A Janus Jump-Start

I am forever in search of an edge. Some tiny edge that will give me a jump on everybody else when I am picking stocks. I don't care about where that edge is coming from, as long as it is legal.

Right now one of my most effective edges is a belief that the Janus family's hot hand will continue. Which is why I continually check to see what are the family's top ten holdings of their open funds.

Why bother? For starters, these are the funds that are getting in all of the money. Just last night a Janus statement came out about how it had raised hundreds of millions of dollars in Japan for one of its funds, an international offering. Right now, the way the quarter is shaping up, this could be the beginning of still one more mad rush into the Janus funds.

So what do they own and can therefore buy more of? Checking through their Web site I see a number of names that ring out with Janus endorsement. Of the ones I like personally, I would highlight Nokia (NOK Quote), Sun Micro (SUNW Quote), Cisco (CSCO Quote), Nortel (NT Quote), EMC (EMC Quote), i2 Tech (ITWO Quote), Verisign (VRSN Quote), Veritas Software (VRTS Quote), JDS Uniphase (JDSU Quote), America Online (AOL Quote), Time Warner (TWX Quote), Exodus (EXDS Quote), Gemstar (GMST Quote) and SDLI (SDLI Quote). (We currently own all but Gemstar, SDLI, Time Warner, Nortel and EMC. Candidly, we sold the others because they had run too far, but we are looking for a place to get back in.)

Is it a self-fulfilling prophecy to buy these stocks, knowing that Janus might be buying more of them for funds that they take in? No, but, as I told my partners in a meeting yesterday, it sure doesn't hurt when Janus likes a stock these days.

Don't get me wrong. Looking up mutual fund holdings and guessing whether a fund still owns a stock is a pretty crummy way to build a portfolio.

That said, in this market Janus serves as kind of a Warren Buffett of old for many individual investors. They tend to go long stocks they think should outperform for a significant amount of time, adding to the stocks as more funds come in.

I think recognizing the force of Janus and accepting the reality of how strong the Janus franchise and stock-picking are right now, gives you an edge -- not the edge -- but an edge if you are trying to pick winners.

Long ago I gave up having pride of authorship when it came to stocks. I don't care about not having invented an idea. If Janus has done the work on a stock and has bought it, that's all I need to sit down with some research reports and recent quarterly returns. To me it is a great STARTING POINT for finding new stocks. You often have the wind behind your back and the good fundamentals still in front of you.

So why bother to do any work at all? Because Janus isn't going to call you and tell you to sell. Only you can do that. Which is why, in the end, it is just a starting point, and no more, but right now one of the best starting points in the firmament.

Random musings: Business Week repeats old libel about me this morning, saying I was short a stock I bashed on CNBC. Hold it! I wasn't short the stock. That was the whole point. Oh well, retraction coming I guess.