Diary of a Fund Manager
Robert Loest, Ph.D, CFA
Porfolio Manager October 13,2000
" I sold all of our Cisco Systems as well. In my view, CSCO has about maxed out its market cap on that segment of the market it dominates. In order to continue growing and adding value, it is increasingly being forced to compete in markets like optical networking in which it is not nearly so dominant, and this had decreased CSCO's potential growth rate and ability to create new value. I have to ask myself, if I intend to invest your money in routing and switching equipment, why shouldn't I put it into much more dominant and faster growing segments of the market that are in far earlier stages of growth? Like data storage system switches from McData (MCDT.N), which I added to today.
This will, of course, create more volatility (risk) than a more mature company like CSCO. Most growth funds would keep a company like CSCO, in order to manage volatility. However, because I use a barbell strategy, I can buy faster growing stocks and be more aggressive in the tech sectors, because I can control that volatility with our low-correlation, dividend-paying companies at the other end of the barbell."
He did add SEBL so he's not totally off the wall. |
