| OCR Text |
Show Sunday, May 28, 2000, THE DAILY HERALD, (www.HaATheHefald.eom), Tech stocks funds:- Pegging deeper or selling By BILL BARNHART I scanned the Morningstar fund Chicago Tribune database and found 171 funds had posted returns of more than 100 percent in the 12 months ended April 30, an extraordinary number considering the steep Nasdaq slide. In a few weeks, we will celebrate if that's the appropriate word the anniversary of the Federal Reserve's effort to slow the economy by raising short-terinterest rates. After months of thumbing our noses at the Fed, as we spent more and earned more on our tech stocks, the rate hikes that began in June are beginning to , m bite. The Nasdaq stock market peaked March 10, but only in the last few weeks ve ageressive growin funds holding popular technology stocks started to take on water, in terms of losses. I scanned the Morningstar fund database and found 171 funds had posted returns of more than 100 percent in the 12 months ended April 30, an extraordinary number con sidering the steep Nasdaq slide. Promotions of triple-digannual returns are a powerful magnet to keep investor cash flowing into aggressive funds. Looking at the 10 largest of these triple-digper- formers, all were in the black on a basis through March and through April. But not any more. The second wave of the Nasdaq slump, which began in early May, has battered many top tech funds. For example, Denver-baseJanus Global ' Technology, the largest of the 10 funds I examined, was up 137 percent on a In the weeks that folbasis and up on a lowed, general growth nearly percent basis as of the end ... stock funds that had oyer- of April. loaded on technology began But as of Wednesday, the to rebalance, Burkart said. fund had declined to a Separately, private venture gain of 97 percent capital firms that had an astounding return, to financed tech companies through-initia-l piihlicoffexi. nd4hfryear4o date return was down 13 ings of shares in recent percent. years began to cash out of Chicago-basetheir investments, he said. Kemper Such trends increased Technology, the eighth-largefund in my sample, selling pressure in the tech was up 104 percent on a sector, hut smart managers saw it coming, said Jeff basis and up 7 e a principal and Molitor, percent director of portfolio review through April. But as of at Vanguard Group in Wednesday's close, performance had dropped to a Malvern, Pa. "After a sector has been 75 percent hit is not the time to build return and a loss of 9 per in diversification," he said. cent Performance numbers Among ebb and flow in today's funds, two strategies volatile stock market. But emerged as managers sensed the coming pullback cautionary handwriting in tech stocks. Some moved regarding tech stocks was out of the sector; others on the wall many months dug in deeper. ago, said James Burkart, fund One of the Kemper remains that Fund. comfortably Technology above water through the The stall in Internet Nasdaq pullback is the stocks, beginning in indicated that Vanguard Capital the tailwind of momentum Opportunities Fund, which owns tech stocks but is not buying in tech stocks was a tech sector fund. fading. The collapse of biotech stocks, beginning a Beginning last year, the few days before the Nasdaq , fund's management team ' peak March 10, validated . at Primecap Management Co. began redeploying cash the demise of momentum drawn to the fund by buying. th 5 year--to-da- te th -b- e-sure- d year-to-dat- e st -- year-to-dat- it year-to-dat- e. best-performi- '. it i year-to-dat- e mid-Decemb- . d Provo, Utah Page C5 Office Depot shares fall by 30 percent tech stocks. strong returns from tech The key decision at holdings, Molitor recalled. For example, the fund Kemper Technology has now owns life sciences firm been to increase the num- Jber of holdings and buy Pharmacia, which since March has provided an tech stocks. enviable counterweight to Whether an aggressive the Nasdaq sell-ofgrowth manager shifts ' The fund was money outside the tech secup 19 percent this year, through tor or digs for bargains Wednesday, and up 99 peramong smaller tech stocks, cent over the last 12 months. the best managers did not Burkart and wait until March to change Deborah Koch took a differstrategies. The dangerous combinaent approach at Kemper. "We could have bought tion of Fed inflation hawks "oil service or drug stocks, and fickle mutual ndbut we still believe that the investors meant that doing major end markets for nothing was not an option. Dumb question: My technology are growing," bond fund account stateBurkart said. Six month ago, they ment lists "free shares," reinvesTaresTcosl began cutting back their shares" and "total shares." positions in such major tech stocks as Oracle, Motorola, What