Going for growth: Large-cap buys
Money manager looks for double S&P growth rate
Stock universe divided
Alger also broadly divides his stock universe into two categories. One includes companies with high unit-volume growth. The other, those that are going through a "life cycle change, a company which has been formerly inert, which suddenly gets a burst of energy, change of product, change of management, change of industry and from that change, a high level of growth is developed."
"We look at each stock, stock by stock as a bottom up stock picker and we do take into account valuation. We are willing to accept higher multiples than a lot of people. We're willing to trade off a high multiple for very high or very predictable growth."
Which stocks are people overlooking now that would be buy candidates in Alger's book?
"Well, I think America Online (AOL), having given up some, is attractive and does have earnings. I think Amazon.com (AMZN), having given up 55 percent from its high, is very attractive." In fact, Amazon.com falls under the exception to the rule category since it fails to meet Alger's normal growth pattern. "We think that's a choice the company's making, that basically their earnings are reduced by their very high marketing expenses."
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