Jeff Tjornehoj on "Business for Breakfast" 1060 KRCN Tuesday, October 10, 2006 - Colorado-Based Funds' Third Quarter Performance
Q: Hi, Jeff. It's been a while since we last talked about Colorado-based funds. How have they performed lately? A: Fairly well, I'd say. Of the 117 equity portfolios run in our fair state, only 19 lost money in the third quarter. That's not exactly a ringing endorsement, since Q3 was pretty good for most sectors, but it is indicative of a better variety of fund styles that have developed since the tech bubble burst.
Q: But since energy stocks were down, did we go back to our old ways and concentrate on oil companies?
A: That could have played a role. The three worst performers were funds that invest in sector-specific stocks, like energy and materials. I wouldn't blame them too much, though, since that's where they were supposed to be. But among diversified funds, Dreyfus/Founders Discovery Fund didn't do very well (-4.8%), and it doesn't hold many energy stocks; that's the same for ICON Core Equity Fund (-3.6%). In both cases it seems their railroad holdings set them back.
Q: So, what did the winners do right?
A: American Growth Fund, which Robert Brody has managed since 1958, was up an impressive 11.6%. This fund has heavy weightings in technology, and HP in particular is a favorite--it was up 16% for the quarter. In fact, HP, Amgen, Intel, and Motorola make up almost half the fund--not a diversified choice. That's often true of the top performers in a quarterly review: they either place their bets on a few companies or just a sector.
If we look for themes at a higher level, it's clear that managers who emphasized large-cap stocks did better than small-caps. That was true across the industry. What was most impressive, though, was that the large-cap growth managers around town did a good job beating the average. The category average return for the quarter was 2.5%, but some managers at Dreyfus/Founders and Janus were able to get 4% to almost 7% returns. Even at the other end--where small-cap growth was the worst performer among all diversified, long-only classifications (-2.8%)--we saw all three managers at Janus in that space eke out positive performance.
Q: So, generally speaking, Denver-based funds did well?
A: Yep, a pretty good quarter overall.
Q: Thanks, Jeff.
A: You bet--thanks for having me.
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