To deliver market-beating performance, Tom Vandeventer, manager of the $87 million Tocqueville Opportunity Fund (TOPPX), looks for "disruptive technologies," reported Barron's. He's found such companies mainly in the technology and biotechnology sectors. Among his favorites, as discussed with Barron's, are: cloud computing provider ServiceNow Inc. (NOW); cloud-based Software-as-a-Service (SaaS) providers New Relic Inc. (NEWR), Workday Inc. (WDAY), and Paycom Software Inc. (PAYC); semiconductor maker NVIDIA Corp. (NVDA); and biotech plays bluebird bio Inc. (BLUE), Sage Therapeutics Inc. (SAGE) and Spark Therapeutics Inc. (ONCE).

Investment Track Record

The Tocqueville Opportunity Fund has delivered a total return (with reinvested dividends) of 11.25% for the year-to-date (YTD) through April 19, beating 97% of its 618 peers in the mid-cap growth stock category, as measured by Morningstar Inc. By comparison, the total return for the S&P 500 Index (SPX) was 1.30% for the same period, while that for the average mid-cap growth fund was 3.91%, also per Morningstar.

During the last 5 years, Tocqueville has delivered an average annual total return of 15.61%, outperforming 90% of the 478 funds in its peer group by an average of 2.61 percentage points per year, as well as the S&P 500 by an average of 1.65 percentage points annually, Morningstar adds. Vandeventer has been fund manager since July 1, 2010, also according to Morningstar.

Selection Criteria

While the fund is classified as mid-cap growth, it also focuses on small-cap stocks as well, said Barron's. Looking for potential acquisition candidates is a major underlying theme for Vandeventer, who expects to see more deals given that larger competitors are building up significant cash balances as the result of lower tax rates and repatriated capital. Among the big macro trends that he seeks to ride are the explosive growth of cloud computing and the rise of gene-editing therapies for disease, Barron's indicates.

As of Dec. 31, technology stocks represented 42% of Tocqueville's holdings, and health care was 32%, per Morningstar. The four largest holdings as of the same date were NVIDIA, Sage, bluebird, and ServiceNow, collectively accounting for 18.75% of the fund's value, also per Morningstar.

Key Statistics

For the eight stocks listed above, their YTD price gains through April 19, forward P/E ratios, consensus first quarter year-over-year EPS growth rates and market capitalizations are, per Yahoo Finance:

  • ServiceNow: +32.7%, 58.1x, +54.1%, $30.2 billion
  • New Relic: +30.3%, 327.2x, NM, $4.2 billion
  • Workday: +29.7%, 80.5x, -10.3%, $28.0 billion
  • Paycom: +45.4%, 38.2x, +91.4%, $6.9 billion
  • NVIDIA: +18.4%, 31.6x, +83.5%, $139.0 billion
  • bluebird: -4.3%, -21.7x, NM, $8.5 billion
  • Sage: +3.0%, -20.8x, NM, $7.8 billion
  • Spark: +57.8%, -19.6x, NM, $3.0 billion

The S&P 500 is up by 0.7% YTD, not including reinvested dividends. Spark, Sage and bluebird are projected to post losses in the first quarter, New Relic is expected to show a gain and all four had losses in the year-ago quarter, hence their EPS growth rates are not meaningful (NM).

A Closer Look

Earlier this year, Dow Jones MarketWatch named bluebird bio as one of five likely takeover targets in the biotech field. Since then, the company's market cap has slipped from $10 billion to $8.5 billion, making it even more digestible by a large acquirer. The most likely buyer, MarketWatch says, is Celgene Corp. (CELG), bluebird's partner in conducting successful clinical trials for a blood cancer treatment that may prove to be a blockbuster. (See also: 5 Biotechs That May Surge On Takeovers.)

Cutting-edge semiconductor maker NVIDIA has drawn positive mention by analysts at Goldman Sachs for two reasons. First, NVIDIA is among those companies showing especially rapid sales growth, which Goldman believes is a key to future outperformance. Second, NVIDIA has been among those tech stocks dragged down recently by concerns circling around social networking company Facebook Inc. (FB), which Goldman expects to be a temporary anomaly. (See also: 10 Techs Pulled Down By Facebook Now Poised to Rise.)