The name of Tom Ognar's game is growth. Not where it's been, but where it's going.
"We concentrate on calculating a company's growth rate, that's been the key to our success," says Ognar, co-portfolio manager of the $1.7 billion
Wells Fargo Advantage Growth fund. "Retail investors -- and even Wall Street analysts -- often rely too much on how quickly a company grew in the past instead of focusing on the future."
To determine a company's all-important growth rate, the fund's managers hit the streets to meet with management, suppliers and customers. They also put their collective ears to Wall Street to find out what analysts are expecting, even taking into account the so-called "whisper number."
Top Growth Manager Gets Googley-Eyed
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"Why not? It's all about expectations," says Ognar.
So far, the multi-cap growth fund has handily beaten expectations. Year to date it is up 28.4%, beating the large-cap
by 23 full percentage points. Furthermore, it sports three-year and five-year average annual returns of 17.5% and 16%, respectively. As a four-star fund, it has performed better than 98% of its peer Morningstar category funds year to date, and better than 95% of its peers for the past three years.
The fund holds over 120 stocks, yet investors seeking diversification or a closet index fund may want to steer clear. Nearly a quarter of the fund's assets can be found in its top 10 holdings.
Right now one of those top picks is
at slightly over 3% of assets.
"Google fits the process nicely. Its growth has decelerated but it is still beating expectations," says Ognar. "Internet advertising is still a growing trend. The percentage of ad dollars migrating to Internet from traditional media is still rising."
Another megatrend Ognar is exploring is the aging baby boomer. He's playing that theme via financial stocks like
"Being in the mutual fund business, one can clearly see that the demographics are changing," says Ognar. "A lot of fund buyers still buy funds with loads because they want financial advice." The Wells Fargo Advantage Growth fund has no front-end load, but investors are paying up for the fund's impressive performance. It sports an annual expense ratio of 1.47%.
"Schwab is transitioning its business to advice-based as opposed to transaction based, which is the correct move," says Ognar. "And the price war that has driven down the cost of individual trades never really crippled them like many people expected, proving that it's not all about the cheapest trade."
Speaking of the cheapest trade, Ognar says his own trading costs are so low now that he has no problem selling a stock once he believes its growth is gone. His fund's turnover rate is a hefty 123%. For mutual funds, turnover rate is a measure of trading activity during the previous year, expressed as a percentage of the average total assets of the fund.
"We have a strong sell discipline," says Ognar. "There is an opportunity cost to holding any stock and if we can improve our portfolio we will. Transaction costs are so low now that it's not a good argument against selling."
And until this fund slows down, it's hard to argue against holding.
Before joining TheStreet.com, Gregg Greenberg was a writer and segment producer for CNBC's Closing Bell. He previously worked at FleetBoston and Lehman Brothers in their Private Client Services divisions, covering high net-worth individuals and midsize hedge funds. Greenberg attended New York University's School of Business and Economic Reporting. He also has an M.B.A. from Cornell University's Johnson School of Business, and a B.A. in history from Amherst College.