how do you like this for an emerging growth fund???
: AIM's Rushin Sours On Tech, Plays Defense
05/02/2002
Dow Jones News Services
(Copyright © 2002 Dow Jones & Company, Inc.)
By Peter Loftus
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Jay Rushin's investment strategy has taken a 180-degree turn in the last few months.
Rushin, portfolio manager of the AIM Emerging Growth fund, was gobbling up bargain-priced technology stocks in late 2001. The stocks surged, propelling the fund to returns of 38% in the fourth quarter.
But tech stocks have soured this year, and the AIM Emerging Growth Fund, with $191 million in assets, has negative returns of 11% year-to-date, according to Morningstar Inc. As a result, Rushin has cut his tech exposure and increased positions in cash and defensive stocks.
"We've kind of positioned the fund for an economic recovery," Rushin said. "But we're less confident in the economic recovery hitting the tech sector anytime real soon. So that's why we've got the exposure to consumer and industrial."
Rushin believes tech spending will remain weak because companies are delaying big purchases until their earnings improve. But consumer spending appears to be more solid, he said.
For an idea of how much things have changed in recent months, consider Rushin's foray into Siebel Systems Inc. (SEBL), the San Mateo, Calif., software maker. He began buying the shares in October at prices ranging from $15.25 to $17.
Siebel shares proceeded to rise above $31 in December, and Rushin sold some of his holdings. By January, the stock was even higher, so Rushin unloaded his remaining stake at prices ranging from $33 to $37, he said. Since then, Siebel shares have retreated to about $23.
"That's a perfect case for something that was oversold in September and we took advantage of it," Rushin said. But when the stock climbed into the 30s, "we thought that was way ahead of where it should be. We didn't think the fundamentals had followed through that strongly."
In the fourth quarter, tech stocks comprised as much as 60% of the fund's assets, Rushin said. Now, techs are only 25% of the fund. Industrial and health-care stocks each comprise 19% of the fund, and consumer products make up 24% of the fund. Its cash position is 10%, the highest it's ever been, Rushin said.
The journey has taken Rushin from software to coal. His top holding is now Arch Coal Inc. (ACI), a St. Louis-based coal mining concern. Coal stocks have sagged due to a mild winter, Rushin said, but an economic recovery could lift them. Arch Coal shares traded recently at $22.02, up from their 52-week low of $14.05, reached last September, but well off their year-high of $38.40 in May 2001.
He also likes media and advertising stocks, including Lamar Advertising Co. (LAMR), a Baton Rouge, La., billboard owner; and Univision Communications Inc. (UVN), the Los Angeles-based Spanish-language broadcaster.
"I personally think these stocks will outperform many in the tech sector," Rushin said.
-Peter Loftus; Dow Jones Newswires; 201-938-5267; peter.loftus@dowjones.com
(END) DOW JONES NEWS 05-02-02
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