Net fund manager calls sector bottom
WWW Internet's York says connectivity is key
By Craig Tolliver, CBS.MarketWatch.com
Last Update: 3:30 PM ET May 22, 2001
LEXINGTON, Ky. (CBS.MW) -- The skipper of the very first Internet fund put his neck out Tuesday and declared a bottom for the sector that crashed and burned during the yearlong tech rout -- taking with it many investors who piled in at the top of the market.
Lawrence York, lead portfolio manager of the WWW Internet Fund (WWIFX: news, msgs, alerts) , said that high-speed connectivity is quickly eliminating the bottlenecks that he believes caused so many dot-coms to flounder.
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"These were companies that if the Internet highway were built, if it was always on a high-speed network, you would have viability in these companies," York told CBS.MarketWatch.com. "There were certainly bottlenecks in causing connectivity problems, causing delays in rollouts."
"You had a lot of capital spending in the core of the network and a lot of neglect at the edge of what we call the last mile," York explained.
Currently, there are only 5 million subscribers using high-speed Internet services but York expects that DSL, cable, satellite and wireless services will soon push that number to 20 million subscribers.
After that, it's a hop, skip, and a jump to 50 million -- which should ultimately bode very well for e-commerce.
As such, York has a keen interest in connectivity companies that specialize in gigabyte Ethernet such as Global Crossing (GX: news, msgs, alerts) and Exodus (EXDS: news, msgs, alerts) , as well as the companies that are making specialized components to tie high-speed networks together like Finisar (FNSR: news, msgs, alerts) , which makes subsystems, and chipmaker Broadcom (BRCM: news, msgs, alerts) .
An area that York recommends investors pay close attention to is the build-out of private exchanges -- companies like Commerce One (CMRC: news, msgs, alerts) and Ariba (ARBA: news, msgs, alerts) that are helping businesses build marketplaces for their own supply chain.
"Because their suppliers are smaller in many cases, from different continents, and there's different standards, your large manufacturers and large companies are saying, 'look, we'll build everything and give you the ability to see our inventory, our supply, our needs.' And then that solves the problem."
Founded in 1996, the $32 million WWW Internet Fund was the first mutual fund to focus its investments exclusively on the Internet sector. At the time, critics largely laughed off the portfolio as a novelty item, which was being marketed exclusively through its own Web site --- another industry first. The site, webfund.com, is still the firm's primary distribution channel.
Through Monday, WWW Internet was off 57 percent over the last 12 months, according to Chicago-based fund-tracker Morningstar, a far cry from the heady days of the technology bull run that produced lofty gains of 71 percent in 1998 and 167 percent in 1999.
Craig Tolliver is the mutual funds editor for CBS.MarketWatch.com in Los Angeles. |
