Needham Asset Management's Bernard Lirola says there's too much bullishness in the stock market.
He's sticking with small technology and consumer companies for his $12 million Needham Aggressive Growth Fund ( NEAGX), which is rated five stars by Morningstar ( MORN). The mid-cap growth fund is up 9% this year, tripling the 2.8% gain of the S&P 500 Index. The fund has lost 1.8% a year, on average, in the past year, but gained 4.5% in the past five. Lirola shares his stock picks in today's Fund Manager Five Spot, where America's top mutual fund managers offer their investing views in five fast and furious questions. Are you a bull or bear?Lirola: Valuations are in the middle of the fairway. I am neutral as the upside potential from things like the pickup in housing and the impact of stimulus fairly matches the downside risk of deteriorating employment and too much bullish sentiment. What is your top stock pick? Lirola: Actuate ( ACTU) is our top pick. The company is developing intranet and extranet applications in open code. The company is run by its colorful founder, Pete Cittadini, who is dedicated to growth as well as profitability. It recently bought back a significant amount of stock at $3.50 and is expected to grow its EPS in 2009, not a small feat when over 50% of its revenue comes from the financial sector. Actuate delivers great functionality at attractive prices and facilitate large enterprises transacting with their customers online, a long-term growth trend for the company. This company should get taken over sometime by the likes of Oracle ( ORCL).
Gregg Greenberg breaks down today's market action with guests including John Barr, portfolio manager for the Needham Aggressive Growth Fund, Gil Morales, co-author of "Trade Like An O'Neil Disciple" and Rodney Anderson, author of the book "Credit 911".