Elwood,
I'm catching up on things at my sisters house. I did find an interesting tidbit in Barron's. The Dell guys have been giving quite a bit of press to the Janus Fund, which had Dell as it's top holding for some time. Barron's did a piece on the fund manager, he says he has been selling Dell recently. Here is an excerpt...
John
f you're one of those investors who owns 103 stocks, and you're not quite
sure why you own some of them, you can learn an important lesson from
Scott Schoelzel: Find a handful of companies you absolutely love, and then
bet the farm.
That's just what Schoelzel does. He manages the Janus Twenty Fund, with
$16 billion in assets, yet he keeps all that money in a mere 29 stocks. Other
portfolio managers, by contrast, typically hold more than a hundred stocks at
any one time.
Schoelzel's system certainly works. His fund achieved a stunning 73% return
in 1998, enough to give Janus Twenty the best performance by far among the
nation's 100 largest mutual funds. The Standard & Poor's Index, by contrast,
was ahead 26.7%, and the average U.S. mutual-fund manager notched a gain
of about 14%.
Schoelzel's approach isn't
without risk. Right now, for
example, he owns some of the
market's highest fliers, including
Dell, Microsoft and Cisco
Systems. In recent weeks,
Schoelzel has been taking an
even greater chance, loading up
on America Online, which trades
at a mindboggling 226 times next
year's expected earnings. He's
been buying so much AOL that it
has become his biggest holding.
Even Schoelzel admits the stock now looks incredibly pricey. But he knows
that if he wants to beat the market he must bet heavily on the stocks he deeply
believes in. Since Schoelzel started adding to his AOL position in December,
the shares have surged more than 70% in price. Although he cautions
investors to tread lightly with AOL during the next few months, he says he
likes the company's prospects for the longer term. "I think they're signing up
subscribers faster than people realize, and they will continue to do so for at
least the next year," says Schoelzel. Indeed, AOL last week said it signed up
more than one million first-time users between mid-November and December
30.
Schoelzel lives to invest in fast-growing companies, but that doesn't mean he
achieved his world-beating results simply by investing in go-go Internet
stocks. Besides AOL, Microsoft, Cisco and Dell, his fund's 10 largest
holdings as of October 31 were Pfizer, Warner-Lambert, MCI WorldCom,
General Electric, Time Warner and Nokia.
Schoelzel has done meticulous research on his top 10 stocks, and he keeps a
close eye on them. It's easy to see why. Almost 60% of the Janus Twenty
portfolio is invested in these 10 names alone.
One surprise: Having fully enjoyed Dell's 249% gain in 1998, Schoelzel has
actually been selling the stock in recent weeks. On October 31, Dell was his
biggest holding, accounting for nearly 11% of the Janus Twenty portfolio.
Schoelzel won't say why he's selling Dell, other than to note that he doesn't
think its stock price will triple again this year. One gets the sense there's
something more on his mind, but upon further questioning, he points out that
he hasn't completely dropped Dell, and he adds that it will probably rank as
his second-largest holding as of December 31.
There can be no question that Schoelzel gets excited about stocks, though.
When we visited him in mid-December at Janus's headquarters in Denver, he
couldn't contain his glee at the galloping market. "We just had a ripping day,"
he said as he bound out of Janus's six-story office building and clambered into
his brand-new white Ford Explorer.
Schoelzel knows he's hit the sweet spot
of the market, and perhaps his career,
but he sees no reason why the good
times won't continue. At age 40, he's
walloping his competitors. He gets to
dress in turtlenecks, corduroys and a
polar fleece cardigan. He lives in a
toney section of Denver, his hometown,
and he is happily married with three
young children he dotes on.
After a 10-year career in commercial
real estate in Denver, Schoelzel joined Founders Asset Management in
Denver in 1990 and four years later hopped to Janus to do some research
and some money management. In 1995, he took charge of Janus's Olympus
Fund, and managed to beat the S&P 500 Index by about a percentage point
during each of his two years there.
When Schoelzel took the helm |
