OT...a MO MO fund.
No time to play the MO MO tech stock game??, let this guy play it for you.
moneycentral.msn.com
(I put some of my grandmothers money in this thing last year!!..really!!...AND...HLIT is/was one of his top holdings)
When the landscape changed
Indeed, Grand Prix Fund exploits an investment strategy that wasn't even legal until 1997. That year, a law dating back to the Great Depression was erased -- prior to then, mutual funds were precluded from garnering the bulk of their returns from investments held less than one year. Zuccaro's turnover rate of more than 750% means he holds the average position only a few weeks or months.
"That changed the investment landscape," the manager notes, and enabled his firm, Target Investors of Wilton, Conn., to expand beyond institutional money management to the fund business. He launched the mutual fund that December.
Grand Prix's strategy is to buy the 25 stocks that score the highest on Zuccaro's proprietary computer models, which assign a score whose maximum is 1,200. The aggregate score of the current portfolio is 1,122, Zuccaro says. "These are the top 6% of companies in the stock market."
There is a bias toward issues showing the greatest earnings and stock-price momentum. The system's Holy Grail is finding companies that will deliver a positive surprise the next time they report their earnings; such shares tend to rally.
"The stock market as a whole is driven by earnings, but individual stocks are more responsive to surprises than the market as a whole," he says.
The fund buys an equal weighting of each company -- Zuccaro says nobody can predict which individual issues will do better than others -- so the top positions only become the largest because they have appreciated the most. As of mid-February, the fund's top positions were PMC-Sierra (PMCS), TriQuint Semiconductor (TQNT), Applied Micro Circuits (AMCC), Business Objects (BOBJ) and Check Point Software Technologies (CHKP).
The first three are semiconductor manufacturers and the last two are software companies. Zuccaro's system currently is leading him mainly to technology companies, which account for 91.5% of the portfolio. The balance is divided between consumer cyclical and health-care companies.
A policy to stave off disaster
The bane of high-flying stocks is their propensity to crash without warning. So among Zuccaro's sell disciplines is this: He sells a large-cap stock when it falls 10% off its closing 52-week high price; he sells a small-cap stock (with market capitalization under $2 billion) when it has fallen 20% off its closing 52-week high.
While 10% or even 20% doesn't seem like much of a pullback these days, Zuccaro says it's enough to break a stock's momentum, and can sometimes send it careening toward disaster. He supplied a number of examples from among positions he eliminated during 1999: |
