It's one thing to call for
10,000 a few weeks back when the index was hovering in the 9900s, but it's quite another to go on the line two years ago, when the market wasn't even at 7000 and the bears were definitely out of hibernation. But that's precisely what
did, and in print no less.
Back in March 1997, the longtime money manager, who also writes a column in
, faced down the pessimists and said this: "Could we have three great vintages in a row on Wall Street -- '95, '96 and '97? I think we could. Great harvests could go right on until the turn of the century, putting the Dow at 10,000."
Those kinds of calls are nothing new to Sosnoff. Making broad macroeconomic and market predictions has been a critical part of his investment process for decades. That top-down approach is matched with some stringent bottom-up securities analysis, and so far, it's been a winning combination. According to unaudited figures made available by his firm, Sosnoff's large-cap accounts easily outdid the
since 1976, when he started running them.
Most of his career, he's handled only institutional money, but last year retail investors got a chance to check out his style as well. And so far, there's no arguing with the results. Since its inception in June 1998, the
fund (call 877-767-6633 or visit the company's
site for more information) is up 30%, according to
, well ahead of the S&P 500. Year to date, the no-load, $10.5 million fund is in the top 5% of its category, sporting a sizzling 13% return, more than triple the return of the S&P benchmark.
And those returns come without benefit of the .coms that fuel many of today's top funds. Besides a small percentage in
, Atalanta/Sosnoff has no stake in Internet stocks.
But that's not to say Sosnoff isn't capitalizing on the Net. "The biggest theme in our portfolio is the convergence of Internet, cable and broadcasting. A good third of this portfolio has milked that theme," he says. "That has been a very, very fruitful concept, and the stocks have been even more buoyant than we expected. But we've done it on companies with earnings, not dreams."
Another theme in the portfolio is the growth of financial services. That sector constitutes a quarter of the fund. He picked up many of these stocks, such as
Morgan Stanley Dean Witter
, last fall when they were very unpopular. "The call was that the economists were going to be wrong, and that the end of the world was not in sight," says Sosnoff. "We made it in October, which meant buying the brokerage stocks at about half what they're selling for today."
Taking big stakes in sectors is an important part of Sosnoff's strategy. He isn't afraid to concentrate; in fact, the top 10 holdings of the fund (
) make up almost half its assets. And Sosnoff predicts he won't abandon these positions anytime soon. "We're core investors who like to stay with stocks for years," he says.
His most recent buy?
. Says Sosnoff: "We think television ad revenues are going to be stronger than expected. Time is getting very tight. So we think the network will start to make some money -- certainly stop losing money. And we also feel that Mel Karmazin is probably the most brilliant executive in the business."
Of course, although Sosnoff's short-term record is certainly impressive and his long-term one also is strong, he openly admits to making his share of mistakes, the most recent of which was a decision to sell
early last year. "We got off the bus on AOL too early. That was probably the biggest mistake I've made -- selling that stock out prematurely on a valuation call," he says.
Valuations in this high-flying market are still a concern for him, but Sosnoff remains bullish. "I think the macro picture is still very constructive," he says. "And I think corporate earnings this year will be up 7% or 8%, which is quite good."
As for any more predictions about the Dow, he says, "I wouldn't be surprised to see it hang around 10,000 for the next couple of years. But I'm not bearish because I think there are tremendous opportunities for stock selection in this kind of environment."
Of course, though Sosnoff is clearly no novice, his fund has been around for less than a year, and cautious investors may want to wait until it has a longer history. But its performance, even during its short life, along with the experience and track record of its manager, makes it clear that this is one growth portfolio well worth watching.
Brenda Buttner's column, Under the Hood, appears Thursdays. At time of publication, Buttner had no positions in the funds mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks or funds. While she cannot provide investment advice or recommendations, Buttner appreciates your feedback at