Enter the Investment World According to GARP: Mutual Funds
Bloomberg News
July 13, 1998, 3:58 p.m. ET
Enter the Investment World According to GARP: Mutual Funds
New York, July 13 (Bloomberg) -- Remember ''Garp?'' He was
the gentle hero of John Irving's 1978 best-selling novel, ''The
World According to Garp.'' Actor Robin Williams brought him to
life in the 1982 film of the same name. Now, a ''Garp'' of a
different kind has achieved success in the investing world.
To Robert Natale, managing director of Bear Stearns Asset
Management Inc., Garp is an acronym. It stands for Growth at the
Right Price. You might even say it is Natale's investment mantra.
Natale is looking for growth stocks that are also bargains.
These are relatively inexpensive stocks whose prices are expected
to increase in the short term because the company issuing the
shares is in a growing industry.
''A GARP strategy, over an extended period of time, can beat
the market,'' said Natale, 47, who manages $250 million in
customer assets. ''It's one of the best-kept secrets on Wall
Street.''
Natale joined Bear Stearns in May, after 18 years tracking
equities at Standard & Poor's Corp. At Bear Stearns, he is
managing a $250 million fund called the S&P Stars Portfolio Fund.
Natale said he looks for companies that are trading ''at or
below the S&P 500,'' and whose earnings are growing faster ''than
that of the average company in the S&P 500.''
Most of the time, this list contains 110 stocks and cuts
across all industries. ''Bear Stearns (analysts) and I pick
stocks off that 'buy list' that we think have very strong
potential for growth.''
Buying News Corp.
Natale's fund tends to consist of 30 to 40 stocks at a time.
Recently, the fund bought shares of Rupert Murdoch's News Corp.
Ltd., the Australia-based international media company that
earlier this year took control of the Los Angeles Dodgers
baseball team. It also bought shares in Stockholm-based Ericsson
AB, Sweden's largest telecommunications equipment maker,
Natale sold shares in Intel Corp., the world's biggest
chipmaker. ''We had a large position, and we've been cutting that
back,'' he said.
The fund's biggest holding is Cisco Systems Inc., which
supplies data networking services to corporations. In addition,
Natale likes drug stocks, especially Pfizer Inc., which today
traded as high as 120 5/8 on the strength of strong second-
quarter earnings. Pfizer's fortunes have been boosted by robust
sales of Viagra, its treatment for impotence.
''Viagra has had a tremendous start in the U.S., but it's
not really actively being sold in the rest of the world,'' Natale
said. ''So you've got all that growth to look forward to over the
next 12-to-18 months.''
New York-based Pfizer, the second-largest U.S. drug maker,
said July 9 that second-quarter profit increased 38 percent to
$628 million, or 47 cents a diluted share, from $457 million, or
35 cents, a year earlier. Revenue rose 25 percent to $3.63
billion from $2.91 billion after Pfizer rolled out Viagra in
early April.
Difficult Goal
By searching for growth and value at the same time, Natale
is trying to achieve a very difficult goal,'' said Robert Powell,
editor of Mutual Fund Market News.
''Investors tend to do better when they are concentrating on
one investment style or discipline, and they tend to run into
trouble when they try to do too many things,'' he said.
Through July 10, Natale's fund was up 25.77 percent this
year, ranking it 25 of 701 ''mid-cap blend'' funds, according to
Morningstar Inc., a Chicago-based mutual fund research
organization. A mid-cap blend fund invests in companies that have
stock-market values of $1 billion to $5 billion. These funds also
seeks value, or growth, in its investments.
Last year, the fund returned 21.4 percent, giving it a run-
of-the-mill performance ranking of 478 of 660. During the past
three years, it returned 24.84 percent, placing it 288 of 480,
according to Morningstar.
--Jon Friedman in the New York bureau (212) 318-2337/wm |
