Amerindo's Vilar on Tech Stocks and His Big Stake in
Avant
HERB GREENBERG'S BUSINESS INSIDER --
Herb Greenberg
The past few months have been nothing short of lousy for San Francisco- based
Amerindo Investment Partners.
It's either the biggest, or one of the biggest investors in a host of tech companies
that have been clobbered, including Ascend Communications, Fore Systems
and Netscape. The firm is known for taking highly concentrated positions in a
relatively small number of companies, primarily networking, telecommunications
and Internet stocks.
When they do well, Amerindo soars. When they do poorly, Amerindo sinks.
There's little in between, and right now it looks as though somebody tied lead
around Amerindo's portfolio and tossed it into the bay. Consider that the
Amerindo Technology Fund, which was launched late last year, is down 38
percent so far this year, and is 50 percent off its highs.
Amerindo's 30 percent stake in Fremont-based Avant hasn't helped. The
software company's stock lost 66 percent of its value over the past two days,
after its CEO and six employees were indicted on criminal charges of
conspiracy and theft of trade secrets from rival Cadence Design Systems.
Amerindo President Alberto Vilar's take on the situation: ``The stock is just
exploding in terms of fundamentals,'' he says. Yesterday Avant reported better-
than-expected earnings, with a rising backlog of orders. ``But this is not the time
for the market to recognize it on its merits,'' he says. ``So you have to look at it
as a fluid situation.''
Vilar says Amerindo's attorneys are reviewing the charges against Avant, and
that after his attorneys talk to Avant's attorneys, ``we'll make a judgment'' about
what Amerindo should do. But he doesn't want to sell Avant. ``You wish you
could find 10 companies that are as formidable a competitor as Avant,'' Vilar
says. He believes the correction in tech stocks has ended, and at bottoms,
stocks ``always exaggerate on the downside.''
In recent days Vilar's firm has been the subject of rumors that it had gone out of
business and/or was liquidating its portfolio. He responds: ``Do you believe this
stupidity? I've done this for 25 years. I established a standard for money
management in emerging technologies.'' He says investors forget that tech stocks
experience 30 percent corrections, on average, every two years. And while the
Hambrecht & Quist technology index lost 37 percent of its value in 1992, and
27 percent in 1994, Nelson's Research still ranked Amerindo as the country's
No. 1 money management during the first five years of the 90s.
He says that his firm has been buying more tech stocks in recent days. ``I think
you'll look back a year from now and say, `Wow.' You could see prices up 50
to 100 percent from here.''
Amerindo, as a firm, manages around $3 billion; just $40 million is in the mutual
fund. And since stocks have started to fall, ``you can count the number of
redemptions on one hand; there have been just two.''
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