Amerindo Adds Some Bio- to Tech Holdings

The (ATAHX)Amerindo Technology fund shuffled its top-10 holdings in the second quarter to make room for two biotechnology companies among its usual Internet holdings.

The appearance of Protein Design Labs (PDLI) and Gilead (GILD) in the top 10 may be a harbinger of things to come.

Amerindo plans to target investment in health-related Internet companies going forward, says spokesman Richard Dukas. "The health infrastructure is very big and bloated and inefficient, and we believe the Internet can play a significant role in streamlining processes and cutting down on inefficiencies."

Meanwhile, as of the end of June, Amerindo continued to make business-to-business software provider Ariba (ARBA) its biggest bet. Longtime favorite Yahoo! (YHOO), which once made up more than 40% of the portfolio, moved up to the No. 4 holding from No. 10 in the previous quarter, despite being off 37.9% since January.

Amerindo's Top 10 Holdings
March 31	June 30
Ariba	Ariba
Broadcom	Inktomi
CMGI	eBay
Critical Path	Yahoo!
eBay	Protein Design Labs
Homestore.com	Broadcom
Inktomi	OnDisplay*
OnDisplay*	Gilead
priceline.com	CMGI
Yahoo!	Homestore.com
Source: Amerindo. *Acquired by Vignette on July 6.

Dukas says most of the movement in the technology fund's top 10 resulted less from buying and selling by the fund than from movement in the companies' share prices. "We tend to be holders, and we tend to build core positions in companies that we like," he says. "If a company is off the top-10 list, it would probably stand to reason that most of them are off the list because of performance as opposed to us selling."

The relative stability of the fund's top holdings is notable, though, at a time when many investors are losing faith in the e-commerce and business-to-business (B2B) Internet subsectors. Though priceline.com (PCLN) has fallen out of the top 10, eBay (EBAY) is flexing its muscles at the No. 3 spot and Homestore.com (HOMS), clings to No. 10, down from fifth place last quarter.

"Certainly they haven't given up on the business-to-consumer area. A lot of people are pretty down on that," says Morningstar senior analyst Scott Cooley. "I suppose part of it's probably that they've had some home runs in that area. eBay is a good example of that. It's a stock they've owned for a long time. They're the kind of shop that tries to look past the short-term noise, and if they had some conviction about an area, they'd be inclined to stay with it."

Amerindo's interest in biotechnology goes beyond its technology fund. It launched a Health and Biotechnology fund March 31. And after the sector soared in June, it's no surprise that some biotech holdings have moved up in the flagship Technology fund. As of Monday, Protein Design Labs, the biggest mover on the list, was up 165% year to date, and Gilead, has surged 90.3%.

"They have a history of buying in this area, and I think they just do it opportunistically," says Morningstar's Cooley.

Amerindo Technology is off 18.5% for the year as of Monday -- but that comes after it skyrocketed 250.6% last year.

As Amerindo grows -- it now has $465 million in assets, according to Morningstar -- the fund may be forced to strike a new investment balance, says Cooley. "In the past, they've had a pretty concentrated portfolio, with a fair representation of pretty small, emerging-growth companies," Cooley says. "It's harder to keep both of those characteristics as your assets rise. It's really just something we have to keep an eye on."

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