|Click on the company name to jump to Wanger's comments on the stock.|
|Christopher & Banks|
|Expeditors International of Washington|
|International Game Technology|
Ralph Wanger says he won't be giving us "hot stock picks for the next hour."
Wanger would likely disapprove of awkwardly trudging out the cliche about the acorn becoming the mighty oak, but it's useful to enlighten our readers for a key point: Real growth takes time.
Wanger knows that better than just about anyone managing money. He has been the skipper of the ( ACRNX) Liberty Acorn fund since 1970, and he has amassed a phenomenal record by spotting small-cap companies poised for growth, scooping them up early and letting them ride. A list of his top-25 holdings reads like a Who's Who of ten-baggers (a ten-bagger, for the hour-to-hour crowd, is a stock you hold until the stock appreciates tenfold -- what a concept!). Wanger jokes that he takes the slow and steady approach because he doesn't like to work that hard. But don't be fooled by the self-deprecating humor, which is also on display in his
Liberty Acorn Fund
|Tenure: Managed fund since June 10, 1970|
|Assets: $5.37 billion|
|10-Year Average Annual Return: 13.25% (top 6% of category)|
|Top Three Holdings: International Game Technology, XTO Energy, First Health Group|
|Expense Ratio: 0.82% (category average 1.66%)|
|Liberty Acorn Information: 800-922-6769 or http://liberty.acornfunds.com/|
|Sources: Liberty Wanger Asset Management, Morningstar|
This market reminds me of two other periods. One was 1969 to 1981, in which the market made a lot of moves, but ended up pretty much where it started. The other was 1930 to 1954, which was marked by similar swings.
In this market, it will be a little more difficult for amateurs to make money, but good companies will continue to perform well.
What about the economy? What do you envision -- double-dip recession, deflation?
I think we're already in deflation in many ways. The price of most manufactured goods continues to drop. I also expect continued sluggish capital expenditure spending until some of the capacity unwinds.
Do you expect this to remain particularly acute for the technology sector? Your fund has a relatively light tech weighting.
It's tough for technology because it was the favorite sector during the bubble. I don't know of any exception to the rule that says the subject of the bubble lags behind the market for years after it gets burst. The Nasdaq had a big run-up in the past month or so. But it has had five moves of more than 20% to the upside over the past three years. There's nothing sharper than a bear-market rally. That's what I believe we're seeing. Despite these 20% gains, the broader trend for the Nasdaq has been a downward slide for nearly three years. 2. How is the small-cap arena poised compared with the broader market? Small-cap can do very well. I expect it will outperform. It's interesting. What we've been seeing in the market is a period of dramatic change. It has shifted in very important ways and investors need to realize that the previous way of thinking -- a 1999 attitude -- is not going to work. Also, you can take a geological look at the markets. Big dinosaurs have died off; now, smaller mammals and birds survive and come to dominate. We have seen a lot of big dinosaurs fall the past few years; in fact, we have seen some big ones get down closer to our capitalization levels.
|Acorn's Progress |
The Liberty Acorn fund has been a stellar performer compared with its small-cap growth peers
|Time Period||Percentage Return||Percentage Ranking Among Peers|
|One Year||-4.37||Top 5|
|Three-Year Annualized||4.79||Top 9|
|Five-Year Annualized||8.83||Top 10|
|10-Year Annualized||13.25||Top 6|