You can tap into the thinking of the smartest fund managers. Hey, this worked the first two times we tried it.
The world's best mutual fund managers work in fishbowls--there's a wealth of data available on how they invest. Two years ago we first took the portfolios of the winningest managers and overlapped their biggest holdings to find a batch of winners. Simple thesis: If a lot of smart guys like the same stock, it must be worth holding.
In the first year, 2004, the ten-stock portfolio of four large U.S. companies, three small- or midcap ones and three international names beat the S&P 500 by 2.5 percentage points, returning 10.5%. (Holding that same group through 2005 let you score an additional 14.5% total return.) Over the past year a new set of ten did even better, up 19% versus an 8% return for the index through November.
Among eight winners in the 2005 group was oil and gas producer XTO Energy, up 80% on soaring fuel prices. Close behind, up 41%, was photo agency Getty Images. The largest loser was Pfizer, dragged down 21% with other pharmas on litigation fears. In last year's installment we warned that Pfizer might face some weakness and suggested that worrywarts might sub runner-up Tyco or fellow runner-up Wells Fargo; both did better.
Read the complete article
GuruFocus comment: This is exactly why gurufocus.com was launched.
The world's best mutual fund managers work in fishbowls--there's a wealth of data available on how they invest. Two years ago we first took the portfolios of the winningest managers and overlapped their biggest holdings to find a batch of winners. Simple thesis: If a lot of smart guys like the same stock, it must be worth holding.
In the first year, 2004, the ten-stock portfolio of four large U.S. companies, three small- or midcap ones and three international names beat the S&P 500 by 2.5 percentage points, returning 10.5%. (Holding that same group through 2005 let you score an additional 14.5% total return.) Over the past year a new set of ten did even better, up 19% versus an 8% return for the index through November.
Among eight winners in the 2005 group was oil and gas producer XTO Energy, up 80% on soaring fuel prices. Close behind, up 41%, was photo agency Getty Images. The largest loser was Pfizer, dragged down 21% with other pharmas on litigation fears. In last year's installment we warned that Pfizer might face some weakness and suggested that worrywarts might sub runner-up Tyco or fellow runner-up Wells Fargo; both did better.
Read the complete article
GuruFocus comment: This is exactly why gurufocus.com was launched.