do these terms Cisco Systems and mean? Microsoft. But nothing in A. According to Morgan the tech selloff has promptStanley Dean Witter, where ed Burkart to abandon his you have a mutual fund enthusiasm for three major account, "free shares" refers to the shares you have held themes in technology investing: the growing penetration long enough to avoid the of personal computers into deferred sales charge your ' overhouseholds here and fund imposes; "cost shares" are the number of shares seas; the global growth of wireless telephone services, you purchased in the fund; "reinvest shares" are the and the expansion of shares you acquired through Internet services. Burkart said his fund's reinvesting dividends or interest, and "totals shares" prospectus permits him to r is simply the total number deviate from a of shares you own. focus, but he does not see the need. He remains optimistic (The weekly "dumb quesabout semiconductor stocks tion" from readers is answered in the belief that and companies he calls there is no such thing as a Internet enablers, which dumb question when it facilitate the growth of comes to understanding the Internet use. One Internet stock financial markets. My address is 435 N. Michigan Burkart likes is WatchGuard Technologies, Ave., Chicago, IL 60611. My an Internet security , phone number is address is My provider with a modest WEBarnhart(AT)aol.com or priceearnings ratio of 24, well below many major bbarnhart(AT)tribune.com) By PRISCILLA FUSCO BridgeNewt NEW YORK Shares Inc. of Office Depot 30 plunged percent Friday after the world's largest seller of office supplies said its second-quarte- r earnings fell short of ana lysts estimates because ol low sales in its technology f. fu- ness in foreign currencies. Delray, Depot saw its Office Fla.-base- d heavily-trade- d shares fall $3.1875 $7,312 by the close of trad- m?rThecomDanv-- stoc 8 has fallen about 70 percent from a high of 52-we- $23.8125. Office Depot said low sales in. its technology department led to May second- earnings -quarter tech-secto- prompted Morgan Stanley Witter Inc. and Deutsche Banc Alex. Brown to downgrade their ratings of the company. The news follows a profit warning by major retailer Costco Wholesale Corp., whose shares plummeted 20 percent on Wednesday Dean after the No. 1 U.S. wholesale operator said it fourth-quarte- r expects to be lower than earnings ; in Utah Is pleased to honor our April Top expected. in Closed Sales Production 17 636-363- 372-770- 7 BrodMngonaPnidaitialUtol) 0 Michael Hinton J Brad Morgan 52 0 MicfnelHinlmaPnidanllaltlloll com 2000 of the Rock Club Our Sales Associates who Comprise the Top 20 CO m ' 1 Grace Huffaker Bob Gledhhl 360-195- 0 372-888- 8 BtibGlecWiePrudenlfflllJloh.com com GrooBHutlokerePrudentMlUloh "I. J Q V. Arruro Morales-Ua- I """ l""""1" oackji Get S5D cash back when you activate on any AT&T Digital PCS Plan. S29.99 or higher. 7 3 KenBusnirmnOPninenMUtoh.com 2 SonDeeWoliaPnKlenliolUlnh.com "I I y if Sandra Montanino Sue ChappeS 205-181- 636-255- 2 8 SondfoMgPruawiWaimBfi. can I SuAnne Hoffman W Kaylene. dlMHfflflPniMOlUI 360-390- 'tl ; I I Michael R. Moffttt 0 376-943- 0 SuAnnatiolrmonOPrudenliolUloha) m MichoelMnfflrOPriMenli Crf American Fork Mall Omnlserve 492-904- y Omnlserve-Universit- 224-741- 9 Prestige Wireless AlrFree Wireless ' 225-045- 0 RC Willey 227-881- AlrFree Wireless 796-936- 3 Ephraim Pleasant Grove Orem Heber Electronics Radio Shack vv. Provo ephones-Rtverwoo- (Sm d 0 222-944- Heber 0 Park City Omnlserve (7" 4 6 9" lil Todd Telford TnnYMTmtlTiHiord Si com m noncvnwvasBnocofri aiufflujxu I i i " W SiMa RainakU Steve Clarke Nancy May 368-310- 0 CM! I h " (I 362-644- 6 . 898-866- 915-224- rcflmuisnacn Kaylene Hunziker Ken Bushman SanDeeWaK n 368-366- 0 372-824- 5 814-186- 0 SeveCKitkeaPmdenliolUlall.com tanBnlnnkliePnxllinllolUlofl.coni I I" lPIH Omnlserve 818-013- 3 Omnlserve-Smith- i 's Park City Cellular 418-014- Orem Advantage Park City Electronics 6 Prestige Wireless 374-361- 6 CY- Wireless 229-900- 9 JocWe WHkes Omnlserve 5 , Omnlserve' Smiths 426-530- 224-130- 636-361- 6 JnrtUBWimKOPriiamltaOohaim Payson 367-158- 358-619- UafruanOPnxlentlolLIIOflco 9 Eileen Lamoreaux 915-722- 2 UwiLnpiHisflftuiailialUtalLco is m 8 Orem 11 01 1 eCertmed Is o revolutionary new designation Kx Authorized Dealer watcxm36B Karl Niefson 5 American Fork AlrFree Wireless 465-177- Matthew Women Offer expires June 30th, 2000. See stores for full details. hchnotogy-sow- Real 4 cents to 6 cents lower than the 24 cents a share forecast by analysts polled by First Call Corp. The announcement THE DAILY HERALD TkjcuM growing newspaper rev- enue from stores owned for at least one year. That, combined with weakness in foreign currencies, placed the company's Estate Professionals |
