Looking for top-line sales growth Janus Fund manager finds plenty to like in big-caps
By Don Scott, CBS MarketWatch
Last Update: 4:06 PM ET Nov 23, 1998
NEW YORK (CBS.MW) -- Janus Twenty Fund portfolio manager Scott
Schoelzel pays keen attention to a company's top-line sales growth.
"You love to get it through unit sales, because there are not many
companies out there that can actually increase prices any more," Schoelzel
said.
"So I'm looking for growing top lines, expanding margins and real,
open-ended opportunities, not just companies that can satisfy a small
niche for a short period of time, but companies that are going to eventually
become, or are, the brand name franchises in their respective industries."
His stock picking strategy is "very simple
and very straight forward." He looks for
companies in only a handful of sectors that
include: telecommunications (equipment
and services), technology, health
(pharmaceuticals, biotech and
healthcare), financial services, retailing and
entertainment.
Twenty Fund's performance
Schoelzel took over the Twenty Fund
(JAVLX) in August 1997 and since then,
the fund has grown at an annualized rate of
34.4 percent, versus the S&P 500's
annualized 17.4 percent over the same
period. The numbers are computed by
Morningstar's Principia Pro database
through the end of October.
Year-to-date, Twenty is up 47.9 percent,
the market's up a comparatively stingy
19.9 percent.
The $12 billion fund is one of the no-load offerings the Janus Group of
Funds (www.janus.com).
Schoelzel also turned in top-draw performances running the Founders
Special Fund and the Founder's Growth fund before Janus. He's 40 and is
using the Twenty Fund to invest for his own retirement and to pay for his
three children's college education. He says his entire liquid net worth
invested in the fund. That clearly puts him on the same side of the table as
shareholders.
Dell, Nokia sales
Schoelzel says unit sales are up 70 percent, year over year, at Dell and up
about 15 percent sequentially. He notes that sales this past quarter were
up 51 percent over the prior year. And sales were up 11 percent from the
second to the third quarter.
Another company Schoelzel likes is Nokia, Finland's cellular phone
company. He says American consumers are ringing up the new AT&T
11-cents-a-minute cellular deal so quickly that Nokia, which supplies the
handsets, can't make the phones fast enough.
"They're producing a million a week and there's a
waiting list." Also encouraging: in the U.S., the
cellular phone penetration rate is just 20 percent.
How big could it get? In Europe, the penetration
rate is 50 percent.
Sure, the field is crowded, Schoelzel admits, but
"it's pretty clear to me that Nokia seems to be a
step ahead of its competitors, not only providing
the feature sets that customers and consumers
want, but adding new features that are opening up
entire new markets."
Intuit
Is there a particular stock that sticks out in
Schoelzel's mind as being an undiscovered gem
that's going to pop once the rest of the world
figures it out?
He says he's begun building a position in Intuit
(INTU), which he acknowledges is not a cheap
stock, no matter how you slice it. It's been trading mostly between 45 and
55, though lately it's moved higher. "Everybody talks about Amazon.com
and how big the book market is, and all the other little markets when
people are trying to imagine what can be done on the web," he notes, "but
consumer financial services is a $1 trillion market--that's the mother lode."
Schoelzel says if Intuit, through its Quicken software, insurance and
mortgage offerings, and other relationships, can become the Amazon.com
of financial services on the Web, then "this stock could be gargantuan and
it has by no means had one of these Amazon.com or Yahoo! type of
moves."
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