An "Artistic" Pick

01/07/2005 12:00 am EST

Focus:

James Stack

President, Stack Financial Management

With an unmatched understanding of market history and keen insights on future prospects, Jim Stack has long been one of my favorite advisors. For his Top Pick for 2005, he opts for a fund that seeks the potential of mid-cap stocks, tempered by a value focus.

"For 2005, a year that almost certainly will see rising interest rates and more challenging markets, we favor a value-oriented approach. Artisan Mid Cap Value Fund (ARTQX ) pursues long-term capital growth by investing in a diversified portfolio of mid-sized companies that are undervalued, but in solid financial condition. Management utilizes a fundamental approach, seeking companies with low debt, positive cash flow, and good returns on capital. The fund typically holds 35-65 stocks broadly diversified across sectors and industries. Individual positions rarely exceed 5% of the fund's assets.

"This fund is managed by Scott Satterwhite and James Kieffer who have worked together for over a decade. They have managed the very successful (but currently closed) Artisan Small Cap Value since inception and added Mid Cap Value Fund when it opened in early 2001.They ar e proving themselves adept in the mid-cap value arena, with Artisan Mid Cap Value ranking in the top 10% of mid-cap value funds for the past one-year and three-year time frames.

"Along with solid performance, the fund boasts very favorable valuation with a portfolio p/e of just 14.2, which is a full six points lower than the category average due in part to its limited exposure to the technology sector. Turnover is very low at only 12%, helping to curb costs; and we expect expenses will continue to decline as the fund grows."

Related Articles on