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

To: BigKNY3 who wrote (6126)	10/23/1998 12:29:00 AM
From: BigKNY3	Read Replies (1) \| Respond to of 9523

Stocks the Large-Cap Fund Managers Love Julie Creswell 11/09/98 Fortune Magazine Time Inc. Page 278+ It's not easy being a large-cap mutual fund manager these days. The market's meltdown has wiped out this year's gains and is eating away at last year's, and redemptions are on the rise. While individual investors can sell their stakes in Coca-Cola or Ford, park the cash in a money market fund, and ride out all the volatility, these fund managers--whose mandate is to invest in large-cap stocks-- are responsible for billions of dollars of investments for millions of shareholders. They have to separate the real losers from those that are merely slumping. For most managers the defensive plays are domestic. They're chucking companies that have bet on emerging countries for their growth, like Coke, Gillette, and Procter & Gamble. They've also gotten rid of financial services companies like Merrill Lynch and Travelers. While the bankers and brokers were favorites earlier this year, they're now getting walloped by exposure to emerging markets and hedge funds. "Financial stocks make up 17% of the S&P 500 index. I'm delighted to be at 3%," says Ben A. Hock Jr., manager of the John Hancock Growth fund. And last, these managers have thrown out cyclical industrial stocks such as GM and International Paper, which face a very bleak future if the global slowdown causes the U.S. economy to nosedive. So what's left? Large-cap managers are desperate to smooth returns after their horrendous third quarter. They're buying anything that has a chance of producing consistent earnings in what looks to be a turbulent 1999. A lot of their conservative picks can help even the smallest investors find stocks for the long haul. Three areas in particular--pharmaceuticals, retail, and, surprisingly, technology-- can boost a portfolio besieged by the turbulent markets. PHARMACEUTICALS An aging population, pricing flexibility, and a friendly FDA that is approving drugs faster than you can say " Viagra " have made pharmaceuticals companies look irresistible, say fund managers. With the bulk of their business in the U.S., their stocks are immune to jolts from emerging markets. Sure, the S&P 500 drug index is down 8% from its mid-July high because of general market turmoil, but given favorable market conditions, investors can find some good opportunities to troll for bargains. Growth should eventually pick up, since many firms have new drugs in the pipeline. For example, Monsanto, Pfizer, and Merck are all developing inhibitors that treat rheumatoid arthritis. The market's big enough to accommodate all the competition, says David Corkins, manager of the $2.5 billion Janus Growth & Income fund, which has nearly 18% of its assets in pharmaceuticals stocks. "Drugs like these will allow for up to 30% earnings growth for these companies," he says. The biggest names remain the safest. Jeffrey Lindsey, manager of the $650 million Putnam Growth Opportunities fund, has put 18% of his assets into companies like Pfizer, Warner-Lambert, and Bristol-Myers Squibb. John Laupheimer, manager of the $9 billion Massachusetts Investors Trust fund, who has 14% of his fund's assets in pharmaceuticals, favors health-care outfits like Guidant. He also sees great growth in Medtronic, which trades around 57, down 22% from its midsummer high.