reilly Automotive $(ORLY)$, the fund's No. 1 and No. 3 positions. "When the price of new cars goes up, people keep their old cars longer, and the auto parts retailers benefit," he said.

Read: 7 stock picks from a global fund manager as markets 'enforce discipline' on Trump

"We have another company we own called Fastenal $(FAST)$, which we think of as a hardware store or hardware company for big manufacturing and construction companies," Niemczewski said. "They had their earnings last week and they talked about the fact that they benefit from this chaos because they have such great supply chain expertise and such a good supply chain all over Southeast Asia."

While the fund is heavy in consumer cyclicals whose fortunes are often tied to the economy, their picks also differentiate, such as home builder NVR $(NVR)$, which doesn't own land. "They have options on land, which means that when the demand for new houses goes down, they have much less at risk in that time," he said.

Discount retailers Ross Stores $(ROST)$ and TJMaxx owner TJX Cos. $(TJX)$, which they own, are far less tied to the economy than companies like Macy's (M), said Niemczewski.

The fund typically holds up to 24 stocks, but currently has 16, and has a cash position near 28%, a signal of tough it is to find stocks that meet their criteria. Hoffmann explained that during a lofty market, they often can't find anything to buy and a number of stocks hit a price at which they have to sell, generating more cash.

So they've done their homework and their shopping list of companies to buy is ready. "What people expect from us is discipline - discipline to wait, discipline to buy it when everything's chaotic and then discipline to sell when it's perfect," Niemczewski said.

Read: S&P 500 tallies its first 'death cross' in 3 years. Here's what happens next.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are drifting lower following back-to-back gains for major indexes, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y mostly steady. Gold (GC00) continues to climb and is shooting for a new record high above $3,244.

   Key asset performance                                                Last       5d     1m      YTD      1y 
   S&P 500                                                              5405.97    6.79%  -4.74%  -8.09%   6.80% 
   Nasdaq Composite                                                     16,831.48  7.87%  -5.49%  -12.84%  5.96% 
   10-year Treasury                                                     4.348      4.40   5.80    -22.80   -32.50 
   Gold                                                                 3247.1     8.28%  7.87%   23.03%   35.34% 
   Oil                                                                  61.83      1.43%  -8.37%  -13.97%  -27.81% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

Johnson & Johnson $(JNJ)$, Bank of America $(BAC.SI)$, Citigroup (C) and PNC Financial are reporting results.

Netflix $(NFLX)$ executives have reportedly set their sights on a $1 trillion market capitalization and doubling of revenue by 2030.

The White House has opened a probe into pharmaceuticals and semiconductors that could lead to tariffs.

China appears to be swatting at U.S. levies, reportedly ordered the country's airlines to stop taking deliveries from Boeing $(BA)$, whose shares are down.

Import prices and the Empire State manufacturing survey are due at 8:30 a.m.

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The chart

Jefferies lowered its year-end S&P 500 target to 5,300, citing the risk of a stagflation-like scenario. They noted there have been five stagflation-like periods since 2001 with rising inflation and falling growth, and that returns struggled during those periods.

Top tickers

These were the most active stock-market ticker symbols on MarketWatch as of 6 a.m. Eastern:

   Ticker  Security name 
   NVDA    Nvidia 
   TSLA    Tesla 
   GME     GameStop 
   AAPL    Apple 
   PLTR    Palantir Technologies 
   TSM     Taiwan Semiconductor Manufacturing 
   AMZN    Amazon 
   MSTR    MicroStrategy 
   AMD     Advanced Micro Devices 
   NIO     NIO 

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-Barbara Kollmeyer

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April 15, 2025 06:52 ET (10:52 GMT)

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