Goldman Sachs Conference: Mood Jittery

The packed Goldman Sachs Technology Investment Symposium is not over yet, but it is already possible to characterize this year's conference: jittery, especially compared to the optimism of last year.

There are two kinds of people at the Goldman conference this year, says Bradford Woloson of JMI Equity Fund, a Baltimore-based private equity firm focused on software companies. There are the people who invested in an Internet stock last year, and those who didn't, he says.

"Anyone who pulled the trigger looks like a genius, and made a lot of money, and it looks like 'easy money,'" says Woloson. "The other guy, who hasn't pulled the trigger, is a deer in headlights."

Both types of attendees have got the jitters, Woloson says. The fund managers who already have a Net stock in their portfolios know it won't be as easy to make money on the Net as it was last year. And those who stayed away are wondering if they'll get a chance to buy Net stocks at a reasonable price and improve their returns. "They're saying: 'I'm petrified because this is like nothing I've ever seen in my whole career,'" Woloson says.

That assessment was shared by Bradford Woloson 's brother, Todd, a partner at Boulder, Colo.-based Canyon Capital, a firm that operates a hedge fund and makes venture capital investments. "They wouldn't buy the stock a year ago because it's overpriced, and now it's up three times," says Todd, who, like his brother, attended last year's Goldman tech conference.

"Last year felt much more like a euphoria in the Internet stocks. People had the feeling it couldn't come down at all," Todd says. "There's a certain cautiousness this year."

Hype and glory

While Net companies have captured the headlines, money managers are in love with technology companies that are doing boring stuff like managing information.

At Goldman's symposium smorgasbord, managers have been impressed with Sapient (SAPE Quote), an information technology consulting company for Fortune 1000 companies led by CEO Jerry Greenberg. "I love Jerry," says Nick Moore, a money manager at Jurika and Voyles. (Moore's firm has no position in Sapient.)

Jeff Taylor of Taylor Capital Management also admires Greenbery, gushing that "He just is a really good manager, and he's in a fast-growing niche." (Taylor has no position in Sapient.)

Sapient, which is on Goldman's recommended list, had 77%-plus year-over-year revenues in 1998, from $90 million to $160 million. Although it's a bit expensive, trading at 70 times this year's earnings estimates of $1.06 a share, money managers say good management is worth the premium. "It may not be worth that much, but after the annual February tech selloff, it will be worth getting into," says a third fan, a fund manager who sold his position in December and requested anonymity.

Checkpoint Software (CHKPF Quote), a provider of network security software, is also involved in an interesting niche, say money managers. The company is generating a 40%-plus annual revenue growth rate and is trading at less than 20 times 1999 earnings of $1.94 a share. Its recent fourth quarter showed a strong demand for its Firewall products, used by companies to keep certain Web sites -- like porn sites -- away from employees. The Checkpoint's products protect a company's information assets, and the value of this service will only rise. Checkpoint was trading at 41 1/2, down 3/16 Wednesday.

Maybe the best indication that attendees are interested in a stock is when all of the company's literature disappears by the end of the first day. Sapient's and Checkpoint Software's company booklets were long gone by Wednesday afternoon.