To: James T. who wrote (9544 ) 11/2/1997 3:09:00 AM From: Mang Cheng Read Replies (1) | Respond to
This fund manager as interviewed in the current Barron online likesQ And you have been in that area from the very beginning?A : We have been heavy in tech throughoutQ The sector bets you've made clearly have been the right ones -- primarily technology, financial services and health care.A : I think if you are not going to be a closet indexer, then to concentrate in the areas you think are most attractive, is going to be the surest way to outperform the index on a consistent basis, which we have been able to do.Q What is your general approach as an investor?A : A general thing is to try to find stocks that are attractively priced relative to their potential. You look at the position of the company, you look at the price of the stock and youQ : So it is earnings that you primarily look at? A : The earnings growth rate. We look at forward earnings growth rate and compare that to the multiples. Q : Since you're overweighted in technology, whichm does tend to be volatile, does your fund tend to show a lot of volatility as well? A : I don't know what a lot of volatility is. I suppose we can be a little more volatile on the downside. We certainly have been more volatile on the upside than the market in general, because we have outperformed the S&P by a significant amount. So we are volatile on the upside, which is good, and you can't have it both ways.Q : Let's talk about your favorite stocks. Cisco Systems has been on the top of your list for some time. That is your biggest holding as of Sept. 30. What more is there to say about Cisco at this point? A :Cisco will continue to grow at a minimum of 30% a year for the next three or four years. There may be surprises, and they may do better than that. I will now say that is a minimum level, and that is a pretty decent growth rate for a company that has grown substantially faster than that and is dominating a market that is growing very rapidly -- wide area networking and the Internet. I don't think anybody thinks the Internet has stopped growing.Q :I hope not, at least for BARRON'S Online's sake. When Cisco is facing competitive pressure they either buy out their competitor or acquire some core competency in an area to extend their reach. A : In the past, some companies have taken the attitude of, if it is not developed here, it is not worth having. But Cisco has gone out and bought other little niche companies that had things to bring to the party. And the other thing we haven't mentioned is that large companies like Cisco or Intel have humongous R&D budgets. Q : Cisco stock has done well, but it hasn't performed quite as well as some of the other tech companies this year. Is that correct? A : It hit a new high on Tuesday, but the percentage gain is not as high this year. It has come on pretty strong in the last few weeks. It was up by a huge amount last year. If you look at too short a time frame, if you look to the last couple of years, it has still done very well. It went down to the low 40s in the spring and it isQ : That would have been a good buying opportunity. Did you buy more around there? A : Sure I did. Q : On the subject of networking, 3Com is another big holding of yours . A : They are the number two player out there, and they are going to do very well. It is a fast growing market, and the valuation on that stock is probably even cheaper. Q : Has it also come back? They were hit a bit early A : They had that stock down to 25. It is now 46. It did get up over 50, but in the last few days they have been beaten up, of course.Q : What kind of earnings growth do you see for 3Com at this point? A : I think 3Com can also grow in the 30% a year range.
