Article which might interest the thread- mentions IW:
Bay Street Beat: Tech is mantra for top fund managers
Reuters, Sunday, January 23, 2000 at 14:13
By Sarah Edmonds
TORONTO, Jan 23 (Reuters) - Managers at the five
best-performing Canadian equity funds in 1999 preach a gospel
for 2000 and beyond soothing to those who worship technology.
Although shares in telecommunications and high-tech
companies are already commanding very high valuations, this is
for a compelling reason, they say.
"We're really undertaking something here in the telecom
area that is probably similar to the building out of the
railroads 150 years ago or the introduction of the automobile
to North America or the world overall," said John Rohr, who
runs two of 1999's top five funds.
"We're introducing a massive new technology which is
changing the way we work and the way we live and the way we
maybe even configure our cities, and this will take probably 10
years to play out."
Rohr manages the Great-West Life Canadian Opportunity and
the Universal Future fund -- both part of Mackenzie Investment
Management Inc.
The managers say the tech-telecom revolution is still in
its infancy and -- almost to a person -- they expect and hope
for a 15 to 20 percent short-term correction in the sector to
improve market health and "shake out" the speculators. But the
underlying trend is clear.
"We're basically long-term investors and we want to catch
major major trends, and while these stocks will be volatile, I
think longer-term, these things will be higher -- especially if
we can get over the interest rates hike here," said Glenn
Paradis, the Toronto-based manager of 1999's top-performing
Transamerica Growsafe Canadian equity fund.
The Growsafe, with assets of C$345 million, produced a
one-year return of 110.5 percent, well ahead of its nearest
rival, the AIM Canadian Premier fund with a 61 percent return.
In third place was the Fidelity Disciplined Equity with
49.4 percent. Four and five were managed by the same person --
Toronto-based Rohr -- and are essentially duplicates of one
another. The Mackenzie-managed Great-West Life Canadian
Opportunity class B, with assets of just C$24 million, grew 49
percent while the Universal Future Fund, assets of C$1.3
billion, rose 48.7 percent.
All the funds beat the Toronto Stock Exchange 300 Composite
index's 30 percent gain last year, a tough task since they are
barred from having more than 10 percent in any single stock.
Many Canadian portfolio managers found that restriction a
tough one given the huge index weight of communications gear
maker Nortel Networks Corp. (TSE:NT) and telecoms holding
company BCE Inc. (TSE:BCE) -- the two now make up 27 percent of
the TSE 300 -- and the phenomenal gains of those two stocks.
All the top five funds have BCE and Nortel shares, but
those managers who disclosed holdings said they were not even
close to using up their 10 percent. Paradis was a late convert
and didn't even buy any Nortel until October of last year.
However, they continue to be fans of Nortel and 1999's
other beauty queen, fiber optic network equipment maker JDS
Uniphase Corp. (NASDAQ:JDSU), both well-placed to capitalize on
telecoms service providers' need to widen and speed up the
information pipeline with fiber optics.
"Wireless growth is explosive and there's an increasing
demand for getting any sort of data to go over the Internet,"
said Boston-based Doug Lober, a stock picker and sector manager
for the Fidelity Disciplined Equity fund, No. 3 last year. The
Disciplined Equity has assets of C$440 million, he said.
"So any company that somehow increases the capacity and
bandwidth will continue to do very well," added Lober.
Three managers cited Rogers Communications Inc. (TSE:RCI.B)
as an interesting possibility for 2000 because Canada's largest
cable television provider has a broadband pipeline and has
moved into the burgeoning cable modem market for Internet
users.
Wireless is another area pegged as a winner under the
technology-rich paradigm. Penetration rates of cellphones are
exploding in Europe, and North America's hunger for wireless
telephone and data devices is likely to prove just as
insatiable.
"We still think wireless -- a number of different ways to
play that, whether it's handsets, whether it's through software
providers, service providers," Transamerica's Paradis said.
His fund owns provider Clearnet Communications Inc.
(TSE:NET.A) and software company Infowave Software Inc. (TSE:IW),
which, like popular Internet pager firm Research In Motion Ltd.
(NASDAQ:RIMM), allows users access to e-mail over wireless units.
However, Infowave is "device-agnostic" and its software lets a
user access e-mail via cellphone, pager or laptop.
Stability is found in diversification. Paradis and AIM
Canadian Premier manager Clas Olsson of Houston are big on
Canada's grocery store leader, Loblaw Cos. Ltd. (TSE:L), one of
the country's retail success stories.
"Loblaw is one of the stocks we really like," said Olsson,
whose fund has assets of about C$333.5 million. "In Canada,
it's hard to find what we define as core stocks and we try to
have a portion of the fund in core names -- which are names
that can report strong earnings even though you go into a
slow-growth time period."
Paradis plays Loblaw through parent George Weston Ltd.
(TSE:WN), to get a holding company discount and exposure to the
Weston bakery business. He also is a big investor in
Toronto-Dominion Bank (TSE:TD), a leader in discount brokerage
which also has an eye on the business-to-business Internet
supply procurement sector which he believes is a growing one.
Mackenzie's Rohr gets diversification through resources and
companies that are developing technologies for industry, like
ATS Automation Tooling Systems Inc. (TSE:ATA)
Olsson and Paradis are also believers in Canada's
biotechnology sector which Rohr eschews as not large enough to
make wagers on.
toronto.newsroom@reuters.com))
Copyright 2000, Reuters News Service
MURFI (a lurker with a definite interest in this company) |
