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Stock Assistant: Stock Market Watch

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Around a year ago, in the spirit of working smarter rather than harder, I advised looking over top mutual fund manager's shoulders to see what stocks they're buying. After all, picking stocks is their day job. Besides, many of them have squads of analysts helping them find worthwhile candidates, and they're better wired into what's happening than you or I can ever hope to be. Regrettably, most mutual fund managers don't publish their holdings in a timely manner for fear of letting the competition in on their thinking. Fortuanately, enough do report at least their top 10 holdings quickly enough to supply us with a steady stream of worthwhile stock ideas. Here are funds that I recently discovered or didn't have room to mention last year. All update their top 10 holdings monthly, usually by the middle of the following month. Also, since there's no point in getting tips from managers down on their luck, I restricted the list to funds rated five stars (best) by Morningstar.

Stock Assistant : Royce Funds


Royce Funds runs more than a dozen funds, but they all invest primarily in small, value-priced companies. While many investors favor large companies (large-caps), I think there's an advantage to seeking out smaller firms. Why? Because the media and most investing gurus usually focus on large companies. The virtues and failings of these stocks are rehashed so often that it's difficult to find promising yet undiscovered large-cap names in either the value or growth categories. Royce follows a classic value-investor's approach to picking candidates. It looks for good companies that are either undiscovered or have recently stumbled. Despite their current hard times, Royce demands strong balance sheets and the ability to generate strong profits and high cash flows when the firms overcome their current problems. Currently, the Royce Special Equity, Total Returns, and Value funds carry five star ratings. Of those, Special Equity is your best bet because it has a relatively low 22 percent annual turnover rate. Turnover measures how fast a fund buys and sells stocks. For instance, a 100 percent turnover means that, on average, the fund changes its entire portfolio annually. By contrast, the Royce Value fund has a 181 percent annual turnover, which means that, on average, it completely changes its holdings every seven months or so. That makes the fund a poor resource for investing ideas because, even though it reports it holdings monthly, it may not still own the listed stocks by the time you see the list.  The Royce Total Return fund has a low 20 percent turnover rate, however it holds more than 400 stocks. That makes it a questionable resource, because, with that many holdings, appearing on the top 10 list doesn't necessarily signal much of a commitment. The Royce 100, a new fund, started about a year ago, is worth checking. The fund hasn't been around long enough to earn a Morningstar rating, but it has gained more than 15 percent in the past 12 months, and almost 10 percent so far this year. To download the top holdings, select Fund Guide on Royce Funds homepage (www.roycefunds.com), click on View Our Funds (top banner), select the fund of interest and then scroll down until you see the top 10 holdings for the previous month.

Stock Assistant : Vanguard


Vanguard is known mostly for its index funds. But it has two managed funds, Vanguard Energy, and Vanguard Heath Care, that are good resources for stock ideas in those sectors. Both have low turnover ratios, so their picks should be current. Vanguard Energy has been on a real tear lately, up 45 percent over the last 12 months. From Vanguard's homepage (www.vanguard.com), select Personal Investors, click on Research Funds & Stocks, and then enter the fund name or ticker symbol. It's faster to use the ticker symbols, which are VGENX for the energy fund and VGHCX for the healthcare fund. Once you're on the main page for each fund, click on Holdings to see top 10 stocks. Both funds hold mainly large-cap stocks.

Stock Assistant : Munder


Market veterans undoubtedly remember Munder from the bubble days when its NetNet fund specializing in Internet stocks was all the rage for a year or so until it crashed and burned when the bubble burst. But Munder has come a long way and offers more than a dozen funds; many highly rated. Two have five-star rankings: the MidCap Select and the Small-Cap Value. The MidCap Select, a growth fund, sports a market-beating 20% return over the past 12 months. The value fund did even better, pleasing its shareholders with a sizzling 29 percent 12-month return. Both have moderate turnover ratios, 53 percent for MidCap Select, and 43 percent for Small-Cap Value, making them good stock idea resources. You can get to each fund's information directly from Munder's homepage (www.munder.com). In addition to previous month's top 10 holdings, you can also see a complete list of all of a fund's holdings from the prior month.  Just like us, mutual fund managers pick their share of clunkers. So being listed in a fund's top holdings doesn't guarantee that it's heading higher. Nevertheless, why reinvent the wheel, a top fund manager's picks is a good resource for stock ideas.  You can spend serious money getting stock tips from so-called experts, but there are a few professional stock pickers that give away their list of favorite stocks for free every month.

