Going for Growth With Chris Bonavico

You won't see any frenetic trading activity in Chris Bonavico's San Francisco office, although the Transamerica mutual funds he manages are jetting along. That's because, for both (TPAGX)Premier Aggressive Growth and (TPSCX)Premier Small Company, Bonavico hunts for quality stocks. He doesn't want to dilute his portfolios with second best.

The fund manager looks for leaders in a variety of industries and holds onto them, keeping about 25 stocks in each of his two funds. To locate potential buys, Bonavico employs a "no-fear" stock-picking strategy -- ignoring a stock's price and considering only those companies he believes possess a sustainable competitive advantage in their fields.

Bonavico's Transamerica Funds vs. the S&P 500*
Fund	Year-to-Date Return	1-Year Return
Premier Aggressive Growth	27.4%	59.6%
Premier Small Company	44.9%	85%
S&P 500	16.8%	26.6%
*Returns through 11/16/99. Source: Lipper

"People get too wrapped up in P/Es," says Bonavico. "I look for industry leaders that demonstrate an ability to continually migrate their customer base to the next generation of products and services -- companies that grow at the expense of their competitors," he says.

He cites Microsoft (MSFT), Cisco Systems (CSCO) and Sycamore Networks (SCMR) as examples of firms with established customer bases that are migrating to newer products. He calls these "platform companies." They make for a higher return on investment, he says, than "product-cycle companies," which may have a great service or product but lack the ability to hold and migrate an existing customer base. Extreme Networks (EXTR), he says, is one such platform company.

"Extreme Networks has a lot of fast switches that made it look kind of neat," says Bonavico. "But the only way it could maintain that advantage is to continually invest and hopefully not get outdone by Cisco," he says. Which is why he passed on the stock.

VeriSign (VRSN), RF Micro Devices (RFMD) and Knight/Trimark (NITE) are three more companies in Bonavico's stable of favorites.

To find out what else he likes, and get his view on potential winners and losers in the battle for Warner-Lambert (WLA), check out "Stock Drill" this weekend on "TheStreet.com" TV show. Bonavico is the featured guest. Jim Cramer and Herb Greenberg will also weigh in on Bonavico's picks. "TheStreet.com" is on Fox News Channel Saturday at 10 a.m. and 6 p.m., and Sunday at 10 a.m.

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