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Strategies & Market Trends : Piffer OT - And Other Assorted Nuts -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (24539)	3/22/2000 7:56:00 PM
From: Lost1	Read Replies (2) \| Respond to of 63513

interesting excerpt about some of our NUT favorites: "Historically, if you invested in the leaders they've outperformed," said Raj Rajaratnam, who manages the $3.5 billion Galleon Fund. To be sure, "since the first shipment of the personal computer in 1980 by Apple Computer, about $2 trillion of wealth has been created in the tech sector, and 75 percent of that wealth has been created by 5 percent of the companies," he said, referring to a Morgan Stanley study done at the end of 1999. Rajaratnam has an interesting way to play the current market environment. He's placing his bets on companies he thinks will report quarterly results that will beat the Street's published estimates by 10 percent. "Our fundamental thought process right now is the Fed is out of the way," Rajaratnam said. "Earnings are going to be very strong and the only issue is valuation and for stocks to move up in a meaningful way is if quarterly reports exceed estimates by 10 percent." It's a couple of weeks before the quarter ends and Rajaratnam has his troops of ten analysts are segmenting their companies into buckets: Those that will beat the Street by 10 percent, those that will beat it by 5 to 10 percent, and others. So, what are the companies Raj says will beat the Street by 10 percent? Yahoo is expected to report sales of $205 million and earn 8 cents a share in the first quarter. Raj expects the Net media giant to generate $225 million in revenue and earn 10 cents. Also on Raj's list: AskJeeves (ASKJ: news, msgs), Priceline (PCLN: news, msgs), Network Solutions (NSOL: news, msgs), InfoSpace (INSP: news, msgs), Inktomi, Be Free (BFRE: news, msgs), Kana Communications (KANA: news, msgs), Web Methods (WEBM: news, msgs), E.piphany (EPNY: news, msgs), Ariba, Commerce One (CMRC: news, msgs), BroadVision (BVSN: news, msgs), Art Technology Group (ARTG: news, msgs), Vignette (VIGN: news, msgs), Viant (VIAN: news, msgs) and Vitria (VITR: news, msgs). So, why the 10 percent threshold? Because typically, if a company beats estimates by 10 percent, the Street often raises their annual sales projections by 30 percent to 40 percent, he said. Rajaratnam has been a portfolio manager for seven years, and has averaged greater than 50 percent return on investments each year. In 1999, the Galleon Fund was up over 125 percent. And if his track record is any guide, then I guess his words are worth noting: "We don't see a lot of companies that are going to miss estimates this quarter. It's time to really buy the leaders."