I'm talking about mutual fund managers. Not all mind you, just those willing to post their top holdings on a timely basis. While it's true that most funds post their top holdings on their websites, the data is usually too out of date to be of use.

Here are my favorite funds that post their top-ten portfolio holdings monthly, all within two weeks after month's end.

Stock Assistant : Thornburg Investment Management


I've listed Thornburg (www.thornburginvestments.com) first because the firm goes the extra mile for investors like us. Not only does Thornburg update its holdings quickly, but it also provides a reasonably in-depth three or four paragraph description of most, if not all, of each fund's holdings, not just the top ten. There's more. Thornburg also includes monthly commentaries written by each of its fund managers overviewing their portfolio changes during the past month, along with their take on current market and economic conditions. Thornburg runs three funds with portfolios you should find interesting.

Its newest, the Investment Income Builder Fund, invests in bonds as well as dividend-paying stocks, both foreign and domestic. U.S.-based stocks comprise about 46 percent of the portfolio, and that is the area of most interest, at least to me. This is the only fund in the fast-update category that emphasizes dividend stocks. Formed just last December, the fund has returned 15 percent, year-to-date.

Thornburg's Value Fund, run by Bill Fries since its inception in 1995, is a value fund with a twist. Most of its holdings are undervalued stocks using traditional gauges such as price/earnings and price/book ratios. However its portfolio also includes picks that Fries considers undervalued based on their earnings growth potential, even though they don't necessarily fit the traditional value mold.

Thornburg's Core Growth, another relatively new fund formed in December 2000 focuses on growth stocks ranging from upstarts such as jetBlue airlines to stalwarts like Microsoft. The fund got off to a rough start during its first two years, but is up 43 percent, year-to-date. 

Find each of Thornburg's fund portfolio holdings and market commentary from its homepage by selecting ‘Funds' from the top menu.

Stock Assistant : Turner Investment Partners


Turner (www.turner-invest.com) operates 15 different value, growth, and industry specific stock funds. Micro-cap Growth, its best performer, has returned an eye popping 33 percent, on average, for each of the past five years. To put that in perspective, the market, as measured by the S&P 500 index, lost around 1 percent, on average, annually, during the same period. The fund is closed to new investors, but that doesn't stop us from looking at its holdings. Turner's New Enterprise fund, focusing on tech, leads the pack this year, racking up a 58 percent, year-to-date return.

Turner is fast. It updates its top 10 holdings lists within a couple of business days after the end of each month. 

Find Turner's fund portfolio listings from its homepage by selecting ‘Individual Investors,' and then clicking on a fund name in the Tuner Funds Daily NAV section.

Stock Assistant : Buffalo Funds


 
Buffalo (www.buffalofunds.com) operates a small family of six stock funds, all above-average performers. Its best-known fund, Buffalo Small-Cap, has returned 31 percent year-to-date, and 20 percent annually, on average, over the past five years. It's new Science & Technology Fund, established in April 2001, up 35 percent year-to-date, is Buffalo's best performer so far this year.

Buffalo updates each fund's top ten holdings list monthly, around the 10th of the following month. Get there from Buffalo's homepage by selecting Fund Information (top menu). 

Stock Assistant : John Hancock Funds


Hancock (www.johnhancock.com) operates a large group of funds covering just about every category you might want. Its biotechnology and its technology funds have been its best performers so far this year, scoring 40 percent, and 34 percent returns, respectively. Hancock updates each fund's top ten holdings about a week after the end of each month. Get there from Hancock's home page by selecting Mutual Funds, then Individual Investors, and finally, Open End Funds.
 


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