One Step Ahead: Tech Funds Give the Scoop
One Step Ahead: Tech Funds Give the Scoop
by Hal Plotkin
Silicon Valley Correspondent
Technology investors looking for an edge will find one at the Web sites of several top performing tech-oriented mutual funds that offer free information about their own recent buy and sell decisions.
Most mutual funds are required by law to disclose their holdings periodically. Several of the hottest tech funds have recently gone a step further by putting the information online, updating it more frequently, and even adding brief explanations for individual buy and sell decisions.
One of the best examples is the IPS Millennium {IPSMX} fund, which has earned Morningstar’s highest rating, five stars. Investors who got into the fund last year saw a nearly 100 percent increase in net asset value through the end of October. The fund’s performance on an annualized basis over the past three years was less impressive but still quite respectable, at 32.25 percent.
IPSMX three-year chart
In addition to listing its top holdings, which are current through the end of October, IPS Millennium’s fund manager, Robert Loest, also provides near-daily online updates about his buy and sell decisions.
On Monday, Nov. 8, for example, Loest explained why he bought 10,000 shares of both Comcast Corp. {CMCSK} and Cox Communications Inc. {COX} that very same day.
Citing a recent Credit Suisse First Boston study, Loest noted the cable industry’s huge capital-spending program to make broadband access available to large numbers of residents. “We are about to see an explosion in return on capital, coupled with a steep decline in capital spending,” he wrote.
Loest’s daily observations are often insightful, tart, and sometimes amusing.
Two-month comparison chart: CMCSK, COX
Take, for example, his recent spirited online defense of one of his top picks, electric power provider Calpine Corp. {CPN}, which some critics claimed would suffer because of downward price pressure on electricity.
“Right. Plunging chip prices really killed Intel, huh?,” Loest wrote. “Plunging automobile prices sure put the kibosh on GM and Ford early in this century, didn’t they? Plunging prices for power in the form of electric motors really wrecked GE and Maytag, I suppose. . .Wow. What a disaster that was. Right now plunging prices for electric power are burying Calpine. It’s only up about 500 percent in the last 12 months. . .”
In addition to the occasional informative rant, IPS Millennium’s Web site also offers equally useful snapshots of the fund’s rationale for its top 10 holdings. That list includes some of the usual suspects, such as America Online Inc. {AOL}, Cisco Systems Inc. {CSCO}, and Yahoo! Inc. {YHOO}. But there are also some less well-known plays, such as Dominion Resources Inc. {DNIR}, EMC Corp. {EMC}, and JDS Uniphase Corp. {JDSU}.
AOL 52-week chart
DNIR 52-week chart
Although the information isn’t updated as frequently as IPS Millennium’s, the Firsthand Technology Value {TVFQX} fund’s Web site also offers a rich source of online information about its holdings and strategies. In 1999, Firsthand’s Technology Value fund returned 66 percent through June 30, up from its average annual return since its inception in 1994 of 46.8 percent, making it another Morningstar five-star winner.
TVFQX four-year chart
One particularly useful feature on the Firsthand Web site allows visitors to call up historical data about the fund’s stock holdings. By looking at the difference between previous positions and the most-current holdings reported, it’s possible, with a little effort, to figure out which stocks are gaining favor and which are being shed.
Looking over Firsthand’s comparative data for August and September, for example, shows the fund increased its holdings of 12 of the 51 stocks in its portfolio during that period, while adding four new stocks to its roster, C.R. Bard Inc. {BCR}, Digital Microwave Corp. {DMIC}, General Instrument Corp. {GIC}, and NETsilicon Inc. {NSIL}.
The Munder NetNet {MNNAX} fund’s Web site, operated by another Morningstar five-star winner, is another very good place for technology-stock trend watchers. Munder’s NetNet fund, which specializes in Internet companies, is up 129 percent for the 12 months ended Sept. 30, 1999.
MNNAX 52-week chart
In September, the Munder NetNet fund added shares of four stocks to its portfolio: EMusic.com Inc. {EMUS}, Foundry Networks Inc. {FDRY}, Internet Capital Group Inc. {ICGE}, and ShopNow.com Inc. {SPNW}. During September, the fund sold two others, Cendant Corp. {CD} and Com21 Inc. {CMTO}.
Munder’s explanations of its sell decisions are a breath of fresh air. Savvy investors know that most stock analysts, particularly those connected with major investment banks, are usually quite reluctant to go on the record with negative comments about a stock.
