The founds had a lot of CSCC stocks and according to volumes
traded today. They are back bitting for the bites of higher
prices for ASND AND CSCC.
..............................................
TWENTIETH CENTURY ULTRA. Mr. Stowers has always been a growth investor. In late 1995, he
had taken that investing style to an extreme. At that time, the Ultra fund was a seething cauldron of
red-hot growth stocks, with an average earnings growth rate of 63%. And the average P/E ratio (stock
price divided by per-share earnings) was a sky-high 45, showing that Mr. Stowers was quite willing to
pay up for great growth.
He's less willing to do so today. The market "is reacting unfavorably to very high P/E stocks, regardless
of the growth rate," Mr. Stowers says. There are "some great companies out there with very high growth
rates," he says, almost wistfully. But once a stock's price trend has turned negative, there's "no need to
try to catch a falling knife."
A fund manager has to "be sensitive to what the market's reacting to," Mr. Stowers says. "We don't care
if a stock is brilliantly positioned and managed if nobody else sees that."
However, Mr. Stowers hastens to add that he isn't selling all his highfliers. Rather, he is bringing the
overall P/E of his portfolio down by confining new purchases to stocks with more moderate P/E ratios.
These days, the average P/E in the Ultra Investors portfolio is 30, and the growth rate is about 30%.
At times in the past, "when Japan was working," Mr. Stowers put up to 30% of Ultra's money into
foreign stocks. But these days, only about 6% of the fund is invested abroad.
As recently as the end of 1995, Ultra had the best five-year performance record among the largest 20
U.S. mutual funds. But in the past 12 months, it has trailed behind the market averages, partly because
of sporadic weakness in technology stocks -- a favorite group for Mr. Stowers. Today, Ultra's five-year
record is only in the middle of the pack among the giant funds.
Mr. Stowers doesn't like to discuss specific stocks, but fund records show that Cisco Systems, Sun
Microsystems, Ascend Communications and Cascade Communications were among his biggest holdings
as of Sept. 30. These technology stocks have all been hit hard this year.
Turnover at Ultra runs close to 100% a year, Mr. Stowers says, making for an average holding period of
about one year. "We're not very patient."
As a rule, Mr. Stowers likes to buy a stock when its earnings growth is accelerating, regardless of
whether profits are high or low. He usually sells when earnings start to decelerate, "even if growth is still
respectable or good."
As for the overall market, Mr. Stowers resolutely declines to make any prediction. But he does comment
that people shouldn't be too scared by the recent Federal Reserve Board move to raise interest rates a
notch. It usually takes three rate increases to spell trouble, he says.
Ultra, based in Kansas City, Mo., is part of the American Century family of funds and has about $19
billion in assets. Mr. Stowers has run the fund since 1981.
(END) DOW JONES NEWS 04-04-97 |
