>>> such an event, most likely, will be a severe market correction, not a 10%'er, not a 3 day and then buy the dips and reverse. but a real gut wrenching, nail biting, whacko. or will it? larry<<<
more like trickle trickle
did you see U? under 20
this is interesting .... the scudder funds most underperformer in past years changes tactics ...
(I never could quite leave the INDO market Larry <ggg>)
and a beauty of a chart now too!
Wed Feb 9 SCOPX
Fund Shifts Focus to High Tech - worldlyinvestor.com
Wednesday February 9, 3:37 pm Eastern Time
worldlyinvestor.com Fund Talk
Fund Shifts Focus to High Tech
By Brad Durham, Special to worldlyinvestor.com
The portfolio manager of the Scudder Pacific Opportunities fund is betting big on Asian high tech.
Since Tien-Yu Sieh took over the reins of the Scudder Pacific Opportunities Fund (Nasdaq:SCOPX - news) last May, this historically underperforming fund suddenly began to outperform its peers.
Clearly something was needed - this fund was the black sheep among Scudder's eight international funds. When Sieh took over, it was the only Scudder international fund with a three-year record to rank in the bottom half of its Pacific/Asia ex-Japan stock fund category, according to Morningstar.
Sieh has increased to nearly 50% the fund's exposure to technology and has invested in the long-term vision of companies throughout Asia.
The fund finally emerged from hibernation last year posting a 75.6% gain and climbing to the top third of its category. Its one-year return of 106% is in the top quartile and its year-to-date gain of 5.5% ranks in the upper 20% of its fund group.
Going with Tech The portfolio manager made the timely decision to increase the fund's exposure to technology stocks from about 25% of the portfolio last September to 42% by the end of last year.
He upped the fund's position in Samsung (OTC:SSNHY - news), the Korean electronics conglomerate that is its top holding, from 3% to 7% and has enjoyed some of the company's 183% share price gain over the past year.
He also acquired new positions in Hong Kong's Legend Holdings (OTC:LGHLY - news), a computer manufacturer whose stock has risen a stunning 769% over the past year. The fund has enjoyed much of this ride '\200'' Legend is now trading at $25, but it was purchased at $6.
Sieh also bought Korea's SK Telecom (NYSE:SKM - news) for the first time, increasing the weighting in the fund to 3.5%. SK Telecom has a monopoly in cellular phones and leads in mobile telecom services and radiotelephone communications in South Korea. The stock has been on a 590% tear over the past 52 weeks.
'\200\234The biggest change to the fund is that we are now taking bets commiserate with opportunities,'\200\235 said Sieh.
'\200\234With Legend and SK Telecom, we are stepping up to the plate in a much bigger way than in the past.'\200\235 New companies to the portfolio are now added at 2% or more instead of at 1% that was the previous norm.
Big Bets in a Few Areas Country allocation is not this bottom-up fund's primary concern, nor does it pay much attention to its benchmark All Country Asia Free Ex-Japan index. But Sieh says that the fund's exposure to technology, in particular the penchant of some Asian countries for outsourcing, is a theme that does contain an element of top-down thinking.
Consequently, the fund currently has a 26% weighting in South Korea and a 25% allocation to Taiwan. It has 20% in China/Hong Kong, led by a 5% position in Hong Kong transportation conglomerate Hutchinson Whampoa (OTC:HUWHY - news) and a 3% allocation to China Telecom (NYSE:CHL - news).
The fund also has an overweight position in India, primarily through the financial services sector and, of course, technology and software.
The Blue Sky Method
'\200\234There is some method to our madness,'\200\235 says Sieh, who describes the fund's method for picking stocks a cryptic way. '\200\234We use conviction adjusted blue sky valuation,'\200\235 he says.
'\200\234In the US we look at valuations on a quarterly basis,'\200\235 explains the manager. '\200\234But in Asia, where the
landscape is more dispersed and quality is not as consistent, we think it's good to look at valuation beyond even six months or a year.'\200\235
Sieh and his analysts met with the management of Legend Holdings, for example, a half dozen times as they mulled adding the company to the portfolio. The company is China's largest vendor of PCs with a 25% market share and a good brand reputation.
While Sieh liked the company's business model, what really drew him was management's understanding of the potential in penetrating the home PC market. The company has begun to deliver on this plan with results that are exceeding expectations. This has been the major driver of the stock.
'\200\234Blue sky is thinking beyond the box,'\200\235 says Sieh. '\200\234With Legend, we are trying to envision where the company will be in six years.'\200\235
While companies in Asia are surrounded by opportunity, Sieh views his job as locating the firms with management that have vision and the moxie to execute.
In getting inside the head of management, Sieh and his team of nine analysts talk to a company's suppliers, customers and competitors and conduct nearly 3,000 company visits per year. They also try to leverage their knowledge base by picking companies that work with companies already in the portfolio.
The Scudder Pacific Opportunities Fund requires a minimum investment of $2,500.
Brad Durham is co-founder of www.eMergingPortfolio.com, an Internet site for emerging market investors. |
