Oak Associates Funds
didn't notice any tech weakness.
The broad shellacking felt by tech stocks has put the average tech-sector fund down 1.5% through July 31, according to
. Some notable losers such as
Jacob Internet have fallen more than 50%.
But the Oak family of funds has been impervious to the reacquaintance with gravity that bedevils many of its tech-fund brethren. The Akron, Ohio-based firm's
Red Oak Technology fund, run by Oak Associates founder James Oelschlager and co-manager Doug MacKay, has racked up a 43.8% gain this year. That gain is the tops among tech funds open to individual investors all year. Its sister fund, the
White Oak Growth Stock, is run in a similar manner and is up 29.1% on the year. A smaller sibling, the
Pin Oak Aggressive Growth fund, is up an impressive 27.9%.
The Oak fund family's big-tech bets and concentrated style -- none of the funds have more than 25 holdings -- make comparisons to the
family inevitable. But in performance for 2000, the comparison ends, with Oak ahead by a mile. The same risks from highly concentrated stock bets that apply to Janus also apply to Oak funds, but, so far, the fund family has held up strong.
So, what did Oak buy that set it apart? "It's really what we didn't own that helped us," says MacKay. "We tended to stick with infrastructure. That's why we weren't in the top 10 last year." Nonetheless, Red Oak's 143% gain last year left few investors complaining.
Not only did Oelschlager and MacKay avoid the dot-coms but they also sold out of some bellwethers early this year that took their share of lumps during the tech bruising. Red Oak dumped its shares of
before those stocks turned south. At the end of June, though, White Oak was still holding onto Microsoft.
The Oak funds have instead focused on semiconductor names. In all of the funds, technology occupies a big portion of the portfolio. Pin Oak, which is classified as a mid-cap offering, has a 95% tech weighting. Red Oak, meanwhile, is 100% pure technology.
White Oak, which has a broader mandate, also loads up on tech: The 54% allocation in that sector dwarfs the 21% allotted to runner up health care. As of June 30, eight of its top 10 stocks were in the sector. But Oelschlager has also identified other possible winners. He's got considerable stakes in pharmaceuticals and biotechs, such as
. In financial services, the fund owns
"If Warren Buffett were to invest in technology, maybe he'd be like Jim (Oeschlager)," says Aviva Casanova, portfolio manager with the financial-advice firm
Emery & Howard
of Burlingame, Calif. "He has conviction in his stocks and lets the market come to his conclusion."
Although he showed smart timing by selling off some big stocks, Oelschlager has made his name by his buy-early-and-hold-tight approach to tech investing.
at the (initial public offering) in 1991, and he continues to hold onto it," Casanova says.
Red Oak has about a quarter of its assets allocated to semiconductors. It's also fond of fiber optics, with another 25% going in there, says MacKay. Because of the fund's concentrated style, portfolio managers find only a few stocks within each of the subsectors they are emphasizing. The fund goes for stocks such as
Maxim Integrated Products
, makers of analog chips.
But before loading up on this fund family, observers advise caution. While the funds have had a great run recently and they are skippered by an investing veteran, there's significant overlap.
Since the funds are run in a concentrated style, a duplication of a handful of stocks can leave the funds vulnerable to an across-the-board whammy. Currently, White Oak and Red Oak have six out of 25 names in common, MacKay says. Stocks such as
are in each of the funds. This concentration begs comparisons with Janus, and Janus has
felt the pain when one of its big holdings, such as
Even the mid-cap Pin Oak is dressed up in some of the same stocks as her bigger sisters. It has nine stocks in common with White Oak, as of June 30.
"I wouldn't recommend that people own more than one of these funds," says Casanova.