Berger 100's Adams Hopes to Coach a Big Winner:
Personal Funds
Top holdings
The fund's top 10 holdings as of today are:
1) Cadence Design Systems Inc.
2) Tommy Hilfiger
3) Altera
4) Waste Management
5) Maxim Integrated Products
6) Xilinx
7) Household International
8) Ascend Communications
9) Tyco International
10) Centocor
Bloomberg News
November 6, 1998, 2:31 p.m. PT
Berger 100's Adams Hopes to Coach a Big Winner: Personal Funds
Denver, Nov. 6 (Bloomberg) -- Patrick Adams, football fan
and manager of the $1.5 billion Berger 100 Fund, has had a good
season so far this Fall.
His two favorite football teams -- Ohio State University,
where he graduated in 1983, and his home-town Denver Broncos --
are undefeated. Both are 8-0 so far, with Ohio State ranked No. 1
in the nation.
His Berger 100 Fund isn't tops in its category, but it is up
30 percent in the past month -- almost twice the Standard &
Poor's 500 Index which is up 17 percent, and lots better than the
18 percent drop in the fund he'd racked up this year through Oct.
6, according to the fund research group, Morningstar Inc.
''I'm happy about my teams . . . because those teams have
had a commitment to winning,'' said Adams.
A commitment shared by the 38-year-old Adams who spends most
of his week navigating the shark-infested waters of technology
stocks, helping manage as well the Berger Select and Berger
Balance funds. In all, he oversees $1.6 billion in customer
assets.
He lives and dies by technology stocks -- about a third of
the assets in the Berger 100 fund, which holds shares of 60
companies. Such stocks are notoriously volatile because of their
propensity for earnings gyrations. Adams, like the coach of a
losing football team, has had moments when he has wanted to bury
his head in his hands in frustration.
Though the Berger 100 has lost 3 percent of its value in the
past year, according to Morningstar, Adams remains a top
cheerleader for the fund. It's dominated by mid-cap companies
with an average market value of about $9 billion, Adams said.
''I'm excited about its prospects because coming out of a
bear market, mid-cap stocks often outperform the big-cap
stocks,'' Adams said.
Using six criteria, here's a look at whether the Berger 100
makes sense for your investment portfolio:
Contents
The ideal investment for Berger 100 is a mid-sized
technology company that's nimble enough to continue to grow, and
help the fund post a 20 percent return in a good year.
''We look to invest in companies that can outperform their
competitors, be in the top quartile of earnings in their
industries and have a reasonable stock price,'' Adams said.
''We're focused big on technology stocks because these will
be the diving force in the economy for quite a long time,'' he
said. ''We have a fairly heavy weighting on semiconductor stocks,
which we see rebounding from depressed levels.''
One of his favorite semiconductor companies is Dallas-based
Texas Instruments, which has returned 10 percent to investors in
the past 12 months. He also likes Cadence Design Systems Inc.,
Altera Corp., and Xilinx Inc.
Yesterday, he sold shares of Amgen Inc., a biotech company
in Thousand Oaks, California. It closed at a six-month high of 82
1/4 yesterday. ''It hit our target price and we don't see a lot
of upside potential,'' Adams said.
Adams also favors Waste Management Inc. and Tyco
International Ltd. because they fit his criteria of defensible
franchises, quality management with a record of creating
shareholder value, the potential for consistent long-term growth
in earnings, and dominance in a market that's either fragmented
or growing quickly. He insists on buying undervalued stocks, too.
Risks
Adams said the risks in funds like his are ever-present
because technology-oriented investments are more volatile than
many other kinds.
''Technology funds are more volatile than the market in
general,'' he said. ''If you have a short time horizon, this is
not the fund for you.''
He suggested that, to minimize risk, queasy investors should
limit their investments in his portfolio to 60 percent, at most,
of their total holdings.
Performance
The Berger 100 Fund has returned about 1 percent so far this
year, compared with the 8 percent loss registered by the Russell
2000 Index, which measures the performance of small and mid-sized
stocks.
Investors have done well by investing in large companies'
stocks. The Standard & Poor's 500 Index, on the other hand, which
tracks the performance of large-cap stocks, about 17 percent this
year.
''The fund compares in the top 1/3 of the mid-cap
category,'' he said. ''When you compare it to the large-cap
universe, it's in the bottom half. It has been a year when large-
caps decimate mid-cap and small-cap. But if you're looking for 20
percent annual growth, which we are, it's hard to own only
companies that grow at 12 percent a year.''
Leadership
After graduating from Ohio State, Adams, a native of
Portsmouth, Ohio, earned an MBA at Xavier University.
For the next five years he served as a portfolio manager in
the capital management group of Star Bank, then managed funds for
three years at the Parkstone group of funds in Kalamazoo,
Michigan.
In 1993, he moved to the Founders family of funds as a
portfolio manager, where he oversaw customers' assets of $800
million. He left Founders in June 1996 for the Zurich Kemper fund
company, but quickly became restless with Kemper's team-oriented
approach to picking stocks, bolting to Berger in January 1997.
Adams is married, has three children and lives in Greenwood
Village, Colorado.
Costs and Taxes
In the Berger 100 Fund, management fees and operating
expenses are 1.35 percent or $13.50 for each $1,000 invested in
it. That compares with the average expense rate of 1.5 percent
for mid-cap stocks, according to Morningstar Inc.
There is no sales fee for this fund.
As with most mutual funds, investors should recognize the
tax consequences. The fund made taxable capital gains and income
distributions of $6.95 a share last year - but Adams said that's
an unusually high number.
''Last year was my first year in managing the fund and it
was a restructuring year,'' he said. ''It had paid virtually no
capital gains in the previous five years. The portfolio had large
amounts of unrealized gains. Any stock we sold last year had
large gains associated with it. This year, the figure should be
about 95 cents.''
Personal Fit/Prospects
The Berger 100 is an open-ended fund that seeks to invest in
common stocks to achieve long-term capital appreciation. Under
Adams' leadership, it has been focusing on technology stocks that
offer the potential for above-average returns.
Fund Facts
Direct Purchase/Sale: 800-333-1001
Berger 100 Fund
210 University Boulevard
Denver, Colorado 80206
The minimum initial investment for this fund is $2,000 for all
investors.
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