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Biotech / Medical : PFE (Pfizer) How high will it go? -- Ignore unavailable to you. Want to Upgrade?

To: Anthony Wong who wrote (4795)	8/7/1998 7:19:00 PM
From: BigKNY3	Read Replies (3) \| Respond to of 9523

BUSINESS WEEK ONLINE August 6, 1998 FOR SCOTT SCHOELZEL, 20 GREAT STOCKS ARE GOOD ENOUGH It's not easy for fund managers to invest tens of billions of dollars in the stock market. Forget about buying small-caps -- it's hard enough to buy a significant chunk of a billion-dollar stock without affecting its stock price. And trying to keep track of the hundreds of stocks in which managers are invested is nearly impossible, which means that they have to have utmost confidence in the dozens of analysts who work for them. But Scott Schoelzel gets to invest the way that most multibillion dollar mutual-fund managers wish they could: buy a few good companies and hold on to them for the long term. That's because Schoelzel is the manager of an unusual fund called the Janus 20 fund, whose goal is to simply own the best 20 or so stocks -- and then sell them when they no longer are among the best. Sound too simple? Well then, maybe every mutual-fund manager out there needs to simplify. Janus has returned 47.2% for the last year through the end of June (Schoelzel has managed it only since August 12, 1997). The fund has an average annual return of 19.5% since its inception in April, 1985. That's well more than a third higher than the S&P 500 for the same period. Even more impressive, the fund has not been horribly hit by the blue-chip rout of the past few days. Janus has lost almost exactly the same as the S&P 500 has for the past week. For the year through the market's close on Aug. 5, the fund has been up 37%, while the S&P 500 has climbed only 12%. "To me it's a great victory to be able to go up faster than the market, but when the market goes down, to simply slide with it," says Schoelzel. Schoelzel has a knack for finding the best stocks and then getting out of them at the top. For instance, he owned United Airlines (UAL) while it doubled from the end of 1995 to late fall 1997, but he has since sold all of it because he figures UAL can't fly any higher than it already has. And he doubts that oil, a major cost of any airline, can get any lower than it already is. One of his largest holdings is Microsoft (MSFT), which the fund has owned since 1991. Schoelzel doesn't shy away from cheerleading for the company in its battles with the Justice Dept.. "Microsoft only makes about 3% of all software that is used today. That doesn't sound like it's a monopoly to me," he says. But whatever happens with the government, he doesn't expect it to affect the company's performance too much over the next few years. He's more interested in how the launch of Windows NT 5.0 goes, sometime in the next two years. He suspects that it'll be a blockbuster and could launch the stock even higher into the stratosphere. Another major holding that has been in the news is Pfizer (PFE). Thanks mainly to its impotence drug Viagra, Pfizer has been up by more than 40% this year. But Schoelzel looks beyond that drug for future growth. He's especially excited about the launch of Celebra next year, which is owned by Monsanto (soon to merge with American Home Products and another holding in Schoelzel's portfolio) but will be distributed by Pfizer. He thinks that Celebra, which is a new type of pain reliever, will be one of the best-selling new drugs of next year and will attain blockbuster status, meaning sales of over $1 billion, very quickly. Schoelzel's sentimental favorite is Cisco Systems (CSCO), which he has owned since 1991, as the stock has increased in value by a factor of more than 100 times. The networking equipment manufacturer once again beat the market's estimates this week, and now analysts expect it to rake in $2.16 in earnings per share for the next four quarters. The largest stock in Shoelzel's fund is Dell Computer (DELL), which has been a fair-weather barometer for the market in the 1990s. In the last eight years, Dell's stock price has leaped by a factor of 433 times. And Shoelzel sees no reason for it to stop. "Demand for personal computers has increased every year for the last 10 years by about 15%, and that's not changing," he says. Dell, Schoelzel says, recently approached its 50 largest corporate customers and found out that most of them plan to increase computer purchases significantly next year, partially because the last big corporate binge was in 1996 (in the wake of the release of Windows 95) and now most of that hardware has been fully depreciated. In addition, many companies are planning significant upgrades as a way of heading off Year 2000 problems. Dell is currently the largest U.S. supplier of computers to corporations and is also quickly gaining market share in the consumer market. Schoelzel has certainly had success in picking the winners, but he fears having the opposite problem: falling in love with his stocks. As a result, he says, he keeps a wary eye on the fundamentals of each stock he owns. "If Cisco misses a quarter by a penny, that doesn't mean I'm going to run out and sell it," he says. "But if Windows NT 5.0 turns out to be a dog, I won't hesitate to sell all my Microsoft." You've got to be cruel to be kind. The Top 10 Holdings of Janus 20 Dell Computer (DELL) Microsoft (MSFT) Pfizer (PFE) Warner-Lambert (WLA) America Online (AOL) Monsanto (MTC) General Electric (GE) Cisco Systems (CSCO) BankAmerica (BAC) Time Warner (TWX) Sam Jaffe writes about the markets for Business Week Online