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Top Stockpickers' Top Plays
07/02/2004 12:00 am EST
On his Marketocracy.com Web site, Ken Kam, manager of the Masters 100 Fund, analyzes the performance of over 50,000 individual stock pickers. Here are some of the latest favorites from the m100-the best-performers in this investor universe.
"Although we reduced our overall weighting in information technology, it is important to note that there are still a number of opportunities in the sector. On the whole, we're finding little worth owning among large-cap info-tech names. By and large, our best info-tech ideas lie among the small caps. In our view, software is more resistant to cyclical changes in the economy. Another sub-industry that we've increased our holdings in is electronic equipment, with a specific focus on those companies whose products are in demand for homeland security applications.
"With the almost daily warnings of terrorist threats on US soil, and the government's commitment to tighter security, names in this area have been gaining in market momentum throughout the month. Investments in Magal Security Systems (MAGS NASDAQ) during the recent month now rank it within the top 1% of all portfolio positions by value. Magal Security is a momentum play in the portfolio. Given the momentum in the homeland security names, we have increased our weighting in the company to take advantage of the stock's high demand. As a company whose security systems are already used in more than 70 countries to protect aircraft, national borders and sensitive facilities, MAGS operates in a favorable environment given the US war on terrorism.
"A current favorite in the software industry is Sonic Solutions (SNIC NASDAQ), one of our top picks in the info tech sector this month. Sonic, which makes the computer software used to create digital audio and video titles in the CD-Audio and DVD-Video formats, is another company that we've added significantly to over the last several weeks. The company's products, which are geared towards both high-end users as well as amateurs, will continue to generate sales even as the economy endures future cyclical moves.
"Concentrated on the delivery of portable, computerized measurement devices, FARO Technologies (FARO NASDAQ) has released a number of products that have gone a long way in increasing factory productivity across a number of manufacturing industries. It's a micro-cap that is focused on making its products an industry standard, which, if successful, makes the stock attractive to own at current prices.
"Healthcare remains the largest investment in the portfolio. Likewise, as an industry, biotech holdings represented the largest portfolio allocation. We like healthcare stocks because some have stock prices not necessarily influenced by the general market's fluctuations. That is to say, the aging population in this country and its demand for more products is expected to continue to drive sales and earnings for a number of companies in this space, regardless of the macro issues surrounding the market in general.
"Candela Corp. (CLZR NASDAQ) makes lasers used to perform procedures to selectively eliminate unwanted skin blemishes without damaging the surrounding healthy tissue, and to remove facial or other unwanted hair throughout the body. As more and more baby-boomers age, laser procedures experience increasing demand, and Candela has already begun to benefit. We've purchased quite a bit of the stock recently, especially after the sharp one day decline of 31.6% at the end of April. The drop came in reaction to earnings that both highlighted a 29% increase on comparable quarter revenues, while also providing guidance for the year that appeared to disappoint sellers.
"We believe that Wyeth (WYE NYSE) has enough potential blockbuster brand names in the pipeline to justify it as a top pick in our portfolio. The company is also rare in the portfolio in that it boasts a market-cap surpassing $48B- and as such, can be expected to trend with other big-cap pharmaceutical names during periods of little new news regarding the company's execution.
"Northfield Laboratories (NFLD NASDAQ) is a top biotech pick this month, illustrating the portfolio's focus on smaller niche players in the industry. Northfield develops an alternative to transfused blood for use in the treatment of acute blood loss- a product that's used by the American Red Cross and Blood Centers of America. Not many companies in the portfolio fit the 'aging population' description better than this one."
iShares S&P Global Healthcare (IXJ) is an exchange-traded fund that seeks to track the S&P G...