At the end of the fourth quarter, mutual funds filed their holdings with the SEC and in turn enabled the public to see the stocks that fund managers held in their portfolios. Examining the investment themes of professionals can assist less experienced investors in seeking out new investment holdings. By poring over the holdings, we picked out four stocks money managers love. Can you learn to love them too?
IN PICTURES: How To Make Your First $1 Million
The Price Is Right
CGM Focus Fund (CGMFX)
Manager: Ken HeebnerInteresting Fact: The fund has beat 95% of similarly structured funds.New Stake: Priceline.com (Nasdaq:PCLN)
Heebner established a new stake in Priceline.com during Q4. Given the high rate of turnover of CGMFX, this position may have been stabled as a short-term play. In any event, this stock has risen more than 200% over the past year and has been trending upward. Analysts are predicting 30.5% sales growth from Priceline.com for its Q4 results, which will be followed by more than 20% quarterly compounded growth for the next nine months.
- Fund: Brown Capital Management Small Company Fund (BCSIX)
- Managers: Keith Lee, Robert Hall, Kempton Ingersol and Amy Zhang
- Interesting Fact: The fund outperformed small growth funds tracked by Morningstar by double-digit percentage points in three of the last three years.
- One of Top Equity Holdings as of December 31: Green Mountain Coffee Roasters (Nasdaq:GMCR)
Green Mountain has been a long-term holding of BCSIX. With an annual portfolio turnover rate of 8%, investors can bank on GMCR remaining in the Small Company Fund portfolio for the long haul. In its most recent quarter, Green Mountain saw its sales increase by 77% compared to the first quarter in 2009.
- Fund: Neuberger Berman Partners Fund (NPRTX)
- Manager: S. Basu Mullick
- Interesting Fact: The fund returned 56.1% last year compared to 29.6% by large blend funds tracked by Morningstar in 2009.
- Top Holding as of December 31: Bank of America (NYSE:BAC)
Now that Bank of America has repaid its $45 billion TARP loan, the company is hoping that the focus will shift to the organic growth of its retail banking business. Earlier this week, the company said that late credit card payments fell to the lowest level in a year. This trend could be a sign that consumers are continuing to regain their footing on a macroeconomic level.
Fuel for the Fire
- Fund: Auer Growth Fund (AUERX)
- Managers: Bob Auer and Bryan Auer
- Interesting Fact: Auer is a relatively new fund that was launched in 2008 by the father-son team returned 36.5% in 2009
- Top Holding as of December 31: James River Coal Company (Nasdaq:JRCC)
In Q3, James River swung to a profit of 36 cents per share from a loss of 86 cents in the company's Q3 in 2008. The company has benefited from the stabilization of coal prices as well as a decrease in the company's cost per ton of coal sold. Production was down in Q3 from a year-ago, but the pullback may only be temporary.
The top holdings or new positions taken by successful mutual fund managers can serve as a good starting point for investors evaluating alternatives for putting their cash to use. It is important to keep in mind the time lag between year-end and the date of disclosure. For mutual funds with high rates of turnover, implementing a strategy whereby investors mimic professional portfolios may be challenging to accomplish. (We break down the key components of analyzing a fund manager's performance so you can find a winner. To learn more, see Choose A Fund With A Winning Manager.)
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