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The Secret Is out: Janus Strategic Value's Holdings Revealed!

Ian McDonald

Investors have given David Decker billions to invest, but they've had to wait until now to find out where he put their money.

When the first shareholder report for Decker's (JSVAX Quote)Janus Strategic Value fund is mailed shortly, investors will discover a fund that looks neither like a conventional value fund nor like a typical Janus fund.

It does, however, resemble Decker's other fund, (JASSX Quote)Janus Special Situations.

Let's go to the numbers: At the end of April, the top five industries in Strategic Value were diversified manufacturers (6.7%), oil companies (6.6%), medical products (5.4%), telephone concerns (5.1%), and aerospace and defense (4.2%). Other industries he's bullish on are cable television (4%), casino hotels (4%), and truck-part and equipment makers (3.9%).

In cable TV, his favorites are Charter Communications (CHTR Quote), Le Groupe Videotron, and No. 8 holding Comcast Corp (CMCSK Quote). In the hotel group there's No. 10 holding Park Place Entertainment (PPE Quote) and Station Casinos (STN Quote). Among the truckers his top picks are Lear Corp (LEA Quote), Delphi-Automotive (DPH Quote) and Federal-Mogul (FMO Quote).

It might be more instructive to focus on his top 10 stock picks, since they represent more than 40% of the fund. (One quick note from the toot-your-own-horn department: TSC named 14 stocks Decker might be buying in a March 1 story and nine are in the fund -- three in the top 10.)

Investors have clamored to know what's in Janus Strategic Value since it rolled out at the end of February with more than $1 billion in a boffo four-week subscription period. Now it has nearly $3 billion, or more than seven times the assets of the average U.S. stock fund, according to Morningstar.

Investors' fervor for the fund went up a notch when the fund, up 5.9% over the last three months, weathered the tech-led selloff better than the Denver growth specialist's other funds and the S&P 500. But like many big fund companies, Janus is preternaturally secretive about its funds' holdings.

The fund's holdings represent a broad range of stocks, which reflects Decker's flexible approach. Rather than focus strictly on common valuation yardsticks like price-to-earnings ratios, he sifts the market looking for companies with a catalyst for growth that might look cheap by other measures, like stock price to cash flow.

That unique strategy has made the young fund stand out among its value peers so far. The average value fund's top sector is usually financial stocks, with a 21% weighting, according to Morningstar. But the group gets just a 9% weighting in Decker's fund with none in the top 10. His top pick in the sector is broker Merrill Lynch (MER Quote) (2.3%), followed by American Express (AXP Quote) (1.9%).

In the report, Decker uses Advanced Micro Devices (AMD Quote) as an example of how and why he's broken from the P/E-fixated members of the value crowd. The microprocessor maker, which has a hefty 63.8 P/E ratio, was far behind competitor Intel (INTC Quote), but a beefed up product line is helping the firm close the gap, Decker says. He bought the pricey stock and it has paid off, rising some 74% since tech stocks peaked on March 10. Over the same time period the tech-heavy Nasdaq Composite is down 21%.

Aside from not looking like other value funds, he's managed to avoid the high degree of stock overlap present in most Janus stock funds. Only two of the Janus' firm-wide top-10 stock holdings, Enron(ENE Quote) and Comcast, are in his fund, according to bigdough.com, a Web site that tracks individual ownership.

Then again, Decker is cribbing some of his own notes. Fourteen of the top 25 stocks in his other fund, Special Situations, found their way into Strategic Value at the end of the first quarter. Apparently he's only taken his best ideas from that fund, which trails its younger brother by some eight percentage points over the past three months.